Relying upon these cases, the Burlington's full position is that it is immaterial how the property was acquired, what it originally cost, whether the present value may be claimed to be in part the result of earnings put back into the property in betterments, or is due to growth of traffic and development of the country served. "The sole inquiry open at this time is the actual fair value of the railroad as it exists to-day as a going concern. The company cannot be lawfully required to' take less than a fair and reasonable return upon this value. To be denied such return will be to appropriate in part a value that belongs to the owners for the use and benefit of the public without just compensation therefore being first paid or secured." [Cases cited.]

Notwithstanding these decisions, it remains for the Supreme Court yet to decide that a public agency, such as a railroad created by public authority, vested with governmental authority, may continuously increase its rates in proportion to the increase in its value, either (1) because of betterments which it has made out of income, or (2) because of the growth of the property in value due to the increase in value of the land which the company owns.

If the position of the Burlington is sound and is a precise expression of what our courts will hold to be the law, then, as we are told, there is certainly the danger that we may never expect railroad rates to be lower than they are at present. On the contrary, there is the unwelcome promise made in this case that they will continuously advance. In the face of such an economic philosophy if stable and equitable rates are to be maintained, the suggestion has been made that it would be wise for the Government to protect its people by taking to itself these properties at present value rather than await the day, perhaps 30 or 50 years hence, when they will have multiplied in value ten or twenty fold.

The books of the Burlington road now show some $76,000,-000 in surplus, which is the accumulation from operating revenues of many years. This surplus is not all held in the form of cash, but has in part been put into the property in one form or another of additions and betterments. The stockholders, it is said, have chosen to waive their right to distribute this to themselves in the form of dividends and have reinvested it in the property. Without questioning the right of the stockholders to exercise this option, and without denying to them the right to a return upon any investment which they make, this much seems clear: That if the investment in a railroad at a given time is $100,000,000, upon which it yields a net revenue of $25,000,000, the stockholders may take that $25,000,000 entirely to themselves. But if they choose to take but one-half of this amount as their return upon their investment and to reincorporate in the same property the remaining half of the net earnings, they may not for this reason increase rates during the succeeding year so as to give them a return upon $112,500,000. It is idle to spend time in nice processes of reasoning over such a condition of fact. Public policy - the welfare of the State - forbids the adoption of any such working theory. Because of the addition of the $12,500,000 a carrier may be entitled to an additional return upon the property, but is it entitled to increase rates so as to make that return ? If the stockholders, as in the last sense trustees for the public, exercise their right to reinvest the company's money in the improvement of the property, the company may be entitled to an earning upon the value of that property without it in any way following that the rates out of which this surplus was accumulated shall still further be increased so as to provide that additional income.

Any new money put into the property, whether derived from the sale of securities or from surplus, which might have been appropriated to dividends, represents new value - an addition to the property - and on this addition the stockholders interested are entitled to a reasonable return if that can be had for an additional service given, but it is not equitable that because the directors of a corporation see fit to distribute to the stockholders less than the amount which the company earns and may be appropriated to dividends, the shippers who made this large dividend and surplus possible shall be increasingly taxed in geometrical progression to make return upon it. New improvements should bring new revenue. The risk of the stockholders in investing their money in these improvements is the same risk that they took when they invested their original funds in the original property. (San Diego Land & Town Co. v. National City, 78 Fed. Rep. 87). . . .

The shippers . . . cannot be compelled to continuously pay higher rates because the directors of the company have not seen fit to distribute their full earnings in dividends. . . . [Otherwise] it is within the power of a board of directors to indefinitely increase the shipper's rates, for all that is needed is that the railroad in one year make an exceedingly large return and after paying a dividend issue stock to the stockholders equivalent to the balance of the unappropriated operating revenue available for dividends, and this money, being invested in the property, creates more value which the shipper must care for. [Other examples here discussed.] . . .

The Supreme Court in the Tift case (supra) held that a railroad could not increase lumber rates because it was buying new equipment out of current earnings, although by so doing it was adding to the value of its property, and doubtless increasing the facility of movement of the lumber traffic. This principle makes against the contention of the Burlington directly, and we see no reason why it may not be accepted as settled law.

The record does not show nor does the Burlington contend that its stockholders have not in the past been remunerated adequately upon the basis of their then-owned property. Its position is that the property having grown in value with the growth of the West and the increase in traffic, it may advance rates up to the point that the shipper can afford to pay and under which the traffic will move.

We are not here dealing with the value of this property, nor with the definition of value, whether value means investment, cost of reproduction, or something else. Our position is that a railroad may not increase rates upon shippers for the reason and as an outgrowth of the fact that it has accumulated out of rates a balance of profit which has been invested in the property. This investment must take care of itself. It must bring a return for itself either in increased traffic or in the reduction of expenses of operation. There is no justification for the investment of this surplus if it is to have the effect of increasing the rates upon the shippers over the original line. If the theory is to be recognized that by increasing the value of their property, by putting back operating revenue into the property, a carrier may as a legal right increase rates, then the shipper is worse off each time he pays a rate which allows a revenue over and above a reasonable return upon the original investment.