Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-10-30
TELL WHAT RATES
ROADS MAY EXACT
Railroad Commissioners Sug-
gest Basis for Valuations of
Utility Properties.

WASHINGTON, Oct. 3O-The pub
| lie will willingly pay rates that will
enable a railroad company to keep its
original investment intact, provided
the money il sets aside for the de-
probation of its property is not ex-
cessive and capital obligations are
eurtailed. This was the opinion ex-
pressed today by DIR. A. +. Weber,
chief statistician of the Public Service
Commission of New York, first dis
trict, in an address on Depreciation
and It's Relation to Fair Value" be-
fore the National Association of Rail-.
way Commissioners ~
The element of depreciation in ar
irving at valuation of railroad prop
erty has been recognized by the
courts, said DIR. Weber, and for a road
to set aside an excessive amount for
depreciation is "unjustifiable because
it is unfair to tax consumers in order
to swell dividends"
DR.. Edward W. Bemis, of Chicago,
declared that the adoption of the "re-
production theory of railroad valua-
tion would establish .far-reaching
and dangerous precedents which viii
seriously handicap future efforts for
the establishment of equitable rates.
DR.. Bemis made plea for what he
styled 1.-THE accounting or historical
method which, he said, ascertains
just what money has been expended
to produce an existing property
what has been, instead of what may
be-"
1.-THE reproduction theory he said,
"contemplates an imaginary COM
munity in which an imaginary cor
I u -
of the cost of an imaginary railroad
or other public utility They then
add an allowance for supervision,
contingencies, insurance, taxes, inter
est and other expenses during con- j,
struction. The result is the estimate
of the cost to reproduce certain
property
"The magnitude of the issue in
volved between these two methods Is
hardly realized by the public. The
corporations, quick to see their OPP
portunity. are striving to convince the
courts and the commissions that the
reproduction theory, or engineering
method, is the best, while municipal
ties. State governments and other
public bodies have not realized the
Importance of the historical method"
Railroad corporations in making
rates are entitled to charge for an in
crease in the value of their right OF
way only up to a certain limit, George
A. Henshaw, member of the Okla
homa Corporation Commission, de-
clared.
ut is conceded said Mr.. Henshaw.
that the property of the Pennsyl-
vania railroad, surrounded by large
cities has increased in commercial
value compared with property orig
inally costing the same amount, out
not so fortunately located.
my conclusions are that there must
be limit to the increased values of
right of way, because Of the building
of large cities, or the particular loca-
ton of the railroad. What that limit
is must be determined by the rules of
equity, that is-what is fair to the
carrier and what Is fair to the pub
lie 7
The rates which public utility cor
porations are entitled to charge the
public should be based on reason
able return upon such money "as they
honestly and wisely expend for the
public" not upon the increased value
of their property. asserted Max The
Ian. a member Of the California Rail-
road Commission.