Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1904-05-02

of the service pipe system that have been
carried into this account Which cannot be
definitely extracted.
The total of all deduction of all KINDS
for want of title I think amounts 10
s12677.90.
The deductions for inefficient n.y.
drants and pipe lines should be $l6O and
$1,467.5S respectively.
Now taking out all these deductions
from the table We have made up that l
call your attention to, the net present
value of this property assuming the
water to be pure-assuming it to De
efficient in every other particular ex-
cept in the matter of hydrants ana pipe
Understanding their income 10 pe
assured-which is the language of the
court, first selected by counsel IN the
argument Ct the case, is $2l6,9n.oo.
The next thing is to determine the
lawful gross, income, not What they
charge. What is the lawful gross IN
come from a property which in thelr
possession and supplying pure water
was worth on March /. $2l6,971.0G. That
is the crucial part of this case. Earn
ing power measures the value. Th!s
| company started here on the LIST day
of March, with u property value or
about $4,000. The lawful earning
power here is that which would enable
it to get Il fair return on that, il that
property value is preserved because its
earning power measures the value.
Let us see what return they are earn
ing under their claim They claim
their income Is lawful. The gross in
come for the current year was $685.
411.SS, the operating expenses $S,974.43,
net $29,437.45. Now upon the various
tables of present property value you
would get the following percentages.
On Aliens valuation of S272,955.S3, they
earn 10 77-100, on Shedd's value,
10 S7-100, on Grays value. -, on net
present value as l claim, IS ST. 100 per
cent, from a business in which there
is scarcely any element of risk. In
Guiding going concern value with prop
city value. an untenable position, would
give 40 per cent. according to the
district table. On either method the
returns are eXtortiOnate. excessive and
unfair, and out of proportion to the
rule that returns should be commen-
surate with the degree of risk
CT safety of the business. Men
want 10 per cent in some kinds
of business because of the risk.
There may come times, as Mr.. GOodhue
illustrates, of business changes. Hard
times come on and during the period of
good times they must carry their divi-
dend high enough to allow for the pc
riOd of bad times. But water is a ne
cessity. The people must have it
whether the times be good or poor,
whether wages be earned or lost,
whether we have financial panics or
not.
There is no form of private invest
ment SO safe and so we'll protected;
upon the other hand there is no public
servant that owes his master so sacred
a duty. The duty is sacred, the in
vestment safe. Why should they have
a return out of proportion to the
safety? Now, may it please the Court,
if the net income as claimed is lawful,
assuming it to be assured and the wa
ter pure, using the capitalization meth
cd forbidden by the Court you would
get these results: property value, at
Aliens valuation, s272,995.S3, going
concern or franchise value added
would give a total of $5SS,749.03.
The districts valuation OF. s216,997.oo
would give precisely the same result.
The results. are reached thus: First at
Aliens valuation: Gross income, $685.
411.SS, less operating expenses ($S974.
43) and per cent return on S272.995.S3
($13,649.19) gives as income available
for franchise value, $15,7S7.66, which
on a ) per cent. basis gives the fran
chse value, including going concern
property value you get $5SS,749.03 In
the second case, with the items of gross
income and operating expenses the
same, and figuring in precisely the
same way, you get $1S,5SS.60 available
for franchise value amounting on
per cent, basis to $371772. which add
cd to the district property valuation
gives $685., 1906, as before. Reduce
the property value to $4,000 or to s20,-
900 and the award would be the sama.
Did not the Court have good reason
for fOrbidding the use of any capitalize
alton? No wonder the Court forbade
it. The Inference is plain. There is n
fixed relation between property value
and income. The income must come
down pro rata with all reductions IN
value of property used The same
conclusion follows if we adopt the I'M
tenaDle theory that the going concern
value is property value and not 4
franchise value. l think too, your
!1OnOrS will remember the reasons for
it. 1t can be demonstrated mathemati-
cally that the assumption of S3S,411.SS
as the lawful gross income irrespective
of the property value leads to the abb
surd conclusion that every reduction
Of the property value increases the
award. Now that is not a matter of
argument. If You start with the prog
osition that s3S.i11 is the lawful gross
income, 1t is the simplest matter
Of demonstration that every time
you drop in the value of prop
erty you increase the award. We
submit that the Court knew what it
was talking about when it declared
that the property values should deter
mine the income and that the assured
income was the chief element to deter
mine the award. When we forced out
the service pipes and showed lack of
title to the additional pumping station