Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-11

l IlSI. fOT ILllS IedSOIl tAAC SOAoAoN~ASS
about the court is going to play large
part in the presidential situation in
| 1882 Any controversy about the SUI
preme Court Is sufficiently important
itself; when coupled with presidential
situation it becomes major politics de-
cidedly Indeed, add nothing to cur
rent knowledge when say this conflict
about the Supreme Court is major
politics. It is a question involving
national policy on an exalted plane.
The heart of the Supreme Court con-
| troversy is public utilities, and every
body knows that public utilities-m.
GLIDING especially electricity generated
from Waterpower, valuation and rates
compose present political issue, both
nationally and in many local ramlflca-
lions. The principal element in 1t Is
a line of decisions handed down by the
| Supreme Court, having to do with the
| valuation to be placed upon public
utilities.
This controversy about the Supreme
Court is made interesting and also acute
by the relation of President Hoover to
| it The court contains several justices
who are much older than the age at
which they may retire. It is common
to say that MIR. Hoover, If he should be
President for eight years, may be called
upon to name as many as seven OF the
nine members of the court. Already,
within q little more than a year after
his Inauguration, he has had occasion
to name two.
Decision ON Utilities.
Stated very briefly and very roughly,
the Supreme Court as constituted dur
ing four or five years past has handed
down line Of decisions about the valu-
alton of public utilities and railroads.
These valuations, in turn, determine or
largely influence the rates which the
public utilities may charge the public
for service. In these decisions, six
members Of the court, including the
late Chief Justice Taft, have usually
taken one line; three dissenting justices
Holmes, Brandeis and Stone-have
usually taken another line.
The difference between the two lines
of thought is very great-so great that
1t ought to be easy to put into words.
Actually, however, it is far from easy,
because the question involved is ex-
tremely complex. In undertaking to pic
| ture for non-legal readers, the differ
ence between the two lines of thought,
one Is obliged to begin with apology
in the nature Of estoppel against criti-
cism from lawyers. What is here said
about the decisions of the Supreme
Court must be expressed only in gen.
eral phrases conveying broad meanings
| The legal refinements, the technical
terms which provide the occasion of
tens Of thousands of words of dissent
between the two groups of justices, can
not be explained in an article of linn
tied length designed for popular, nom
legal readers.
Speaking broadly, the controversy is
between two theories or principles of
valuation. One. which is sustained in
the court by majority of six. is called
| present reproduction coSt"-that is,
what 1t would cost to reproduce the
property today. The other theory, held
by the three dissenting justices, Is
called prudent investment cost"-that
Is, acutal cost at the time the prop
erty was created.
Illustration Of Difference.
The distinction may be illustrated by
questions involving valuation come be-
fore the court. In Indiana or New
York or Maryland or elsewhere body
OF State officials DEGREES that the rate
to be charged the public for service by
| q public utility-a gas company or an
| electric company or a telephone COM
pany or street railway connpany-Shall
be certain sum. As an example, the
State officials decree that street rail-
cents and no more.
Thereupon the public utility says, in
effect: THAT rate is too small; it does
not give us sufficient profit on the
value Of our property" The public
utility goes into court. Ultimately the
case comes to Washington, before the
Supreme Court. The Supreme Court Is
valuation of the public utility's prop
erty. In passing upon what is fair
| valuation for one public utility the
court must lay down and follow certain
principles governing the valuation to
be put upon all public utilities, every
| where.
The majority of six in the court holds
Il speak broadly, emitting important
qualifications which the court itself is
careful to use-'"The value of prop
erty is what it would cost to reproduce
it now, as of today" This is the pres
ent reproduction cost" theory Of valua-
ton. The three dissenting justices, on
the other hand-Holmes. Brandeis and
| Stone-hold, in effect: 1.-The value OF a.
property is the amount of money the
company actually paid out to build it,
assuming they spent the money pru-
IDENTIFY" This is the prudent invest
ment cost" theory Of valuation.
Not a Stark Contrast.
Perhaps I should say that the dis
tinction between the position OF the
two groups of justices is not stark
contrast between these two theories. 1t
might be expressed more accurately by
saying that the majority lays most en-
phasis on present reproduction cost,
while the dissenting three lay most en-
phasis on prudent investment cost"
Also, there is not space here to re-
| cite any of the arguments in behalf
| of the respective theories, arguments
which already have filled hundreds OF
pages of law books and Of the Con-
gressional Record and of newspapers
| and will fill more. 1t is sufficient to
point out that both theories have many
strong and sincere adherents, mighty
| placed
Between two positions, held respec-
| lively by a majority of six justices and
a minority of three. there can hardly be
question of superiority. Two deaths
| and two appointments Of new justices
could transfer the sanctity of majority
from the present six to the present
three.
In any event, between these two
phrases of three words each, political
battle Is going to rage. They will be-
come in a little while slogans. symbols.
They or other slogans arising from them
win become as potent to cause mems
wattles to redden and their back hair
to raise, as was "Sixteen-to-One" in
1896 or free silver" or "greenback" or
other politically provocative phrases of
generation ago.
Issue In New York.
Over these two theories of valuation
AA -