ETHICAL PRINCIPLE IN PHYSICAL VALUATION 153 



THE ETHICAL PEINCIPLE IX PHYSICAL VALUATION FOE 



EATE MAKING 



By E. W. JAMES 



OFFICE OP PUBLIC EOADS, U. S. DEPAETMKNT OF AGEICULTURB 



THE history of the control of public service corporations in this 

 country is very short, but its interest is great enough to warrant 

 even now a historical monograph of considerable length. Though the 

 movement toward governmental control is new, it has been rapid. It 

 culminated about a year ago in the passage of a law authorizing the 

 Interstate Commerce Commission to make a valuation of railroads under 

 its jurisdiction. Physical valuations have been provided for in "Wis- 

 consin, Nebraska, Washington, Massachusetts and other states. In gen- 

 eral, the state valuation laws, as, for instance, that in Nebraska, provide 

 for the valuation of practically all public service corporations. When 

 we consider the history of corporations in the United States, the 

 adoption of this policy with a view to control of public utilities appears 

 logical enough, and opens a new field of discussion. Some parts of our 

 railroads are eighty years old. Many were built under unusual condi- 

 tions. The early days of many public service corporations display a 

 tangle of promotion, corruption, lease, combination, purchase and re- 

 organization. Original records in many cases are lost. As a result, the 

 discussion of physical valuation has been largely confined to considera- 

 tion of the ultimate, technical details of some practicable method, to the 

 neglect of important underlying principles. Valuation has been usually 

 argued from the point of view of the material interests of the disputants. 

 It has been only within the past two or three years that really serious 

 conclusions have been arrived at ; and the discussion since the passage of 

 the Physical Valuation Act affecting the Interstate Commerce Commis- 

 sion has alone provided some basis for a formulated set of principles 

 around which interest now centers, A small vocabulary of technical 

 terms has developed in the course of the debate as to principles and 

 methods. 



There is an aspect of valuation that has not received the emphasis it 

 deserves. A study of the economic and social phases of the subject may 

 be made much more illuminating than it has been. It appears that such 

 a study would provide a solvent for several of the problems now in dis- 

 pute among writers of undoubted ability and experience. In the first 

 place, the public attention has not been directed toward corporation con- 

 trol because it had nothing else to busy itself with. The movement 

 toward physical valuation is not an erratic one. The public's point of 



VOL. LXXXVI. — 11. 



