The discussion of this topic, together with the opinions of counsel as to the legal status, is of interest. The Commission did not consider the value of paving as constituting any part of the physical property, the value of which must be supported out of earnings. The present value of the pavement was estimated and reported without specific recommendation as to whether an allowance should be made.
The valuation of real estate was left in the hands of real estate experts familiar with values in Chicago, each piece of property being personally examined and valued, and the representatives of the roads given such hearings as they desired.
In computing the value of physical properties, an allowance of 10% was made to cover the following items:
"1.—Legal Expenses—including those incurred in securing right of way and frontage consents.
"2.—Interest or carrying charge for the money expended during the construction period and up to the time the property goes into operation.
"3.—Brokerage—or the expense of securing the necessary moneys.
"4.—Contingencies—to cover incomplete inventories, unforeseen difficulties of construction, and any and all other items of expense which cannot be foreseen."
The only novel feature in this list is Item 3, which was not included specifically in any of the railroad valuations made by States and heretofore described.
The franchise and intangible property valuation, amounting to some $9,000,000, or about one-fifth of the total, was a very important phase of the work, and the Commission gave up a large part of the report to its discussion.
The difficulties in this part of the work are described as threefold: