base would be as of January 1, 1928, based on the commission's valuation. That figure is $36,045,995.66. Those figures are for the District of Columbia only. The Court of Appeals of the District of Columbia, in its decision in the Capital Traction Co. case, rendered February 7, 1927, decided that the fair value as of January 1, 1925, was $25,756,880. This amount was made up as follows: Reproduction cost as of Jan. 1, 1925, of physical property the reproduction cost of which was found by the commission as of 1914 to be $10,966,214... From this figure the court deducted the value, as included in the above figure, of retirements between July 1, 1914, and Jan. 1, 1925, amounting to.. This left a difference of They then added certain values found by the commission, including Grace Street buildings and equipment (less retirements). Preliminary operation expense Intangible elements of value.. And added also the additions from July 1, 1919, to Dec. 31, 1924, And working capital (one-twelfth of the operating expenses for Making a total, as shown above, of $20, 568, 035 2, 630, 616 17, 937, 419 748, 182 114, 333 309, 000 30,000 1, 946, 281 4, 289, 826 125, 688 256, 151 25, 756, 880 The figure first given, of $20,586,035, was obtained in the manner shown in Exhibit No. 4 of the commission's merger hearing. That was explained to-day by Mr. Hanna, I believe. The increase allowed by the court over the commission's valuation is caused by the use of 1925 reproduction cost and the refusal of the court to make any deduction for depreciation, whereas the commission used 1914 reproduction cost, less depreciation, and added subsequent additions. The Capital Traction Co. presented an exhibit at the merger hearings, claiming that the value of all their properties at January 1, 1928, was $26,427,290.44. This was made up, as shown in their Exhibit No. 7, by adding to the court's determination the net additions for 1925, 1926, and 1927, amounting to $267,679.43, and then adding in Maryland property, $402,731.01. The Washington Railway & Electric Co. submitted an exhibit, No. 15, based on the court's decision and exhibits showing additions and the computation of the value of their Maryland property. Their total was made up as follows: Jan. 1, 1925, value, District of Columbia... Net additions, District of Columbia, 1925, 1926, and 1927 Total for the District of Columbia_ Jan. 1, 1925, value for Maryland... Total for Maryland. Total for District of Columbia and Maryland... $30, 385, 263 955, 401 31, 340, 664 4, 595, 096 234, 603 4, 360, 493 35, 701, 157 62, 128, 447 As previously stated, these figures represent the claims of the comnies. They have not been checked as to computation, but agree sely with similar computations made by our accountants, as far property in the District of Columbia is concerned. It seemed ile to merely check their computations, and accordingly I used a ferent method. A number of trend curves were examined and certain ones were ected as varying too greatly from the others. For example, the gineering News-Record curve was higher than all the others. he Bureau of Labor wholesale commodity index was considerably low a group of others which agreed closely. Also the court of peals rejected this index as being inapplicable. An average of ree closely agreeing curves was adopted. The greatest deviation om the average of the trends combined to make the average was per cent in 1920, the year of highest costs. I present as an exhibit e curves used; and the two following tables for the two companies ere prepared from these curves. (The statements referred to are as follows:) ABLE No. 1.—Washington Railway & Electric Company (District of Columbia)— Estimate of cost of reproduction of physical property as of December 31, 1927 TABLE NO. 2.-The Capital Traction Co. (District of Columbia only)—Estimate of cost of reproduction of physical property as of December 31, 1927 The total figures shown on these tables represent an estimate of the reproduction cost new of physical property, exclusive of lands, materials, and supplies and working cash. Taking first the figures so determined for the Washington Railway & Electric Co., showing the total reproduction cost of physical property, as above, $30,565,010; I deduct 15 per cent for depreciation, amounting to $4,584,752, showing a depreciated reproduction cost of $25,980,258. I then add back the land, which was found by the commission to be worth, as of July 1, 1914, $830,598, less the retirements of a portion of that land, $11,209, making the net amount, $819,389, making a total value of physical property, $26,799,647. The commission allowed intangible elements, $2,321,439; preorganization expenses, $341,500; preliminary operation expense, $35,500; total, $2,698,439. These figures are those allowed by the commission as of July 1, 1914. The present practice tends toward including all these under one heading as "Going concern value." Ten per cent is usually allowed, and since 10 per cent is slightly less than the above, add, $2,679,965, making a total of $29,479,612, to which must be added materials and supplies at December 31, 1927, $204,937, and onetwelfth operating expense for 1927 as an allowance for working cash, $317,715, making a total for the Washington Railway & Electric Co. of $30,002,264. Then for the Capital Traction Co. the reproduc |