Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-17
New York Electric Rate Reduction Seen
AS Having Significance in Political Way

/ least fixed figures with which 10 deal.
The other principle, valuation based on
the cost of reproduction, Is subject TO
a f1uctuating and therefore troublesome
factor, the changing value Of the dollar
year to year.
Speaking of the present situation
only, emitting the question what is the
best permanent basis of valuation, the
fact of today is that If the Supreme
Court had adopted the basis of valua-
ton which their critics insisted upon,
in that event the public utility COM
panies would not now be under such
clear compulsion to reduce their rates.
One wonders why the public utility
companies and their lawyers insisted
upon a basis of valuation that has
turned out to their disadvantage. What
they wanted, necessarily, was the
largest valuation. If they took the line
of valuation based on cost of repro
duction, that was because they thought
this basis would give them the largest
valuation. But the changing value Of
the dollar has worked against them.
Utility Lawyers Had Warning.
The public utility lawyers had plenty
of warning. The warning was right in
their own law books if they chose to
look at it. This same issue arose 33
years ago-in connection at that time.
not with public utilities, but with rail-
roads. The issue arose in 1897-but
with the fundamental difference that in
1897 the purchasing value of the dollar
was changing, not upward, as today,
but downward.
AT that time, in 1897, the railroad
lawyers, seeking the principle that
would give them the largest valuation,
asked, not for reproduction value, but
tor actual money invested" value. And
at that time William Jennings Bryan,
galloping into court as volunteer coun-
sci for the State of Nebraska, insisted
that the railroads should be valued on
the basis of cost of reproduction. That
is, Bryan, and all the other Bryans of
that day. took precisely the opposite
position from what has been taken by
the present day organs, our current
La Follettes.
To put it in other words, In 1897 the
position of the railroads and of the rad
icalS was exactly reversed from what it
has been recently.
All of which is sufficient to show that
railroads and public utilities try to get
what they think is their best interest,
which Is the largest valuation. And the
radicals and politicians, the organs of
every era, try to get what they think
Is their best interest, which is to achieve
the thing that they think will give
ing value of the dollar fools them both
One speculates in vain as to why the
public utility lawyers, with the example
OF the railroads in 1897 before them
insisted upon the theory of cost of re-
production" value. One can only as
sumo that the public utility lawyers
and the heads of public utilities must
nave been making, during the past 10
years or so, the same mistake in reason
ing that a lot of people made. A great
many persons, including some profound
political economists, including also some
very distinguished bankers, have been
thinking, during some 10 years past,
that the purchasing power of the dollar
could never go upward again. Some of
the bankers who thought that nsve
been having an unhappy time dur+.g
the past few months. Thinking that
the purchasing value of the dollar could
never go upward again and thinking,
Ior tnat reason, that the prices of goods
ana commodities must always go up
ward mas been, during the past year or
so, extremely costly to good many
people.
Looking to the future, what seems
likely to happen is that the price of
commodities is the same thing
as the purchasing value of the dollar
VIII stabilize very shortly about where
IL now is. Thereafter there should be,
Tor about 10 years ct least, hardly any
change to speak of. During that 10
years the type of political issue that
arises out Of changes in purchasing
power of the dollar should be happiiy
absent. The present spaSm of demand
for public ownership should be the last
for some time. g