Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-22
Proposes to FamiIiarize Him
self With Provisions Be-
fore Assuming Post.
HOOVER NOMINEE CANNOT
TAKE OFFICE UNTIL JUNE
General Did Not Meet Members of
Commission on Visit to
Office.


mated by President Hoover to succeed
John w. Childress as a member of the
Public Utilities Commission, today be-
gan an intensive study Of the act Of
Congress regulating the public utilities
OF the District.
Gen. Patrick called at the executive
ONCE Of the commission in the Dis
trict Building yesterday afternoon and
procured copy Of the utilities act, in
dicating that he proposed to familiarize
himself with its various provisions be-
fore taking offlce. Even though the
nomination off Gen. Patrick be con-
firmed by the Senate Immediately,
which Is considered likely. he cannot
take ONCE until June /, as the resig-
nation of Mr.. Childress does not be-
come effective until May 81.
Gen. Patrick did not meet members
of the present commission on his visit
to the executive Offices. Mr.. ChildreSs
was in New York, and Col. William b.
Ladue, Engineer Commissioner, the
other member. was IN session with tne
: two other District Commissioners, con-
sidering the Districts budgetary esti-
mates for the 1891 fiscal year.
Study O'FaIlon Decision.
Attaches Of the commission had be-
fore them today q memorandum pre-
pared by Peoples Counsel Ralph 3:
Fleharty outlining his Interpretation OF
the decision Of the United States Su-
O'Fallon Railroad case, which authors
ties on public utilities indicated yester-
day would probably have no material
effect on the valuations OF the public
utility corporations Of the District.
Mr.. Fleharty prepared the memoran-
dunn after q careful study of the formal
decision of the court, and pointed out
that, In his opinion, the utilities have
a long road before them before they
is the yard stick by which fair value
il to be measured" It is in line with
his informal opinion, expressed yester-
day.
The text of the memorandum follows:
THE Supreme Court does not by its
decision in the OFallon case say that
current cost of reproduction is to be
taken as the. measuring stick Of present
fair value. II does not, indeed, even
say that reproduction cost Is the most
important Of the several elements OF
value that 1t has heretofore In Smyth
v. Ames and subsequent cases said
should be taken into consideration IN
arriving ct q conclusion Of value. The
court distinctly says that what weight
should be accorded to reproduction cost
was not for it to decide, and points out
railroads the ultimate value OF which
should be placed far below the sum
necessary for reproduction.
Commission Erred.
1.-THE gist Of the decision is that the
Interstate Commerce Commission erred
In not giving any consideration or
weight whatsoever to the aScertainment
Of the current cost Of reproduction OF
the property. The decision thus takes
us back to n reconsideration OF Smyth
VS.. Anaes, in which fair value OF the
property used by the utility for the con-
venience Of the public was held to be
the basis of all calculations as TO rea-
sonableness Of rates. In the last named
case the Supreme Court enumerated
some Of the matters that required con-
sideration In arriving at q conclusion Of
fair value, but also said that 1t was
not attempting to say that there might
not be other matters to be regarded
The matters enumerated were: Original
cost of construction, the amount eX-
pended in permanent improvements,
the amount and market value of the
bonds and stock, the present as COM
pared with the original cost OF con-
struction. \ the probable earning capacity
of the property under particular rates
prescribed by statute and the sum re-
quired to meet operating expenses. 1t
would seem, therefore, that the utilities
have q long road before them before
they can say that current reproduction
cost Is the yard stick by which fair
value Is to be measured.
In my opinion, any decision Of q
commission which on its face shows
that after giving due. consideration to
all these elements the commission has
arrived at its conclusion Of fair value"
as determination Of o debatable issue
of fact will be upheld by the courts as
being in accord with the law of the
land as announced by the Supreme
Court of the United States. Under
these circumstances, fair value as found
by q commission might in q particular
case be sum less than, equal to, or
more than the difference between cur
rent reproduction cost and ascertained
depreciation"