THE PURPOSE OF THE APPRAISAL J 
new road-bed requires more careful watching and greater ex- 
pense for upkeep. Consequently the net earnings are lower 
than they would be with the same volume of business, the same 
rates and a well-compacted old road-bed. If the resulting 
earnings are inadequate in the early years of business, the defi- 
ciency may be treated as a temporary investment to be amor- 
tized out of the larger net earnings of later years. 
Depreciation in the Pocatello Water Company Case. — The 
Supreme Court of Idaho in a recent decision (1915) in the 
Pocatello Water Company case, Murray vs. Public Utilities 
Commission (150 Poc. Rep. 47, p. 50), reversing the Public 
Service Commission of that State says in reference to deprecia- 
tion: 
“So far as the question of depreciation is concerned, we think 
deduction should be made only for actual tangible depreciation 
and not for theoretical depreciation, sometimes called ° accrued 
depreciation.” In other words, if it be demonstrated that the 
plant is in good operating condition and giving as good service 
as a new plant, then the question of depreciation may be entirely 
disregarded.” 
This decision is in substantial accord with the minority report 
of the Commission which had been made by A. P. Ramstedt 
and in which he said: 
“ A person having invested his money in a continuous busi- 
ness enterprise for the benefit of others must always be ready 
to replace the constructive portions of his plant as they wear 
out. A person having embarked on such an enterprise is justly 
entitled to compensation to cover this depreciation in addition 
to a fair return, over and above expenses, upon the reasonable 
value of the property. Allowance for depreciation cannot, in 
my judgment, be considered as profit or an earning factor in 
the business. ... The fact that in an investigation of the 
petitioner’s property . . . it is found that the market value of 
his physical property employed for public use has depreciated 
$77,188.39 does not, in my judgment, justify the commission, in 
its determination of a fajr value for rate purposes, to deduct 
the amount of depreciation from the present estimated cost of 
reproducing the property new, and thereby reduce the earning 
power of his property.” 
13”