The controversy over railroad rates regulation was a fundamental component of the jurisprudential trajectory that culminated in Lochner v. New York (1905) and the so-called laissez-faire era of U.S. constitutional law. Constitutional protection of property required that regulation preserve the value of the regulated business. This article builds on Siegel (1984) to argue that, by selecting, as in Smyth v. Ames (1898), reproduction cost as the correct technique to calculate the value of a railway, the US Supreme Court retained its allegiance to the fundamental tenets of classical political economy even in a period of massive economic transformation, when classical analysis was widely deemed unable to account for the new reality of US industrial life.

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