[17]. Transactions, Am. Soc. C. E., Vol. LXIV, p. 1.
Physical Values and Methods for Their Determination.
All the foregoing narrative of methods adopted in recent valuations, review of judicial opinions, and comment on the expressed opinions of various engineers and railway officials, is presented as being proper and necessary to support the contention that the Michigan valuation, while not the first appraisal work, was the first valuation work of large magnitude undertaken by any State; that it was a work which established many precedents; and that the complete discussion of methods and principles in connection with and following this appraisal has given it probably a greater general value than any similar undertaking. The Wisconsin work, which immediately followed that of Michigan, was along lines similar to those of the Michigan physical valuation, and carried the work forward, adding to and strengthening certain of its features. Without any impropriety, it may be claimed that these two appraisals have laid down the general lines on which this class of engineering effort will be largely directed in the future.
It is desirable, in closing this paper, to indicate such general methods of procedure in valuation practice as may be said to have been thoroughly established by precedent, and to present such argument as will support the contention that such methods are proper.
The fact has been emphasized, again and again, by every writer on the subject, that problems of this class are not capable of exact mathematical solution; that, no matter how much care may be exercised in the execution of the work, the result is tempered by the personal judgment of the men engaged on it, and that only when it is executed by men of experience, sound judgment, and high moral worth can it have a definite, final, and just result.
This feature of appraisal work cannot be too strongly emphasized. The value of the work depends on the character of the men doing it, their experience in design, construction, and operation of properties, and their absolute fairness and freedom from prejudice.
That there will be many large valuations undertaken in the near future, there appears to be no doubt. These valuations will be made as a necessary preliminary to three classes of corporate control: rate-making, taxation, and the regulation of capitalization.
The Courts hold that the value must be "the fair value of the property used for the public," and that the corporation:
"may not impose upon the public the burden of such increased rates as may be required for the purpose of realizing profits upon [such] excessive valuation or fictitious capitalization." (Smyth vs. Ames.)
This language is repeated, again and again, so that it is clear that any valuation, to be sustained by the Courts, should: