Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1922-05-24
City.Cuts Transit
Valuation in Half


$500, I20,T TIL. city also offered five
totals based on investment figures.
The various totals submitted by the
city follow:
Check Of company's cost of repro
duction new. based on prices as Of date
of closing of inventory. June 30. 1919
sls7 ,553 ,326.
Check of company's estimated cost
of reproduction new. based on prices
Of June 20. 1919, af.er dpducting de-
probation which hIS actually taken
place-S141 $3.50. 500.
Cost Of reproduction new. based on
latest prices available, first quarter Of
l022-S147, ,S7O.5I5.
Cost Of reproduction new. based on
prices Of the first quarter Of 1922. after
deducting depreciation which has ac-
tually taken placc-S11G.5O4.O .O42.
Other Totals Are Offered
Using investment figures as n valua-
ton basis. the city offered these totals: !:
Total capital paid in on securities is
sued as of June 80. 1919-S125, 2S4 .056.
Cumulative total investment or his
torical cost rs of June 30. 1919, includ-
ing horsccar. cable and early electric
lincs-S12S. S35.370.
Cumulative total investment or his.
torical cost as of June 30. 1919. after
deducting superseded property--S1O0,-
$3.50
Original cost new Of the present ex-
listing property-S1OS. 7S4 .O6S.
Original cost new of the present ex.
listing property. after deducting dcprc-
citation which has actually taken place
SS0.O24.521.
The city contended that It's charts
show "the ephcmeral nature Of prices
of June 30. 1919. and the futility of
attempting to create n valuation land
mark for thc future by reproduction
cost based on prices Of date of no
historical or economic significance.
There are here set forth as the op!n.
ion of the city's witnesses. the report
says. "the reasons which initiate
against the adoption Of n rate base
which is influenced solely by the repro
duciion cost Of the property under val
uation.
Economic Theory Hit
''These show that il the reproduc-
tion cost is adopted as the rate base.
1t will to large extent be founded
upon estimate and hypothesis and will
result in economic instability. and that
only a valuation based upon the actual
record Of cost and investment can have
the merit of being fair both to the
investor and to the public.
1.-THE examination Of the books
showed total investment in road and
equipment Of all properties in the
system Of S12j.O10.95G as Of June 30.
81, all laI ,LA Co., ynp
working capital of So. .155.414. giving
a total of SIPS. So. $40. 4 conserva.
tive estimate IS made that the invest
mcnt I'm superseded property, or prop
prty which is no longer In existence,
but which Is included in the foregoing
figures. amounts to at least Sl0.26I .3t3.
'An investigation was also made OF
the total pad-in capital on securities of
all companies in the system from which
was developed total for the paid-in
capital of S125. .2S4 1854 at June 30.
1910.'
The city's report says that 'thp entire
system earned an average net return on
investment over the entire period of
1891 to 1920 of SO per cent per an
mum. Other studies show that the
dividends and interest paid for the first
thirty three years of operation averaged
in excess Of II per cent per nnnum on
the paid in capital.
Opposite Figures Advanced
"The company's claim for going
concern value is S3S. 900 900. to which
should be added the cOmpany's claim of
ST.. .OOO. 600 described as loss of fair re-
turn. making n real total of SOB ,OOO,-
600 for the item usually described as
going value The city's position is
that no ground has been made out by
the company for the allowance of a
separate item of this description.
THE consolidation features afford no
basis for going concern va luc. In
this property the consolidation ms been
so financed as to be liability and
not an asset. and has rendered the
property commercially unsound. Its
effect is that tho present operator is
saddled with an interest charge Of 12.4
per cent per annum for the use Of SG3.-
800. 600 of capital supplied by the un-
derlying owners.
"As far as saving in operating eX-
penscs by consolidation is concerned. it
is offset BY the investment in superseded
and duplicated property taken over. in
cluded in the dead capital for which
this high rate of interest is eXacted.
I'm this property, going value could
only be created by the commission as
an Offset to depreciation or superseded
property value. in order to preserve the
integrity of the actually unamortized
remaining investment
Raps Economy Allowance"
The claims of the company for
economies and cfficicncics are analyzcd
TO show that most of them are based
on comparison with the antique methods
in vogue ten years ago. ana that in
thc main while the quality of the serv-
ice has been greatly improved, the
volume of service available has not IN.