way Company in 1909. This valuation was made the basis of a settlement ordinance fixing the terms of future municipal purchase and also fixing rates of charge. Special percentages of from 3% to 10% were first added to specific items, on account of conditions making necessary a special charge. In addition, to the total inventory value a percentage of 10% was added to cover organization, engineering, interest during construction, etc. The following is from Judge Tayler's decision: 4

I have divided overhead charges into two general classesthose which apply to the specific thing, and those which apply to the enterprise as a whole; the specific things which are done vary in the amount of overhead charge necessary in order to complete the work, that is to say, the contingencies and uncertainties and accidents are larger, for instance, in track laying than they would be in the purchase or construction of cars or other things of that character.

So that I have allowed as specific overhead charge applicable to track, ten per cent; to pavement, three per cent; to cars, land, buildings, overhead construction, return circuit, power stations, storage batteries, miscellaneous rolling stock and equipment, five per cent; and, to the other items, nothing specific, as applied to them, as, for instance, shop stores, auditors' stores and bookkeeping credits. The result of those is to make a total value up to that point of $15,175,565.28.

Now, we come to the subject of the general overhead charge which is applicable to the whole investment and cannot be separated or divided among the several items; some of them, if you took a separate item and undertook to apply the general overhead charge, might not have an application peculiar to that particular item, but I have undertaken as best I can to arrive at a fair statement of what is the general overhead charge in the construction of a property of this magnitude,

'Decision of United States District Judge Robert W. Tayler in the matter of the arbitration of the valuation of the property of the Cleveland Railway Company, December 16 and 17, 1909.

for financing, engineering, legal expenses, organization, administration, insurance, including accident insurance, superintendence, interest during construction, delays not covered by the specific allowances, consents, litigation with property owners, incidentals and contingencies not applicable to specific items, fifteen per cent; making the total actual physical value $17,511,305.62.

In the following tabulation the overhead charges allowed in this appraisal are shown in percentages of inventory

In the above the allowance for overhead charges includes allowance for financing, engineering, legal expenses, organization, administration, insurance, superintendence, interest during construction, delays not covered by specific allowances, consents, litigation with property owners, incidentals and contingencies. The total allowance amounts to 18% of the inventory-reproduction-costless-depreciation.

§ 245. Columbus, Ohio, Electricity Rate Case, 1906.

Columbus Railway and Light Company v. City of Columbus is an electricity rate case. The master reported in favor of a permanent injunction and his report was approved by the court. No itemized reproduction cost is approved by the master but from his discussion of overhead charges and the total cost of reproduction as found by him the following may be taken as a fair statement: 5

5 Columbus Railway and Light Company v. City of Columbus, no. 1206, in equity, U. S. Circuit Court, Southern Dist. of Ohio, Eastern Division, Report of Special Master T. P. Linn, June 8, 1906.

In this case the master did not consider cost-of-reproduction-less-depreciation, so the question of depreciation of overhead charges did not come up.

§ 246. Des Moines, Iowa, Water Rate Case, 1910.

The case of Des Moines Water Company v. City of Des Moines involves the validity of rates fixed by ordinance." The master reported that an injunction should be granted and his report was approved by Judge Smith McPherson. The master based his findings as to reproduction-cost-lessdepreciation on two estimates. Estimate number 1 was made up from the testimony of witnesses for the company and estimate number 2 was made up from testimony of witnesses for the city plus an apparently arbitrary addition of 20% upon certain items for contractor's profit which made the total of estimate number 2 very nearly equal to that of estimate number 1.

ESTIMATE NO. 1.

Inventory-reproduction-cost-less-depreciation... $1,452,092

Overhead charges..

Cost-of-reproduction-less-depreciation. . .

233,856

$1,685,948

• Des Moines Water Company v. City of Des Moines, no. 2468, in equity, U. S. Circuit Court, Southern Dist. of Iowa, Central Division, Report of George F. Henry, Master in Chancery, September 16, 1910.

Inventory-reproduction-cost-less-depreciation . . . $1,301,141

In this case the estimates for total cost-of-reproductionnew are not given by the master but his figures show that the allowances for overhead charges both under Estimate no. 1 and Estimate no. 2 were depreciated from 6% to 13% on the same allowances under cost-of-reproduction

new.

§ 247. Lincoln, Neb., Gas Rate Case, 1909.

The case of Lincoln Gas and Electric Light Company v. City of Lincoln, 182 Fed. 926, 928, decided April 6, 1909, is an action to enjoin the enforcement of an ordinance reducing the price of gas. In the following tabulation the overhead charges allowed in the appraisal in this case are shown in percentages of inventory cost:

In this case fair value for rate purposes was based on cost-of-reproduction-less-depreciation but the overhead charges were not depreciated. There was no allowance for interest during construction.

§ 248. Appraisal of street railways for Massachusetts Validation Board, 1911.

An appraisal of various street railways owned by the New York, New Haven and Hartford Railroad was made in 1911 in connection with an appraisal of that railroad. These appraisals were made to determine the relation of property to the amount of securities outstanding. The work was in charge of George F. Swain. In his report Mr. Swain discusses the overhead charges as follows (at page 123):7

In the preceding pages reference has been made to the appraisals of trolley roads. These appraisals have been based upon those made by Westinghouse, Church, Kerr & Co., which were in great detail and entirely reliable. Some changes have been made, however, in the overhead charges.

Report to the Joint Board on the validation of assets and liabilities of the New York, New Haven and Hartford Railroad under Chapter 652, Acts of 1910, by George F. Swain, Engineer in Charge. Published in Report of the Massachusetts Joint Commission on the New York, New Haven & Hartford Railroad Company, February 15, 1911, pp. 51-154.