The (Rail)Road to Lochner: Reproduction Cost and the Gilded Age Controversy on Rate Regulation

30 Pages Posted: 26 Apr 2015 Last revised: 27 Apr 2015

See all articles by Nicola Giocoli

Nicola Giocoli

University of Pisa - Department of Law

Date Written: April 25, 2015

Abstract

The controversy over railroad rates regulation represented a fundamental component of the jurisprudential trajectory that, culminating in Lochner v. New York, led to the era of so-called laissez faire constitutionalism. Constitutional protection of property required that regulation be such as to preserve the value of the regulated business. The paper builds on Siegel 1984 to argue that, by indicating in Smyth v. Ames (1898) reproduction cost as the correct technique to calculate the value of a railways, the Supreme Court retained its allegiance to the fundamental tenets of classical political economy even in a period of massive economic transformations, when classical economics was increasingly viewed as unable to capture the new reality of American industrial life.

Keywords: reproduction cost, historic cost, business valuation, railways economics, Lochner, laissez faire constitutionalism, regulation, Gilded Age

JEL Classification: B13, K23, L51, M21

Suggested Citation

Giocoli, Nicola, The (Rail)Road to Lochner: Reproduction Cost and the Gilded Age Controversy on Rate Regulation (April 25, 2015). Available at SSRN: https://ssrn.com/abstract=2599032 or http://dx.doi.org/10.2139/ssrn.2599032

Nicola Giocoli (Contact Author)

University of Pisa - Department of Law ( email )

via Collegio Ricci 10
Pisa PI, 56126
Italy

HOME PAGE: http://https://pisa.academia.edu/NicolaGiocoli

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