APPROVE LA FOLLETTE VALUATION PLAN
Approve La Follette Valuation Plan THE Interstate Commerce Commission in the case of the St. Louis & O'Falion Railway Company has denied the excessive claims of the railroads for a valuation based...
...The Interstate Commerce Commission in its majority decision frankly admits the soundness of the prudent investment theory, but states that inasmuch as the records of the railroads during the early years are incomplete and do not show the original cost of construction, it is impossible to determine accurately the amount of the actual prudent investment...
...Louis & O'Falion Railway Company has denied the excessive claims of the railroads for a valuation based upon the present cost of reproduction with allowances for jjoing value and other equally unreal elements of value...
...The people and their representatives in Congress should let it be known that they stand solidly behind the Commission in this epoch-making decision...
...As Judge Peter Grosscup said many years ago, "The Supreme Court has windows through which it may see what is happening outside...
...Robert M. La Follette and his followers consistently contended for what is known avs the prudent investment theory of valuation...
...The decision is thus subject to severe criticism in the public interest...
...The importance of this decision to the great masses of the American people is enormous...
...It would sanction an increase in rates for railroads, street cars, gas and electric companies and other public utilities of $1,800,000,-000 a year...
...Congress should also re-enforce the Commission's position by enacting into law the theory of valuation which it has proclaimed...
...And yet it is so much better than it was feared it might be in view of recent court decisions that it must be hailed as a victory and a cause for rejoicing by all progressive citizens...
...Such'rate increases obviously would complete the destruction of American agriculture, seriously threaten the existence of every kind of business and commerce, and impose an intolerable burden upon the domestic consumers of the towns and cities...
...This is unduly generous to the railroads, as Commissioner Eastman points out...
...To this they add the actual cost of all property acquired by the roads since 1914 in order to bring the value down to date...
...Outside of the personnel of the Commission itself, the principal credit for this victory should go to the National Conference on Railroad Valuation, which was organized in May, 1923, under the leadership of the late Senator La Follette...
...It also makes no deductions for the hundi-eds of millions of dollars given to the roads by the American people in the form of public lands, and all the gifts, grants and aids that were showered upon the roads during the early days when states and cities were competing for the favorable _ location of the railroads...
...This is the Indianapolis Water Works case recently handed down by Justice Pierce 'Butler, who was the paid attorney of the railroads and other public utilities up to the time he was appointed to the Supreme Court...
...The figures involved are so great that they stagger the imagination...
...This is a-sum greater by ten billions of dollars than the entire national debt of the United States...
...Through its General Counsel, Donald R. Ricbberg of Chicago, it intervened in several of the pending cases...
...That is, they declared that the railroad owners should be credited with every cent they had actually and prudently invested in the railroads, but not one penny more...
...The railroad executives admit that such rates are far more than the traffic could bear and in the long run would actually be ruinous to the railroads themselves...
...Richberg as General Counsel for the Conference presented the principal briefs and arguments sustaining the position which the majority of the Commission has now adopted...
...It is equivalent to a perpetual burden of debt of $1,500 for every American family...
...This decision will, of course, be carried to the Supreme Court by the railroads...
...W. W. case/ jbot only because those are the initials of the company, but because if that decision is applied to all the railroads and other public utilities it will make more I. W. W.'s than all the agitators that ever lived...
...One of the shrewdest lawyers in the country said recently "That it Should be known as the 'I...
...The great public importance of this decision of the majority of the Interstate Commerce Commission lies in the fact that the Supreme Court of the United States in a recent decision applying to a local public utility has recently given its sanction to the valuation of such utilities on the basis of what it would cost to reproduce them at present prices...
...This constitutes a substantial victory for the theories of valuation advocated by the late Senator Robert M. La Follete...
...It, therefore, behooves the public, including particularly the farmers, shippers and wage earners, as well as the Governors of those states which are peculiarly interested in transportation rates, to join hands in support of the Commission's decision...
...This, they declared, was just and equitable not only for the railroad investors, but also for every one that uses the roads either as a shipper or a traveler...
...Thus years after the death of Senator La Follette we who survive are enjoying the fruits of his labors...
...They have therefore estimated the cost of reproducing the road at pre-war prices as of 1914, which they declare is in their opinion approximately equal to original construction costs...
...It values the railroad lands as of 1914 and thus gives them all the unearned increment that has accrued since they were originally acquired...
...Louis & O'Falion case, which has just been decided, Mr...
...BASIL M. MANLY...
...In the St...
...Commissioner Eastman in his separate concurring opinion declares that "in the case of privately owned railroads and utilities the current cost of reproduction doctrine would probably increase the public burden by upwards of $30,000,000,000...
...It is equal to the entire cost of American participation in the World War...
...This Conference, which was held in the City Hall at Chicago, was attended by a large number of Governors, Mayors, Senators and Congressmen, as well as representatives of farm and labor organizations...
...The Conference challenged the theories and methods of valuation then being applied by the Interstate Commerce Commission and demanded that the Commission obey the Valuation Act of 1913 and secure the original cost of the railroads...
Vol. 19 • April 1927 • No. 4
