(4) If rate-making or the sale of the property be the ultimate object, the work of making rates or of negotiating the sale can be carried on to better advantage with a complete appraisal than with an incomplete one.
(5) The work in the States of Minnesota and Washington was done with one object in view. It was ultimately used for another purpose. If a low valuation is deliberately made for taxation purposes, serious embarrassment is likely to arise when rate legislation is contemplated. It will be very difficult for an engineer to sustain his position when he submits one "true value" or "fair value," with the expectation that it will be used as a figure for assessed valuation, and another and radically different one as a basis for rate-making. It would appear to be much easier to submit a complete set of schedules, showing the cost of reproducing the physical property, depreciation, present physical value, together with all other elements affecting the final value, and then to point out that certain modifications would appear to be proper in an assessment for taxes.
(6) The actual making of rates or of assessments for taxation is not a duty usually assigned to a body of engineers.
Mr. Dana's discussion is directed to this phase of the subject, and brings out a number of points which are suggested above very fully.
This is a matter on which engineers have radically differed in practice, and it involves a principle of valuation which should be finally determined as soon as practicable. Further discussion in connection with this paper would hardly accomplish any definite end, therefore it is left, with emphasis on the fact that there are radical differences of opinion regarding it.
Going Concern.—The discussion of this paper, taken in connection with the paper by Mr. Alvord before the American Water-Works Association, and the recent paper by Messrs. Metcalf and Alvord,[[49]] brings out clearly three points of view:
(1) That of Professor Henry C. Adams, stated by him in various publications, and advocated by the writer in the paper: That there is no going concern value, as such, but that all intangible elements of value merge into one non-physical value, which may be determined by a study of the income accounts of the particular property under investigation.
(2) The "Wisconsin Method," sometimes called the Cooley Method. The general principles of this are described so fully and so clearly in Mr. Gillette's discussion, under the head of Development Expense, that further explanation is unnecessary.
(3) The method advocated by Mr. Metcalf in his able discussion of this paper, and by Messrs. Metcalf and Alvord in their paper.
The writer cannot concede the accuracy of the position of Mr. Burns, that interest during construction should be eliminated from the physical valuation of the property and included as part of the "going value." Interest during construction is no less a part of the actual cost of constructing the property than the rails in a railroad or the water pipe in a water-works plant. Nor can the writer accept Mr. Metcalf's optimistic view of the probable action of the Supreme Court when it will be called on to pass squarely on the "going concern" value in a rate case. Mr. Metcalf says: