Such a theory, of course, does involve a determination of the probable order and rapidity of construction of the component parts of the property, and this is usually made, in water-works valuation, in the estimate of the reproduction cost of the property.

For the sake of completeness, in reference to the legal decisions of importance in valuation proceedings, attention is called to the Pennsylvania case, Brymer vs. Butler Water Company (179 Pa., 231), referred to in the closing discussion on the writer's paper on "Water-Works Valuation."[[45]]

In this case Justice Williams, speaking for the Supreme Court of Pennsylvania, says:

"By what rule is the Court to determine what is reasonable and what is oppressive? Ordinarily, that is a reasonable charge or system of charges which yields a fair return upon the investment. Fixed charges and costs of maintenance and operation must first be provided for. Then the interests of the owners of the property are to be considered. They are entitled to a rate of return, if their property will earn it, not less than the legal rate of interest; and a system of charges that yields no more income than is fairly required to maintain the plant, pay fixed charges and operating expenses, provide a suitable sinking fund for the payment of debts, and pay a fair profit to the owners of the property cannot be said to be unreasonable."

The Pennsylvania Court, therefore, in the words of William S. Wallace, Esq., recognizes the single standard:

"The Single Standard, according to the Brymer case, while acknowledging the full right of the public to regulate such public corporations, also recognizes as a prime factor its private character and the rights which accrue to it in that capacity, ... and holds to what seems to me the only rational and practicable basis, that a fair return, after deducting the charges above enumerated, is a reasonable rate"; whereas, "the Double Standard basis of fixing a reasonable rate seems to accentuate the public side of the corporation and rather ignores the private element."

As to the propriety of the inclusion of a substantial recognition of franchise value as a basis for rating, the layman may well confess to perplexity, in the light of the conflicting nature of the two important recent United States Supreme Court opinions referred to—the Knoxville case, and the Consolidated Gas Company case—for, while substantial allowance was made for franchise value, in the Consolidated Gas Company case decision, in large measure apparently on account of its earlier recognition by the legislature, in the Knoxville case, in spite of legislative recognition of such value, and similar approval of the issue of securities predicated on such recognition, the United States Supreme Court failed to make similar allowance for franchise value.

The author's treatment of the unit price question and the contingency item is intelligent and creditable. Engineers are prone to make valuations based on "hindsight" instead of "foresight," on the assumption that no substantial difficulties in construction were encountered, when, in fact, substantial difficulties should perhaps have been anticipated, and may actually have been encountered in the original construction, record of them having been obliterated, however, with the lapse of time.

The author's definition of the value of a property, as the "estimated worth at a given time, measured in money, taking into account all the elements which add to its usefulness or desirability as a business or profit-earning proposition," suggests the advisability of recognizing the other side of the ledger by modifying his statement so as to read: "* * * all the elements which add to, 'limit, or detract from' its usefulness or desirability as a business or profit-earning proposition."

While recognizing the author's view, that there is no separate and independent method of determining franchise value, which is not based on the determination of the value of the property as a whole, by capitalization methods, it must be recognized that going value may be determined independently, and may have a positive value, even though the property as a commercial whole is worth less than the sum of the physical value and the going value.