ELEMENTS DESERVING SPECIAL CONSIDERATION 391
E — Going Value
Going Value in the San Francisco Water Rate Case. — Refer-
ring to going value as an element deserving consideration when
“value” and ‘ rate-base” are treated as synonymous the
standing Master in Chancery, Mr. H. M. Wright, in his report
(August, 1917) on the value of the properties of the Spring
Valley Water Company,* says:
“ Such additional value, if it is to be recognized here, is ob-
viously not of a separate element in the plant, as is a conduit or
a reservoir, but of the plant as a whole; an intangible value, a
characteristic of the unified business structure, inhering in every
part. We are here concerned, however, to estimate this value,
if possible, as if it were a separate thing.
“ Going value and development expense are not synonymous.
One is value; the other is cost, either actual, where the form of
value is actual investment in plant, or hypothetical, or repro-
duced, where the present valuation is by present market value,
or reproduction cost.”
That there is always difficulty in estimating ‘ going value ”
for inclusion in the rate-base is clear from this general statement
and has been universally recognized. The Master quotes Judge
W. W. Morrow, who in Bonbright 2s. Geary (D. C. Ariz. 1903)
210 Fed. 44, 54, 56, in an opinion awarding a preliminary in-
junction, said that a going value should be allowed but that,
though often presented to him, he had never been able to deter-
mine a proper amount upon the evidence submitted. He quotes
Judge W. C. Van Fleet of the District Court of Appeals, San
Francisco, as saying:
“All that we are agreed upon is that upon principle there
should be a greater value attachable to a going concern than one
which is merely in its initiative and not enjoying the benefit of
patronage.”
The law as interpreted by the courts requires that value be
made the basis of the calculation when the sufficiency of the
* Spring Valley Water Co. vs. City and County of San Francisco (rate case).
