THE ROLL CALL

"The More It Is Studied, The Greater It Appears" THE NEW YORK GLOBE on March 12 printed the following from its Washington correspondent: "The Interstate Commerce Commission has come to the...

...It will show the exact amount received from the sale of stocks and bonds, and if the bonds have been sold at a discount, the price realized, and all the expenses of brokerage it will show the amount paid in by stockholders...
...OTHER VALUES AND ELEMENTS OF VALUE—THAT IS, INTANGIBLE VALUES "This classification provides for going value, good-will value, and franchise value...
...The commissioners are pleased with the law, because, while it tells very specifically what they must ascertain, it leaves to their discretion the manner of procedure...
...No decision by commission or court will stand which is ultimately found to be unfair to the public or to the common earrier...
...It will require several years to do the work, and it is estimated by officials of the Commission that three to five millions of dollars will represent the cost A big organization, including expert engineers, statisticians, economists and writers will have to be formed, in addition to which a force of hundreds of field workers, clerks, etc., will be needed...
...It also informed them as to the overhead cost, such as engineering, legal, and general expenses, and other kindred items...
...If stocks or bonds have been issued for property instead of cash, the value of the acquired property will be ascertained...
...They are explained in the report to the Senate by Senator La Follette from the Committee on Interstate Commerce, part of which follows: "The courts from the first have used various That is what a New York newspaper says of the new Physical Valuation Law which the Interstate Commerce Commission is preparing to put into effect...
...There shall be a determination of its original cost, of its present value, and of the present cost of reproduction, with statements of the depreciation that is charged off in reaching present valuation...
...terms descriptive of the values and elements of value to be determined as a basis for ascertaining the fair value of railroad propeiiy...
...Being in possession of the detailed cost of all the modern structures, a most desirable guide was available in fixing the cost of reproduction...
...HENRY L. Gray, engineer of the public service commission of the State of Washington, says: " 'This work (the ascertainment of the original cost to date) was of the maximum value, as it acquainted the engineers not only with the cost of the lines as a whole, but also with the cost of many isolated structures, such, as bridges...
...As to the importance of obtaining the original cost to date, Mr...
...All property held by a carrier, for other purposes than that of transportation, must be reported in detail...
...It could not properly make a mere arithmetical compromise or average between them, but it should work it out on principle...
...The original cost to date will, at every stage of construction, take account of the prices paid at the time for property, material, and labor...
...And it will be for the commission and the courts to determine to what extent such investments will be allowed to be capitalized as against the public for rate making purposes...
...The Commission must decide, first, on the plan of doing the work, and then, determine whether a board or a single individual executive shall be placed in charge...
...The More It Is Studied, The Greater It Appears" THE NEW YORK GLOBE on March 12 printed the following from its Washington correspondent: "The Interstate Commerce Commission has come to the conclusion that it is confronted with the greatest administrative task it has ever undertaken, or perhaps any government body in this country has ever undertaken, in the valuation of the railroads...
...2) Cost of reproduction new...
...At the conference which the Commission held yesterday this matter was not taken up formally, but it is required by the law that the business be set on foot within sixty days...
...The Wisconsin commission recognizes it as important in its investigation of railroads as well as municipal utilities...
...and it must have its historical cost (original cost to date) in order to get a true, fair, or reasonable value...
...And I think that is the reason for using the term "original cost" instead of "actual cost" for the real thing that is meant to be determined is the actual cost at the time of acquisition...
...This is an element of value so generally considered essential by commissions and courts that the wisdom of ascertaining it will not be questioned...
...THE TIME when the Republican party became an "organization of such a character that no honest man can be in it" is easily placed...
...The legislation requires that all the property of every railroad shall be .appraised in detail...
...With this knowledge it was a comparatively easy matter to reduce the cost of the different classes of property to a unit basis, such as the cost of bridges per linear foot, the cost of buildings per square foot of floor area...
...This cost is arrived at by taking the amount of depreciation which has occurred in every part of the property since it was laid down or employed in the public service...
...This is so written that it means in effect a complete financial history of every railroad corporation that ever built any of the railroads now in operation in the country...
...the amount of money paid out for legal services, engineers, architects, designers, management in organizing the corporation, and constructing the road...
...The new law directs the commission to make a valuation of the railroads, telegraphs, telephones, and—as it is understood by the commission—many of the street car systems...
...The construction has been piecemeal and has advanced with the growth of the business...
...Surely is he a "has been" in the truest sense of this expressive slang phrase if he does not see and sense the forward movement of society in the sentiment of that nine-tenths...
...It has just discovered that it must write a complete history of the railroads of the United States in order to comply with the new physical valuation law...
...In short, the original cost to date will show the true investment...
...This requirement is only an incidental feature of a measure which the more it is studied the greater it appears...
...Where we can obtain the actual facts regarding the cost of the existing plan we put much more emphasis upon these figures than upon estimates of engineers.' "Professor John R. Commons, of the University of Wisconsin, and at the present time a member of the Wisconsin Industrial Commission, speaking before the committee of the importance of ascertaining these three items of cost: (1) Original cost to date, (2) cost of reproduction new, and (3) cost of reproduction less depreciation, says: " 'The court or commission must necessarily have these three items...
...Taylor professes to be an authority on political economy...
...So long as Dr...
...Some of these terms they have altogether rejected...
...They are not expanding...
...But if there has been fraud or misrepresentation or monopoly unwarranted and unjust and unfair to the public, that must also be considered...
...buildings, etc...
...Whether any or all of these values will be considered by the commission or the courts in determining the fair value of the property, and, if so, what importance shall attach to them, is a matter for the commission and the courts...
...Taylor has long been annoyed by the enthusiasm of the students for the equal suffrage cause...
...Consequently, the term "original" I think, has come to be pretty well recognized by commissions, by engineers and accountants, as well as those cases which come up to the courts as a basis upon which to ascertain the actual cost...
...I think altogether too much attention has been given to cost of reproduction and too little to investment (original cost to date...
...The gas and electric light commission has recognized it in Massachusetts since its creation, and courts are recognizing it everywhere.' COST OF REPRODUCTION NEW "This will show the exact cost of reconstructing the property in all its parts at existing prices...
...THE ORIGINAL COST TO DATE "Existing railroads have actually been built up through a series of years...
...It is expected that there will be protest from the railroad managers when they realize what is to be done...
...Taylor claims that nine-tenths of the Vassar girls are suffragists...
...The term "original" is equivalent to "actual" as against speculative or hypothetical.' "Professor Edward W. Bemis, late of the Chicago University, and public utility expert who has had the widest practical experience in valuing public utilities, regarding the importance of obtaining the original cost to date, said: " 'That (the original cost to date) is recognized in the courts as one element to be considered...
...It was coincident with the refusal of the grand old party to nominate Theodore Roosevelt for a third term, and straightway only "crooks and thieves" were left, even if the neighbors of most Republicans know them to be honest folks.— Springfield Republican...
...One of the important details is that the property in every state shall be itemized and appraised separately...
...It must have this engineering cost of reproduction...
...It is included, however, under this condition which the court carries through all of its reasoning on these questions, that that price or cost must have been reasonable...
...The committee has, it is believed, provided for ascertaining every element of value which, upon recognized authority, should be considered...
...In the original cost everything that is involved in the question of cost to the present owner is included and can not be avoided...
...Taylor can find nothing but annoyance in this nine-tenths sentiment, he is rendering both Vassar college and the cause of women, for which Vassar was founded, the highest possible service in tendering his resignation...
...If the present corporation has acquired the property, or any portion thereof, at less than its physical value, or through some form of manipulation or combination or deception to the public, with a view of strengthening its monopoly character, and increasing its prospect for excessive value, or if its expenditures do not represent reasonable expenditures which ordinary business management would not have approved, all of these facts will be disclosed by ascertaining the original cost to date...
...It may be that none of these three is reasonable, and it must check and compare in order to see where it is coming out...
...While this may be regarded as a classification of diminishing value, it is contended that it is entitled to consideration in ascertaining the value of the physical properties of the earrier, and that contention is recognized by some commissions and some courts...
...When these values are once ascertained, each aids in correcting the other, and is given such weight as it is entitled to in enabling the commission and the court to arrive at the fair value of the property of the carrier used for its purposes as a common carrier...
...It is therefore included as a separate classification...
...All honor to the nine-tenths.—The Wisconsin State Journal...
...But actual cost may be very different from reasonable cost It may have to be an estimated cost if the books are lacking...
...it must have the cost of the property less depreciation...
...that is, the probable cost at that time...
...3) Other values and elements of value— that is, intangible values...
...These terms accepted by recognized authority are: " (1) The original cost to date...
...Nine - tenths THE GROWTH of woman suffrage sentiment among the girls at Vassar College is reported to be one of the chief contributary causes for the resignation of Dr...
...THE COST OF REPRODUCTION LESS DEPRECIATION "This will show the exact cost of reproduction in existing condition...
...James L. Taylor as president of that famous woman's college...
...Especially as to intangible values, the commissions and the courts are in a transition period...
...Getting at the True Value WHAT elements of value will the Commis-sion ascertain...
...Others have come to have an accepted meaning and significance by commissions and courts and are recognized as covering all the elements of value attaching to the property of common carriers for rate-making purposes...
...If, on the other hand, the company has been in severe straits, has not been earning dividends and therefore the purchase was a sacrifice sale or price or cost, that must be given due weight In the treatment of those questions which have been more or less touched upon by the courts, the idea is to find what, under normal and reasonable conditions, would have been paid at that time...
...The elements of value which will finally constitute fair value for rate making purposes are steadily narrowing...
...It is expected that when the work is in full swing the organization will be one of the biggest bureaus of the government, and that its force will number more than half as many people as the entire establishment now operated by the Interstate Commerce Commission...
...Without the knowledge of these as obtained it would have been utterly impossible to intelligently dispute the estimates later prepared by the railroads.' Clyde B. Aitchison, chairman of the Oregon commission, says: " 'Any rule based on reproduction value less depreciation which ignores the item of original cost, additions and betterments, is not only economically and legally unsound, but is fraught with possibilities of greatest danger to the country.' "Commissioner Maltbie, of the New York Public Service Commission, says...
...The greatest task, in some ways, is the requirement of a financial and physical history of every railroad...
...A member of the Board of Trustees of Vassar stated, day before yesterday, that Dr...

Vol. 5 • March 1913 • No. 12


 
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