The Monmouth inquirer. [volume] (Freehold, N.J.) 1865-1933, 1923-06-21

n.y. SAID Is no junction or the courts
and should not be attempted either
directly or indirectly
State Must Fix Rate
"If it is eventually determined by
this court or the Supreme Court, on
appeal that the rate fixed by the
Board of Public Utility Commission
ers is confscatory, it will be neces-
sary for the board to prescribe new
rate of fare. 1t is, or course, not to
be doubted that the board will fix
proper rate OF fare based upon the
valuation and rate of fare which this
court or the Supreme Court, on APP
peal, may eventually determine is
proper In order to avoid confiscation.
The report declared the value of the
plaintiffs property which is to be used
as base for determining whether the
rate complained Of is conzscatory is
not the original cost of such property
but the value thereof at the time Of
the inquiry, or, in other words, present
value.
The report estimated the cost of re-
production, new, at present prices,
less depreciation, at $9S,291 ,563;
power leases or contract at $S,OO0,OO0;
going value $5,5OO,O0O, atotal of SILL
791,563. Another estimate, at pre-war
prices, for cost of reproduction, new,
appreciated so per cent, less depreci-
alton, at $90,497 ,795; power lease or
contarct at $4,000 900 and going value,
$5,500,000, total of $103, 997 ,795. The
historical or original cost of construct
ing the system was approximately
$100,000,0 900. The total capitalization
is approximately $4,000 900.
"As above stated" said the report,
Il think that the proper way to ascer-
tain the reproduction cost new, in this
case is by taking present prices (as
they have become reasonably stable),
rather than pre-war prices, appreci-
ated by percentage representing an
average price level OF many repre-
sentative commodities.
Taking the figures thus ascertain
ed as the cost of reproduction new,
less depreciation, and taking into
consideration all relevant facts men,
toned in the before quoted extract
from Smyth VS.. Ames, SO rar as the
evidence enables me to do so, as well
as the fact that it seems clear from
the evidence that the property is cap
able of earning fair return upon the
value which / have reached and Civ
ing due consideration to probable
future Values the fair or reasonable
value of the plaintiffs properties is,
at the present time, for rate-making
purposes, in my judgment, the sum Of
$4,000. 900, in round numbers.
1.-THE serious and difficult question
is exactly what constitutes a fair rate
of return. The amount which the
board considered that the rate COM
planned of would produce, over and
above operating expenses (including
maintenance and Depreciation and
taxes, was $5,S42, 800. This the board
held would be fair return upon the
valuation which it made, and would
give the company a rate of slightly
over 7 per cent upon such valuation.
This figure does not take into account
any allowance for the cost Of money,
which, as before stated, the board
said should be taken care Of in the
amount of the return.
Moreover, the plaintiff Insists that
the rate fixed by the board would not
have produced as great return as
the board estimated that it would by
at least s2,40O,000. l think that the
plaintiffs figures in this respect are
extravagant, but it does seem reason
ably clear, both from the defendants
witness, Mr.. Perry, and from what
has happened subsequently, that the
boards estimate of the net returns
was excessive.
"If the boards estimate of what its
rate of fare would have produced ($5.-
S42,500) is accepted, then the rate of
return on the value of the plaintiffs
property as I have above fixed it,
would be only 5.34 per cent, and on
the valuation OF SOB, 900 900, it would
be only SGT per cent. The percent
age, of course, would be less if it Is
figured on s5,727 ,90S. 1t will be borne
in mind that the last declaration of
the Supreme Court southwestern
Bell Telephone Case) is that 1-3 per
cent is wholly inadequate
'.It is apparent, Therefore, that look
ing at the case in the most favorable
aspect to the defendants, the rate
fixed by the board is confiscatory and
violates the Fourteenth Amendment,
and am so constrained to find"
The report states me company's
operating expenses have practically
doubled since 1916; and that its taxes
have increased about 50 per cent. 1t
also appears that under the rate of
fare permitted by the federal court,
there has been an excess of gross
receipts over operating expenses, fixed
charges Interest on bonds, guaran-
teed dividends and other INTEREST," and
taxes, while in the four years preced-
ing there was a deficit. The differ
ence, SO far as 1920 and 1921 COM