Valuation Act

File:Atlantic Coast Line Railroad, Valuation Section 1C-Alabama - DPLA - ee10ab58b425879ba74c5af6b700954a (page 18).jpg, a long-since abandoned rail line]]

File:Atlantic Coast Line Railroad, Valuation Section 2-Florida - DPLA - 3dd185610f3376cb74db9b7f7fa36e71 (page 3).jpg

The Valuation Act is a 1913 United States federal law that required the Interstate Commerce Commission (ICC) to assess the value of railroad property.United States. Valuation Act, 62nd Congress, ch. 92, {{USStat|37|701}}, enacted 1913-03-01. This information would be used to set rates for the transport of freight.

Background

The act was the brainchild of ICC commissioners Charles A. Prouty and Franklin K. Lane.{{cite journal |author= |title=Director of Valuation Prouty Claimed by Death |url=https://books.google.com/books?id=vyU-AQAAMAAJ&pg=PA93 |journal=Railway Review |location=Chicago |date=1921-07-16 |volume=69 |page=93}} Its objective was the setting of fair rates for freight shipments. It was a classic piece of Progressive Era legislation designed to find a scientific basis for setting tariffs (shipping charges) by determining the correct value of each railroad's real property and assets. Members of Congress assumed that with this information, the ICC would be able to set rates according to the principle of a reasonable rate of return on the real value of each railroad and the industry as a whole.{{cite book |last=Martin |first=Albro |date=1992 |title=Railroads Triumphant: The Growth, Rejection & Rebirth of a Vital American Force |location=New York |publisher=Oxford University Press |page=[https://archive.org/details/railroadstriumph00mart/page/358 358] |isbn=0-19-503853-3 |quote=Except to take up incredible amounts of space on library shelves, the reports of the valuation agency never served any visible purpose. |url-access=registration |url=https://archive.org/details/railroadstriumph00mart/page/358}}

Implementation

The law amended the Interstate Commerce Act of 1887 and required the ICC to organize a Bureau of Valuation in order to undertake the assessments. The ICC formulated a set of procedural and reporting standards for the valuation process, and then permitted the individual railroads to complete the valuation under the nominal supervision of an ICC administration. In 1914 Prouty resigned from his Commissioner post at the ICC to serve as the first Valuation Bureau Chairman.{{cite news |title=Tells of Valuation Work. Basis for All Future Freight Rates, Says Judge Prouty. |url=https://timesmachine.nytimes.com/timesmachine/1914/11/20/100115593.html?pageNumber=15 |date=1914-11-20 |page=15 |newspaper=The New York Times}}

Although the original intent of the Valuation Act was to prepare a one-time assessment of railroad assets, subsequent legislation had the effect of prolonging the process. The Esch-Cummins Act of 1920 expanded the ICC's rate-setting responsibilities, and the agency in turn required updated valuation data from the railroads.Esch–Cummins Act, Pub.L. 66-152, {{USStat|41|456}}. Approved 1920-02-28. The enlarged process led to a major increase in ICC staff, and the valuations continued for almost 20 years.{{cite book |last1=Gailmard |first1=Sean |last2=Patty |first2=John W. |date=2013 |title=Learning While Governing: Expertise and Accountability in the Executive Branch |publisher=University of Chicago Press |page=72 |isbn=978-0226924403}}

Congress passed a minor amendment to the law in 1922.{{USPL|67|233}}. 67th Congress, ch. 210, {{USStat|42|624}}, enacted 1922-06-07.

Aftermath

The valuation process turned out to be of limited use in helping the ICC set rates fairly.{{cite book |title=The Best Transportation System in the World: Railroads, Trucks, Airlines, and American Public Policy in the Twentieth Century |last1=Rose |first1=Mark H. |last2=Seely |first2=Bruce E. |last3=Barrett |first3=Paul F. |year=2006 |publisher=Ohio State University Press |isbn=978-0-8142-1036-9 |pages=7–8}}{{cite journal |last=Miranti, Jr. |first=Paul J. |date=1990 |title=Measurement and Organizational Effectiveness: The ICC and Accounting-Based Regulation, 1887-1940 |url=http://www.thebhc.org/sites/default/files/beh/BEHprint/v019/p0183-p0192.pdf |journal=Business and Economic History |series=Second Series |location=Wilmington, DE |publisher=The Business History Conference |volume=19 |pages=183–192 |issn= 0894-6825}}