The Federal Valuation of Utilities

• Author: Charles A. Prouty
• DOI: 10.1177/000271621606300115
• Published date: 01 January 1916
• Date: 01 January 1916
• Subject Matter: Articles

173

THE

FEDERAL

VALUATION

OF

UTILITIES

BY

CHARLES

A.

PROUTY,

Director

of

Valuation,

Interstate

Commerce

Commission.

It

has

been

objected

that

the

valuation

of

our

railways

now

being

made

by

the

Interstate

Commerce

Commission

will

not

be

worth

its

cost.

But

this

is

not

a

question

of

expense.

While

the

cost

will

not

in

fact

be

excessive,

having

relation

to

the

interests

involved,

the

thing

must

be

done

sooner

or

later

and

the

sooner

the

better.

The

United

States

is

today

trying

an

experiment

which

has

never

been

worked

out

to

a

conclusion

in

the

past.

The

revenues

of

our

railroads

for

the

last

fiscal

year

exceeded

$3,000,000,000.

The

property

which

produced

this

enormous

income

is

private.

This

private

property

the

government,

state

and

national,

finds

it

necessary

to &dquo;regulate&dquo;

and

in

this

process

of

regulation

it

is

doing

or

preparing

to

do,

among

other

things,

the

following:

To

determine

the

amount

of

securities

which

shall

be

issued;

To

fix

the

standards

by

which

the

roadway

and

equipment

shall

be

constructed

and

maintained;

To

prescribe

the

schedules

upon

which

trains

shall

be

run

and

the

train

crews

which

shall

be

used

in

the

operation

of

those

trains;

To

determine

the

charge

which

may

be

made

for

every

service

rendered

by

the

common

carrier.

I

have,

for

one,

long

believed

that

the

government

must

possess

and

exercise

when

necessary

all

the

above

authority.

In

no

other

way

can

society

protect

itself.

And

if

these

powers

are

wisely

exercised

there

still

remains

a

broad

and

satisfactory

field

for

the

scope

of

private

enterprise,

but

it

must

be

obvious

that

such

author-

ity

may

be

pushed

to

a

point

where

little

opportunity

for

initiative

or

direction

is

left

to

the

owner

of

this

capital.

Upon

the

unreasonable

exercise

of

the

regulating

power

there

are

two

limitations.

The

first is

economic.

The

billions

which

are

already

invested

in

these

properties

were

put

there,

for

the

most

part,

because

the

investor

believed that

his

investment

would

be

safe

and

his

return