THE RATE-BASE AND DEPRECIATION ls 
be supposed to be subject to depreciation, and what doubt might 
arise with reference to the propriety of including engineering 
charges in these figures is at once dissipated when it is considered 
that the property will not be constructed again as an entirety, 
but is to be kept up by annual renewals from time to time made, 
so that engineering, and other such overheads caused by the 
assembling of the plant, will not have to be provided against, 
because they will not again be incurred.” 
The definition here given of annual or current depreciation is 
identical with what the author contends should be called the 
annual replacement requirement. 
That the import of the latest decisions of the United States 
Supreme Court in rate cases is the protection of the legitimate 
investment will appear from a careful reading of the decisions 
in the Southwestern Bell Telephone Company case, in the Blue- 
field Waterworks case and in the Georgia Railway and Power 
Company case from which the following extracts should prove 
of interest. 
In the case of the Southwestern Bell Telephone Company vs. 
Public Service Commission of Missouri (262 U. S., p. 276, and 
L. Ed., p. 981) decided, May 21st, 1923, it was shown that 
the Commission had made an estimate of the actual cost of the 
property decreased by depreciation and had used this as the 
rate-base. The Court found fault with the Commission because 
of its disregard of the higher prices of labor and materials which 
prevailed at the time when the rates were fixed as compared with 
those which prevailed at the time the plant was constructed. 
“ Obviously, the commission undertook to value the property 
without according any weight to the greatly enhanced costs of 
material, labor, supplies, etc., over those prevailing in 1913, 1914 
and 1916. As matter of common knowledge, these increases 
were large.” 
The principle is here clearly favored of giving consideration 
in a fair measure to the fluctuating value of the dollar. (See 
Chapter XIV.) 
On this subject of valuing physical properties at prices of labor 
1c