Freight Car Inspection.—One of the most perplexing problems which was faced by the Mechanical Department was the proper and satisfactory inspection and valuation of freight equipment. The freight cars owned by the companies were scattered over the United States and Canada, and the inspection of any considerable percentage of those owned by any company was, of course, an impossibility. The fact that these cars had been purchased in series, so that there were considerable numbers in a group, all of the same age, and built according to the same specifications, made possible a valuation by groups. The acceptance, however, of any arbitrary percentage of depreciation by years, or the acceptance of the rules of depreciation of the Master Car Builders Association, without making independent investigation with a view of establishing the correctness of the rule, appeared to be unwise.
The several companies submitted carefully prepared statements of equipment. These statements were compared with the equipment register and the reports to the Commissioner of Railroads. The prices used were those of the rules of interchange of the Master Car Builders Association wherever applicable.
Prices were furnished by the leading manufacturers, and in many cases were secured from the books of the railroad company.
In order to determine the condition of the equipment, the inspectors of the department personally examined 32,000 freight cars in Michigan and adjoining States. Their reports were separated, classified, and analyzed by groups, with the result that the inspection fully confirmed and justified the use of the rule for depreciation of the Master Car Builders Association, which was therefore applied. In the 1902 appraisal this rule was accepted without any inspection or further study of the problem.
The criticism of this part of the work by the appraiser of the State of Washington is wholly unjustified, as the work was necessary in order to qualify in Court and defend the rule adopted, and the actual cost of the work was small.
Locomotives.—The inventory of locomotive equipment was secured from the companies, and checked against reports and the equipment register. Personal inspection was made of every locomotive in the State, then a complete description was prepared, and the percentage of depreciation assigned. Curves of depreciation had been computed and plotted, and the figures of the inspectors were compared carefully with the curve in order to eliminate possible errors.
Vessels.—Professor Sadler's appraisal of vessels involved a personal examination of every vessel. This survey included:
(a) The hull of the vessel and general equipment;
(b) The machinery and boilers.
An independent estimate of the cost of reproduction and depreciation was made, and, wherever possible, this was checked by comparison with the detailed original cost. In case of material difference, various shipbuilders were consulted, and independent estimates of cost were secured. In every case these latter estimates were confirmatory of the estimated cost of reproduction, which figures were used throughout the appraisal.