The news scimitar. (Memphis, Tenn.) 1907-1926, 1919-07-19
ACTUAL VALUE Of
STREET RAILWAY
WILL Be SECURED
Expert Appraisal Will Con-
slider First Cost, DepreCia-
tiOn and Estimated Cost Of
Reproduction of Plant.
FRANCHISE VALUES
TO BE ELIMINATED
Expert Engineers Will Not
Begin Work Until Complete
Inventory Has Been Com
pIeted.

-
The valuation of the properties of the
Memphis Street railway for the pur-
roses of computing the amount actually
lhvested. upon which a reasonable re-
turn should be made to the owners of
the property, will be fixed probably
upon three basic propositions.
j., The expert appraisers, who are among
the best known electric traction engi-
neers In this country, will figure out the
original cost of the properties to the
present owners, including the total
sums actually invested in the properties.
They will figure the amount to be al
lowed for depreciation. They will also
make estimates Of the cost of reproduc-
ing the properties if they were to be
built up now, but in making these esti-
mates they probably will not use actual
cost of materials now, but the average
cost during period of reasonable
length to secure fair average of costs.
The original cost will include the sums
actually paid for the old properties by
the present owners, but it would prob
ably be an impossibility to get any fig
ures on the actual appraised valuation
at that time, although the books and
records show, as was admitted In the
hearing at Nashville before the state
commission, that about S2,500,000 of
stock issued after the consolidation did
not represent actual tangible values,
value, based upon probable future earn
ings.
The appraisers now hold that fran
chises in cases of this kind have no
value as basis for earnings.
Average Cost To Be Basis.
An estimate of the cost Of reproduc-
ing the physical properties of the COM
pany basel upon present prices Of ma
terlal, would probably show decidedly
higher valuation than the actual, cash
investment. Such valuation alone
would be manifestly unfair as basis
for fixing the rate of fares to be
charged, as it would not represent the
actual investment upon which returns
should be earned.
The three appraisers after spending
Friday in conference as to their fu-
ture procedure under the orders of the
state commission, ordered complete
scriptlon owned by the street railway
TO be made. The inventory is to 20
into every detail OF cost and descrin-
Tuon, when the t~@entory \!
completed which Stll not be for sew
eral weeks, the appraisers will have it
checked over by their own employees to
verify the figures and it will then be
used as basis for their general work
Of appraisal
Old Heads at Work.
1t was arranged that much of the
work of appraisal Is to be done Jointly
by the three experts. Separate reports
probably will be made as to some fea-
lures of the appraisal, as each of the
appraisers is likely to nave his own
ideas OF arriving at some Of his conclu-
sions.
Albert S. Rlchey, of Worcester, Mass.
represents the state commission in the
appraisal. He is engaged in appraising
number of the largest traction cor
porations in the East now, and will d.
vide his time between that work and
the work in Memphis.
Ross w. Harris, of Madison, Wis.
has been employed for a number Of
years as one of the experts in valua-
ton of the railroads and traction lines
for his state, working for the public
utilities commission and the state as
SCISSORS Of public utilities. Wisconsin
took the lead in having such valuations
= ,ade both as a basis for assessment
and rate making, and maintains a
force of experts constantly in the field,
expending approximately 100000 a
year in keeping the valuations up tn
date. Mr.. Harris was employed much
to the state commissions
System Has One Appraiser.
j.. II. Perkins, of Birmingham, for
mefly with Ford, Bacon d Davis, of
New York, firm or engineers and
bankers closely connected with the
ownership of the local system, will rep
resent the street railway interests In
the appraisal. He is now a consulting
engineer, and has been employed fire.
quently in similar work for the Amer
lean Cities company, owners of about
80 per cent of the stock in the Mem
phis Street railway, and seven or eight
other electric traction and power COM
panies in this section.
The reports are to be made direct
to the state public utilities commission
and are required to be completed by
Nov. 1. After that the hearing on the
question of street car fares and as
sessed value for taxation will be re-
opened.
Mr., Harris contract, which as drawn
by H. J. Livingston, city attorney, re-
quired him If called, 10 testify before
the state commission IN support OF his
report if the valuation he makes is
found not to agree with that of either
or both of the other experts.
The three experts will return to
Memphis and begin their work together
as soon as the inventory called for has
haan rnmnlefad