Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-11
POLITICAL RESULT is SEEN
i'm SUPREME COURT FIGHT
Issue Based on Utilities Rulings May
Be Significant In Next Presi-
dental Election.

SSue. over the issues lnVOlVeo III tncoS
two theories, millions Of voters VIII get
as excited as men 80 years ago we're
about the railroad issues or the trust
issue. Over these two phrases, Senators
some of them, like Norris OF Ne
braska, occasionally described as "livid
with rage"-will argue or rant or both,
every time a new appointment Is mace
to the Supreme Court.
It seems safe to say already, based on
the experience with Chief Justice
Hughes, that the Senate as now con-
stituted, will never confirm the ap-
pointment of a justice Of the Supreme
Court who is known to hold the pres
ent reproduction cost" theory Of valua-
ton
Meantime a few folks-a very few,
indeed-will prefer to keep themselves
uninfected by the pervading excite
ment. For such, the remainder of this
article is written.
This political issue and these theories
of valuation are merely one phase Of a
thing that is very old. indeed, and very
productive of political commotion-
the changing value of the dollar.
Dollar Value Changes.
Everybody who is as much as IS
years old knows by experience, and
every fairly well read person knows as
matter of history, that the dollar
varies in value from time to time. To
achieve simplicity, at the expense of
exactness, let us say that sometimes
other times 1t Is worth only so cents.
For convenience, let us say that some
times there are big dollars" some
times "little dollars" For example, In
1914, when the Great War broke out,
the dollar was worth hundred cents
big dollars; by 1917 it had fallen
to so cents or less-"little dollars"
Since about 1919 the dollar has txssn
crawling slowly upward In the difEc-
ton Of hundred cents again.
And all this row about valuation is
an incident and effect of the changing
size Of the dollar-with vice and virtue
changing their respective positions. It
is an interesting and ironic story, If
one has the patience to follow 1t. And
1t Is worth following, because under
standing OF the changing value of the
dollar is the beginning Of wisdom, both
political and economic.
During the COS and los the dollar
was worth so cents. With these So
cent dollars at that time the railroad
companies built hundreds of thousands
OF miles Of transcontinental and other
lines. For convenience sake, let us say
that the railroads were built during the
COS and 70s at an expense per mile of
$10,000-that is, 10000 50-cent dollars
$4,000 mile Is taken as a convenient
unit; actually, railroads at all times
cost more than $4,000 mile).
Nebraska Appraisal.
BY about 1897 the dollar was up to
q hundred cents again. In that year
the State of Nebraska undertook to set
an official valuation upon the railroads
within the State-as an incident of FIX
ing rates which it should be fair for
the railroads to charge.
The reader must now understand
and II he understands this he will I'M
derstand the whole problem--that
railroad which was built originally in
1870 with 10000 50-cent dollars could
be reproduced In 1897 with 5000 100
cent dollars.
Out of this situation arose the origin
OF the present controversy and law
suit which every lawyer knows as Smyth
VS.. Ames-Smyth being the attorney
general OF Nebraska. Into this lawsuit
and into the controversy galloped VIII
liam Jennings Bryan, then beginning
his career as an outstanding antagonist
OF railroads, public utilities and other
corporations. Bryan asked and secured
permission to act as q lawyer in the
proceedings, representing the people of
Nebraska.
In this lawsuit the railroads said, in
effect: I'VE want to be valued at the
number Of dollars We actually paid to
lay the track, namely, $4,000" That
is, the railroads.&c. that time-wanted
prudent investment cost" Bryan and
the State of Nebraska said, in effect:
Not so; you must be valued at as many
dollars as 1t will cost to build the track
now, namely, $1,000" That Is, Bryan
and all the liberals and radicals wanted
at that time present reproduction cost"
What Bryan Wanted.
In other words, Bryan wanted the
theory which would at that time, in a
period Of big dollars" give the rail-
roads the smallest valuation. The rail-
roads wanted the theory that would
give the railroads the largest valuation.
Each took the position that was at
that time Self-intereSt. The railroads
took the prudent investment cost
theory because that, in time of 'big
dollars" would enable them to charge
the higher rates. In exactly the same
La Toilette and all the other radicals
and liberals, took the present repro
auction cost" theory because that, at
that time, would give the railroads the
lowest valuation and rates-and would
give Bryan favor with the populace.
which was to Bryan the same thing
that money was to the railroads.
Bryan and the State Of Nebraska
won. For once Bryan and the radicals
and liberals and other volunteer friends
OF man had no cause to complain of
the Supreme Court. The court adopted
the present reproduction cost" theory
OF valuation. And it is that decision,
That precedent, Smyth VS.. Ames, that
Is determining the position of the ma
Jort1y OF the Supreme Court today. The
court, as expressed by Its majority, is
right where 1t was in 1897.
Position Reversed.
But-most ironically-in the mean
time the dollar has taken q nose-diye.
the big dollar" of 1897 has become the
little dollar" of the 20s. And by that
change the position of the interested
parties has been reversed. To each of
them self-interest is now on the other
side of the question.
Today, under little dollar" condi-
tons. the prudent investment cost"
theory-which the railroads ardently
wanted in 1897-would now give them
Consequently the railroads and public
utilities now reverse their position; now
they take the position that Bryan took
In 1897; now they want the present
reproduction cost" theory. Conversely,
the present-day organs are now fight
ing for the position that the railroads
held in 1897. Vice and virtue have now
changed places. ct should be added
that the phrase "present-day organs"
should not be taken invidiously. MANY
OF the most thoughtful-and even some
Of the most OBSERVATION-DISCLOSURES of the
country believe that prudent invest
ment cost" is the better theory for
permanent adoption.)
Neither Sees Irony.