The Washington times., 1915-06-02

1t has now become apparent that
when the Governments work OF valu-
ing the railroads is finished. no final
valuation will have been placed on
them. Congress. in the last anlysis. will
have to take UP the various elements
OF value as reported to II, and decide
what Is the conclusion.
This Is one Of the most interesting.
and much the most important. recent
development concerning the appraisal
work.
1t needs. however to be illustrated.
and the item of overhead charges pro-
Vides a ready illustration.
No physical appraisal of railroad
as IT stands today could possibly in
clude an accurate allowance for the
brain work Of the people who planned.
engineered, and pioneered 1t. 1t could
not include allowance for costly mis-
takes that were made in early construc-
ton.
Want Allowance For Skill.
Yet 1t is hardly to be assumed that
| money invested in making these mis-
takes. or in the general direction Of the
project. is to be wasted. One of the
most necessary things in such enter
prises Is the privilege of making mis-
takes: quite the most necessary OF all,
is the power to set big brains at work
| planning things that can never be repre-
sented in a physical appraisal.
Engineering judgment and direction.
for instance, must decide whether a
tunnel shall be built In one place. or a
bridge in another. The knowledge and
discretion to decide that point cost
| money; but the finished property shows
| no evidence OF II. SO II Is necessary TO
determine some allowance that shall
| represent this element. 1t Is proposed
| to allow some fixed percentage for this
item: and this percentage Is calculated
| all the way from to ~ per cent.
The railroads are holding out now for
10 per cent; while for contingencies
they demand allowance OF 10 to 80 per
cent The determination as to these
two items will represent possible diff
| ference of value. for all the railroads
| Of the country. Of possibly ss,0o.Vo.ooo.
Cast Out By England.
In England, when the government
bought the entire telephone system OF
| the country. the element OF contingent
| cies was cast out OF the calculation
| entirely. The government refused to
pay anything on this item. Supposine
| the railroads are appraised at S2e, ,OOO,-
/ 0O0.00O. the difference between nothing
| and 30 per cent for this one item would
| be s6.0OO,0Oo,0 900.
Again. there is the question OF interest
| charges during the construction period
Some OF the authorities insist on ar
allowance as high as 20 per cent on this
| account They urge that a large par'
| of the investment Is obviously unable &c
| earn any returns during the construc-
| ton period. and therefore should be
compensated after earnings became pos.
| eible. To allow a general . per cen;
increment tor this reason would add
81 200. 10000 on the 0.0o0. 900. 600 basis
| while to allow 20 per cent would add
81 900 900, ,oC0.
Land Values Most Difficult.
Most difficult Of all these elements Is
that Of land values. In the recent con.
| ference the railroad representatives tool
the position that railroad lands should
| be given a valuation representing the
present cost Of acquiring their rea
property. There are now before the
commission three general theories as tc
the proper values of the lands of the
| railroads:
| !. That they should be listed as rep