Evening star., 1928-12-06

and approved by the commission was
about "a per cent of the cost of the de-
preciable property, materially in ex-
cess Of the percentage found in The
case of the Capital Traction Co."
From the above facts 1t is my opin-
ion that the total value claimed by the
companies as OF January l.. 1928
amounting to 62,128,447, does not
represent the true value of the prop
critics as Of that date, and that 1t does
not represent the value which would
be found by the District courts upon
complete, up-to-date and proper 1ec-
ord covering all elements Of value OF
the used and useful property If the case
were adequately and effectively pre-
sented.
Decision Not Binding.
1.-THE District courts passed upon the
case as it was presented to them, anc
the findings so made do not bind the
commission or the courts in a later
proceeding upon different record with
all of the facts adequately presented.
"The only way in which one cculC
be reasonably certain Of the value oi
property is through the preparation ol
an inventory of recent date, an exam
ination of the property, and a deter
mination of the various elements which
must be considered, such as actual cost
reproduction cost, earning capacity
suitability to present requirements, de-
probation, etc.
Report states that the Public Util.
tiles Commission, as result of its in
vestigation in 1915-1919. found the
actual cost of the street railway prop
critics to be approximately $25,000,000
compared with cost shown on the
books of the companies of $45, 900, 900
IF one were to add a generous al
lowance for the property belonging to
the three companies subsidiaries not
included in 1914-1919) the total cost as
Of January /, 1928, would not exceed
$32 900 900. This amount includes prop
erty that is not used and useful and
non-transit property to some extent
The difference of nearly $20,000,00O
between the cost obtained in the man
ner above described and the book cost
is due to securities issued for franchise
property which has been destroyed, re-
moved or abandoned and not written
out of capital account, and possibly
other factors.
Dependable Basis Missing.
"It Is certainly true that there is no
COSb ia UIlC
used and useful property of the two
Washington systems as OF any current
date which could be accepted as the
basis for rate making for 10 years"
Reports state that deducting depreci-
alton in accordance with United States
Supreme Court rulings and on basis o:
former Public Utilities Commission flnd
ings Of depreciation percentages on
local lines, approximately $4,000, 900
would have to be deducted from $62,-
100000 reproduction cost figure cited by
companies.
but this method contains two i'm
portant assumptions that are incorrect;
first, that the amount of depreciation
on January /, 1923, is no greater in
percentage than upon July /. 1914, and,
second, that the accrued depreciation
percentage is no greater upon the basis
of 1925 reproduction costs than of 1914
reproduction costs.
while the properties have been we'll
maintained it is certain that
much of the property is older and has
much less remaining useful life than
IA years ago. I am of the opin-
ion that the amount of depreciation In
the case of rolling stock is consider
ably in excess Of the percentage appli-
cable to 1914"
Is Per Cent Minimum.
"It does not seem that the deprecia-
ton could be less than 25 per cent OF
the reproduction cost of the used and
useful property. I am reasonably. sure
that it would exceed IS per cent of the
reproduction cost of the identical prop
erty, and that such cost less deprecia-
ton would not reach $50.000,0 900.
However, as reproduction cost less
depreciation is not the sole measure Of
value, but weight must be given tc
other factors. even under the latest de-
cisions of the United States Supreme
Court, and as all of the other factors
to be considered would produce valus
less than reproduction cost less depre
citation, it is my opinion that thorough
examination of the property and the
consideration of all elements of valu'
would produce a figure less thar
| $50, 900 600"
Report criticizes lack of certainty il
| agreement as to rate base adjustment