LA FOLLETTE'S COMMENT
Follette, Robert M. La Jr.
La Toilette's Comment Baltimore Decision By Supreme Court and Its Implications to the Public — Gov. Roosevelt Praised for Program on Water Power. By Robert M. La Follette Jr. SUPREME COURT BOOSTS...
...It will be a declaration by congress that it favors the the- | ory of investment as a base for rate-making purposes...
...Howell's resolution will give legislative sanction to the valuation methods used by the commission in the O'Fallon case...
...The only hope for the protection of the public interest in this great economic conflict, in so far as the railreads are concerned, is for congress to act promptly by declaring the basis which it believes the interstate commerce commission should follow in the valuation of the railroads...
...The fact that members of the supreme court again and again have taken diametrically opposite views on these great economic questions of paramount importance, justifies doubt is to the soundness of the conclusions of the majority...
...Lawrence river shall "remain forever in the actual possession of the state...
...The majority opinion opens the way for the utilities to claim a rate of return which would be the end of governmental regulation...
...The people are aroused...
...Justice Brandcis in his dissenting opinion, concurred in by Justices Holmes and Stone, points out: "A net return of 6.26 per cent upon the present (inflated) value of the property of a street railway company enjoying a monopoly in one of the oldest, largest and richest cities on the Atlantic seaboard would seem to be compensatory...
...If after congress has out-i lined its policy the supreme court declares that rule to be confiscatory, j then there remains the alternative of government ownership as a means of i restraining the extortions of private monopoly...
...They see the significance of the issue created by the power monopoly...
...SUPREME COURT BOOSTS UTILITY VALUATIONS IN previous issues of The Progressive I have stressed the necessity for prompt attention by congress to the problem of public utility regula-I tion and especially to the question raised by the supreme court decision relating to railway valuation in the O'Fallon case...
...It is tremendously encouraging to find the governor of a great eastern state such as New York leading a courageous fight for public competition with the power monopoly...
...Roosevelt, but the legislature has refused to respond to the popular will, and has blocked tbc efforts of New York's governors to carry out their pledges to the people upon the power issue., In view of the recent decisions of the supreme court it becomes increasingly evident that the only protection for the people from domination and extortion by the power monopoly lies in public competition...
...He took further advanced ground by advocating that the state finance and operate statewide systems of transmission lines for the distribution of this power...
...It is true that the supreme court would have to pass upon the valuation made by the commission, but the court has placed a responsibility upon congress when it declared that the commission had not followed the intent of the legislative branch of the government...
...Roosevelt will have the support of the people of New York and of many other states in the magnificent work which he is doing to protect the citizens of the Empire state from the greed of the power trust...
...It is clear that the public cannot look to the supreme court for the protection of its rights...
...This ruling of the commission was a victory for the public in establishing the principle that the people should not be made to pay transportation charges on watered stocks and otherwise inflated valuations...
...Smith and Gov...
...The interstate commerce commission, although taking account of other factors, had given most weight to actual investment in fixing the valuation of the O'Fallon railway...
...What the finding .of the majority of the supreme court, if unchallenged, means to the public will be realized when it is remembered that the interstate commerce commission declared a few yeaxs ago that if the reproduction theory of valuation were applied to the railroads of the country that it would add nearly $30,000,000,000 to the value upon which the people would have to pay a rate of return...
...Moreover, the estimated return is in fact much larger, if the rules which I deem applicable are followed...
...Lawrence power, but advocated development by the state of its power and control at the switchboard, the current to be distributed by the employment of private capital, j Gov...
...The street car companies, public utilities, telephone and telegraph lines and the rail-| roads may secure an additional return which would add a burden of staggering proportions to the load already being carried by the public...
...ROOSEVELT FIGHTS THE POWER MONOPOLY /"""•OV...
...The supreme court's decision in the case held that the commission had not followed the rule laid down by congress...
...If this be done there will no longer be need for regulation of rates, since the utilities, with the sanction of the supreme court may charge all the traffic will bear...
...ROOSI'.VFI.T in his recent message to the New York legislature reiterated the proposition that the ownership, development and operation of the vast power resources of the St...
...Howell, of Nebraska, has introduced a joint resolution declaring in substance that the interstate commerce commission did follow the correct j principles in valuing the O'Fallon railway...
...The passage of Sen...
...GOV...
...The opinion contends that franchises should be eliminated from the rate base and that depreciation should be calculated on original, not on, reproduction costs...
...Ic is the settled rule of the court," a majority of the justices said, "that the rate base is the present value...
...The Maryland Public Service Commission, which declared that public utilities should be valued for rate making purposes at what it would cost to reproduce them new at prevailing prices of material and labor...
...Smith inaugurated the fight to retain for the people the control of the St...
...The fight is on in Maine, New York, and other eastern states as well as in Wisconsin, and the West...
...Roosevelt is to be commended for carrying on the fight begun by I Gov...
...This leaves an opportunity for congress to clarify the rule which it thirties should be followed...
...Not satisfied with an ipse dixit that boosts utility valuation to high i levels, never before deemed possible, the majority of the court further dc-i clares, ""it is not certain that rates securing a return of 7\'i per cent or even 8 per cent on the value of the property would not be necessary to avoid confiscation...
...Early in January the supreme court,rendered a decision in x\\e case of the United Railways of Baltimore vs...
...The people of the great state of New York have stood behind the program of Gov...
...Smith, and for coming out squarely for the building of state transmission lines for the distribution of the power developed through publicly-owned plants...
Vol. 1 • January 1930 • No. 8
