Valuation, depreciation and the rate base

Bibliographic data

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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Essentials of value

Collection:: Economics Books

ESSENTIALS OF VALUE r) price or at an appraised value. Usually the method of making the valuation is agreed upon in advance in order that there may be as few points of disagreement as possible. The in- determinate franchise may be granted subject to various con- ditions such, for example, as an allowance of 10 per cent or some other amount on the actual investment if the property is taken over within 10 years; or that after a certain number of years a part of the earnings will be turned over to the community; or that certain requirements relating to the character and quality of the service will be complied with. The indeterminate franchise has not yet been fully tried out, but in those states in which suitable provision has been made for the regulation of rates, there is good reason to believe that it will prove satisfactory. Capitalization of the Franchise. — The tendency has been to capitalize the value of the franchise, in other words, to use the franchise as a basis for the issuance of securities. Perhaps there is some reason for this in the case of a perpetual privilege, when thereunder the assured earnings exceed the ordinary fair inter- est return on other similar investments; but the capitalization of the franchise, except the actual cost thereof, is now quite generally prohibited by the laws which provide for the control and regulation of the public service corporations, and the de- cisions of the courts are adverse to such capitalization. The Wisconsin Railroad Commission says on this subject in the Antigo Water Case (Aug. 3, 1909), “ That if the municipality required the payment of money or its equivalent, or there was necessary legitimate payment made for the franchise, then the sum which may be reasonably said to have been paid for the franchise may be included in the valuation, the same as money necessarily invested in physical property. But the Commission refuses to consider the claim of some experts and corporations that franchises for which no money was paid may have ‘in- tangible ’ values which should be considered in the making of rates.” The Public Service Commission Law of New York provides: “ The Commission shall have no power to authorize the capitali- zation of any franchise to be a corporation or to authorize the Ec

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