AUCTIONEERS; ESTATE AND HOUSE AGENTS.) (X.) United States.--The American law conforms substantially to the English as stated above, save that there are no American stamp duties in reference to valuation. There are, however, at least three additional fields in which valuation has assumed con siderable importance in the United States. One is a matter of private law; the other two, of constitutional law. The first is the common legislative attempt to control stock-watering by provid ing that corporate stock shall be issued only in return for full par value in money or property, and giving creditors various civil remedies against directors or against those who receive stock without making adequate return. This raises immediately the question of valuation of property exchanged for stock. In substan tial effect these statutes have proved inadequate to their purposes. They leave no legitimate machinery for promoters to procure the profits which the courts themselves view as proper and necessary; hence there is persistent pressure to devise means of evasion. And the courts show a distinct tendency to support valuations of the property arrived at "in good faith," which in practice regularly means some substantial addition to provable tangible assets, by way of the anticipated profits from their use. And transfer of the stock to a bona fide purchaser is held to wipe out the creditors' claims against the stock. Furthermore, the introduction of no par stock makes possible in many States to-day the complete dis regard of the older regulations. The second field is valuation for purposes of taxation. Here the common practice is for the asses sors to undervalue realty, so that tax valuation of realty is not admissible as evidence of value in a suit for any other purpose. And such undervaluation becomes a constitutional right of the tax-payer, in so far as he is entitled not to have his holdings valued at their true worth, if other holdings of like character are under valued by the assessors. A more difficult problem is met in the apportionment of the intangible going value of an interstate enter prise, for taxation by the several States in which the enterprise is operated. In the field of communication and transportation agencies, which have been chiefly concerned, the courts have in general worked out the permissible divisions by taking the total tax base of the enterprise (e.g., gross income or value of out
standing securities, etc.) and permitting any one State to reach its due proportion as calculated by the ratio of tangible assets (e.g., miles of track) or traffic (ton-miles, car-miles, etc.) inside the State to total tangible assets or total traffic. The more recent cases show a definite trend toward nicer approximation to meas urement of business actually done in the taxing State. In the case of interstate business enterprises, the combined effects of the interstate commerce clause and of interlocking corporate struc ture produce a technical chaos incapable of brief exposition. The third field is valuation for purposes of determining the rates chargeable by public utilities. On the one hand, such utilities as gas, railroad, water and telephone companies are subject to rate regulation by the government to prevent excessive charges. On the other, they are private property, in the sense that rates may not be put so low as to be confiscatory. "A fair return on fair value" is the legal formula applied. It is clear, however, that value itself, in the market, depends wholly on the return from the assets, so that reference to market value to determine the "fair value" on which a fair return is to be allowed involves reasoning in a circle. This the courts have never expressly recognized, but in their actual decisions they have introduced other more stable factors by requiring any rate-regulating commission to "consider" certain phases of cost in determining the fair value. The empha sis has been strong on the reproduction cost of plant and equip ment. Originally, this seems to have been influenced by a desire to avoid the padded original costs of early corporate exploitation; more recently, it is a reflection of rising costs of reproduction. The valuers, in the first instance, are of course the railroad or public utility commissions of the States. It is clear that market value is by no means always the measure of value which is sought in legal valuation. (K. N. L.)