No attempt was made to assign depreciation, as regards the rails; this was determined afterward, from the age of the steel in the track. It was necessary, however, to make quite a thorough inspection of the ties, and to note their condition, as they were replaced year by year singly as they wore out. Almost every conceivable kind of timber had been used for ties at one time or another. Treated and untreated ties lay side by side; and thus there was great difficulty in classifying them with regard to the kind of timber. With bridge ties and timbers of frame and pile bridges, there was not so much difficulty, as they were open to inspection, and had been inspected twice yearly by the Division Engineer and the Superintendent of Bridges and Buildings, and accurate records of their condition and renewals had been kept. The depth and condition of the ballast also varied very widely.
In a very short time all the men on the survey became well acquainted with the character of the work they had to do, and, as the work went on, the progress of the party day by day was very much more rapid. At the beginning of the survey, a progress of 6 or 7 miles of single track was considered a very good day's work; at the end of the survey, the parties were making from 12 to 15 miles per day.
There was considerable difficulty in setting proper values on the hundreds of buildings, large and small, owned by the railroad. Most of these buildings had never been constructed from plans, and it was difficult to calculate what they had cost originally, and what it would have cost to build them at the time of the survey. However, time books were searched, and the contents of the buildings in board feet were calculated, and, while in many cases their age was not known from any records, it was nearly always possible to find out from somebody just when they were erected.
As intimated before, the railway company derived much actual benefit from the work, outside of the accurate knowledge obtained as to the value of the property itself. Steel charts, bridge records, etc., were established, and profiles, stationing, continuous bench-levels, etc., were all re-run or re-established; thus making the engineering work of the future more consistent and uniform, and enabling more work to be done with a smaller force. New maps of all the station grounds and terminals were obtained, and all the records were put in better shape than they had ever been before.
Examination of some of the old terminals brought to light many strange and out-of-date conditions. Old wrought-iron rails of antiquated pattern, old cast-iron frogs, etc., of a pattern which had not been in general use for fifty years, were found in the track. On some of the little-used sidings, the old wrought-iron rails were so worn that the tread of the rail was entirely gone, only the web remaining to carry the traffic, and such rails were still in use.
In such a valuation, also, many items, some of considerable magnitude, were found which were extremely difficult to classify and assign to their proper place. Such a one, for instance, as a soft, sand rock deposit beside the track, which for many years had furnished engine sand. Many thousand cubic yards of this material had been excavated, but it had not gone into the roadbed as ballast, or to make fills, or to widen embankments. It would hardly have been proper to classify such excavation as grading, for it was an item of engine maintenance and train operation. This is only one of numerous problems which had to be solved.
After all the survey had been made, most of the work of compilation had to be done. Some of it had already been done in the office by the small office force, but the great mass had to be done by the men who did the work in the field. This task was of almost incomprehensible magnitude. There were thousands and thousands of items, and such a great mass of figures that the ordinary man would become lost in the maze. The data had to be checked and re-checked by men who were not accountants, and sometimes most ludicrous mistakes were discovered. However, it was at last accomplished, and the writer's recollection of the "Present Value" of the Chicago and Northwestern property in Minnesota is that it was somewhat more than $23,000,000 for the entire mileage (about 625 miles), or an average of about $37,000 per mile of track. Hardly any of the mileage would be called high-class or trunk-line track, but most of it might be classed as second-class or important branch-line railway.
E. Kuichling, M. AM. Soc. C. E. (by letter).—This paper is a very valuable addition to the literature of a comparatively new subject that is rapidly attaining great political importance, and it gives abundant evidence of deep research and thought by the author. The reasons for determining the true value of such properties, as well as the general principles of making the valuation or appraisal, have been set forth so clearly and convincingly that little can be added in this respect; hence, there is room for comment only about details.
One of the perplexing questions is the determination of the proper value of the right of way and real estate of a railroad. The land was originally acquired at a certain cost, essentially for public use, and in the course of time its value, as determined by reproduction cost, usually becomes greatly increased by the development of the adjacent land by its various owners. Without the railroad, such development and appreciation of land values would probably not have occurred, and, therefore, it has been argued by many persons that, for taxation purposes, the railroad lands should be appraised at only their original cost, while, for capitalization purposes, they should be appraised at a value measured by that of the adjacent land at the present time. This claim is based on the theory that the railroad is like any other piece of public work, such as a canal, highway, or pavement, which is built for the use of the public, and on which no tax is levied by State or municipality. On the other hand, it has been held by some of our Courts that a proper valuation must take into account the appreciation or depreciation of land values; but, as the opinion of a Court is not unalterable, the soundness of this doctrine cannot be regarded as permanently established.
The author states[[41]] that there can be no serious objection to this doctrine in relation to rights of way in the country and small towns, although he admits that it is subject to exceptions in the case of cities and terminal and dock properties. It will be of great interest to learn his reasons for making such exceptions in the case of the most costly lands, and whether the valuation of such lands should be more or less than that of similar adjacent lands used for other purposes. From the context the inference may be drawn that the valuation should be somewhat higher than that of adjacent similar land in the case of a steam or interurban railroad, because its holdings form a continuous strip; but to the writer this reasoning does not appear satisfactory. The statement of the Court, that "the value of land depends largely upon the use to which it is put and the character of the improvements upon it," does not necessarily involve a higher valuation of the property than its cost, and it is quite conceivable that the actual value of the property after being taken by a railroad may be much less than it was before. The only reason in such a case for maintaining the purchase price is to conserve the general valuation of the adjacent similar real estate.