The author's emphasis on the necessity for eliminating the personal equation, as far as possible, is commendable, but a large exercise of discretionary judgment is inseparable from the process of appraisal. The fullest investigation of all pertinent facts should be made. Too much must not be expected from rules and formulas. They are education only. Governing principles must be understood, and subsequent procedure the writer cannot better express than in the words substantially as used on a former occasion:[[47]] Having considered the various factors likely to influence the value of any property under consideration, and having summarized the results, it will remain to determine the varying degrees of importance and weight to attach to each, and to decide, in view of all the attendant circumstances, what the amount is on which the company is entitled to receive a suitable return. This final solution can never be reduced to a mathematical formula applicable to all cases. The inquiry will have established approximate limitations, both as to maximum and minimum, but there will then usually be found remaining quite a wide intervening field for the exercise of discretionary judgment.
That the final result will depend to some extent on the personal equation, does not of necessity detract from its worth. It only shows the greatness of the problem, which requires for its solution the exercise of faculties higher than the application of mere formulas and mere routine, faculties which are rooted in laborious thought, in ripe experience, in moral worth.
A word concerning the use of experts on work of this class: Most valuations grow out of or grow into cases at law. Under the prevailing order, the litigants secure the services of the necessary expert appraisers, who, in the course of examination, are subjected to processes usually much better calculated to magnify than to harmonize differences, and to cloud rather than to clarify issues, to the detriment of the record, the confusion of the Court, and the attempted discredit of the witnesses and their profession. Self-defense is calculated to lead witnesses into undue reliance on rules and mathematical formulas, as direct means of obtaining the desired result, instead of aids for the final exercise of a right judgment as to the real value of the property for the purpose intended, simply because it is easier in dealing with attorneys to justify mere mathematical processes than to support opinion resting on considerations of a general character, not always readily measurable in figures. This tendency leads also to under-valuations. A change in the process of Court procedure relative to such expert evidence is needed, and the influence of the Profession, both individually and collectively, might be used to secure the appointment of such witnesses at the instance of the Court, instead of the litigants, to the great advantage, both of society and of those more immediately concerned.
C. D. Purdon, M. Am. Soc. C. E. (by letter).—A comparison of some of the more important items in the Minnesota valuation may be of interest. In the "Cost of Construction of Roadbed and Track," the principal items are:
| Land | 25.46% |
| Clearing and grading | 21.49% |
| Rails | 12.72% |
| Bridges | 7.01% |
| Ties | 6.72% |
These five items amount to 73.40% of the total cost, and "Adaptation and Solidification of Roadbed" to 4.53%, the other twenty-three items amounting to 22.07 per cent.
The estimated value of "Adaptation and Solidification of Roadbed" ranges from $543 to $1,542.80 per mile, averaging $1,231.92, which includes 4½% for engineering. If engineering is omitted, the average for all roads is $1,124.95, and for "Carrying Roads"[[48]] $1,128.16.
The "multiplier" for cost of right of way was ascertained from the market value of land in the vicinity, as shown by late transfers, and the prices paid for right of way at about the same time; this cost ranged from 195 to 891% of the market value. Taking "all roads," the cost of land for terminals was 71.05% of the total cost of land for all purposes, but only 3.78% of the quantity.
A. Mordecai, M. Am. Soc. C. E. (by letter).—Mr. Riggs has done a valuable service in preparing this very able and painstaking paper, as the subject of the proper value of Public Service Corporation property is one but lately demanding attention. When the country was undeveloped, and the railroad companies struggling for existence, and often ahead of the needs of the people, no criticism was made; but, during the last few years, securities have increased so largely, the increased issue often being manipulated so as to accrue to the benefit of a few individuals in place of the great mass of original security holders, rates have been made and defended on the plea that the increase was necessary to pay a fair interest on the capital invested, and increases in assessments for taxes were fought and criticized to such an extent by the companies that the public seems to think it absolutely necessary to have some investigating and regulating power. It argues that the history of the past shows that we cannot depend on the officials themselves, not from any desire to be dishonest or unfair, but merely that they cannot reach the proper point of view. After years of struggling, they cannot see the justice of being obliged to show their books or have their incomes disturbed, while they see a neighboring factory, owned by a like chartered company protected by patents and copyrights, greatly enlarged, and the company paying a very handsome return on an ever-increasing capital, without investigation of any kind.
No one supposes that any body of legislators or a committee selected from one should understand the situation better than the managers themselves, but the public, forced to look somewhere, demands that its representatives try to regulate these matters and see that no abuses occur, fully aware that the machinery is not perfect. It asks: