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.