THE FIXING OF RATES , 
Comments on Value and Depreciation by the Wisconsin 
Railroad Commission. — Substantial recognition of the principle 
that present value is not a proper rate-base is found in the 
findings of the Wisconsin Railroad Commission in the case of 
the Superior Commercial Club vs. Duluth Street Railway Co. 
(Wis. R. C. R,, 1912, Vol. 11, p. 1 to 21). The Commission 
makes the following statement: 
“ A valuation of the physical property of the Superior division 
of the company as of June 30, 1911, showed a cost new of 
$717,538 and a present value of $487,236. When the present 
value of the physical property of 1911 is increased by the pres- 
ent value of that part of the property located in Duluth, but 
chargeable to Superior and which cannot greatly exceed $70,000, 
when additions of about $10,000 are made for working capital 
and when proper allowances for depreciation and going value 
are added, it will be found that the total amount does not quite 
reach the cost value new. In fact, it does not greatly exceed 
$700,000. This sum finds support in the cost of reproduction 
of the plant and the business as well as in their original cost. 
. . . As under normal conditions investors are entitled to 
have their property or investment kept intact, it follows that 
the amounts, which have been properly set aside for such pur- 
poses or for depreciation, in accordance with the provisions of 
the law and the rules of the Commission, should in the instant 
case be included in the amount on which returns are allowed. 
On the other hand amounts earned for depreciation but with- 
drawn or used for other purposes than provided by law should 
not be so included.” 
Again in the case of the Stevens Point Lighting Co. relating 
to service and rates the Commission says (Wis. R. C. R., Vol. 14, 
p- 364): 
““ The failure of a utility to make allowance for depreciation 
if the earnings have been sufficient is tantamount to a with- 
drawal of capital from the business and the cost of reproduction 
new must be diminished in determining the fair value upon 
which the reasonable return allowed is to be based when an 
adequate reserve for depreciation has not been provided. The 
utility is, however, entitled to earn an amount sufficient to off- 
set future depreciation.” 
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