Valuation, depreciation and the rate base

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Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter I. Introduction and general notes

Collection:: Economics Books

2 VALUATION, DEPRECIATION AND THE RATE-BASE in the public service or not, is the task which was set in under- taking the preparation of this volume. It is hoped that the same will fill the gap for a time until wider experience of the valuation experts shall have eliminated the involved and ofttimes useless procedures which are still in practice and explanations of which have, therefore, been included in the text. The Public and the Owner. — The question may well be asked whether the reformer, who has been seeking protection against the demands of the trusts and corporations which have frequently been guilty of over-capitalizing, has not in his turn gone too far in the endeavor to reduce the earnings of the cor- poration-owned public utilities. The public has demanded and, in some measure, has obtained, from various rate-fixing bodies, and from the courts, the introduction of methods of procedure that are not always equitable, but the baleful effects of which are slow in becoming manifest. There has, for example, been no little confusion in the matter of defining depreciation and not a few valuation experts have had difficulty in grasping the fact, which when once recognized seems fundamental, that the repayment of capital (amortization), is one thing and that the making of provisions for the replacement of worn-out or dis- carded parts at the end of their term is another thing. It is fundamental that the owner of a public utility should be allowed: a. To obtain, sooner or later, a reasonable return on his investment. b. To recover at some time the capital invested for the public good. ¢. To reap a suitable reward for establishing and managing the enterprise. It is the knowledge that these principles have obtained uni- versal recognition which prompts the capitalist to embark upon such ventures as those known as public utilities. Control of Public Utilities a Recent Innovation. — Until within the last few decades the control by the public of the operations of the public utility concern has generally been so loosely ex-

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