"Professor Adams and his associates, therefore, applied only positive values, where any such were found, although advocating the use of negative values."

And, of the method then used, he says:

"... it fails, in the form in which it was used in 1900 and 1902, to bring out those negative or subtractive elements which may be determined from the income accounts, in the case of properties which do not earn a fair return on the investment."

And again:

"... where the earnings have been fairly uniform and stationary for a period of years, and the property does not earn a sufficient sum to care for depreciation and annuity, it is clear that the value as an earning investment is less than the determined physical value, and that the physical valuation should be reduced by some amount to arrive at the 'fair value.'"

In his argument favoring the use of a valuation in rate-making, Mr. Riggs affords no support to Professor Adams' contention that, for that purpose, only replacement cost should be considered, and that, after fixing the rates on the basis of the least favorably located and least efficient line, so as to afford it a bare return on its replacement cost, the surplus earnings at the same rates of its more favorably located or better operated competitors should be confiscated under the guise of a special tax. This extraordinary proposal, the character of which is so illuminating as to the attitude toward railway property and investments of the most prominent and persistent advocate of so-called "physical valuation," is best stated in Professor Adams' own words, which are as follows:

"I cannot evade the conclusion that equity, as between various classes of roads, can never be attained until all the excess of revenue over the Constitutional limit be made a contribution to the public treasury, and that this contribution be made as a substitute for all taxes of all kinds and all sorts."[[38]]

On the contrary, Mr. Riggs distinctly upholds the right to earnings in excess of the bare return, at the minimum rate of interest, upon the cost of replacement, saying, inter alia:

"It is contended that the determination of rates that will be just and fair to all competing companies involves other consideration than the valuation of either physical or intangible properties, and that when all these rate-making problems are properly solved, there will remain large intangible values on the well-designed plants."

Professor Adams has himself admitted that there is no possibility of utilizing any valuation for the purpose of fixing specific rates, as such a task is far beyond the capacity of any conceivable system of cost accounting. Supplementing this admission, Mr. Riggs' opposition to the plan proposed by the former and its gross injustice, so apparent to every one but its author, destroys the last element of plausibility in the suggestion that any sort of valuation could be of utility in that connection. The writer is not overlooking the fact that the Courts, when under the necessity of repelling efforts to confiscate railway properties under the guise of rate regulation, and in view of the form in which this necessity has commonly presented itself, have accepted "fair value" as an element of importance in their inquiries; but if the railways are entitled to charge rates based on the value of the services they perform, it is clear that the question whether a rate or a schedule of rates is reasonably adjusted to the value of the service or services is very different from the question whether a fair return upon fair value has been allowed. Assuming, however, the need of an appraisement in every litigated case involving railway schedules, it is evident that each case would have to have its own appraisement, for value is ever changing and unstable. Mr. Riggs himself says: