in the bonds of any other railroad corporation. In determining the amount of the assets of any savings bank under the provisions of this subdivision its securities shall be estimated in the manner prescribed for determining the per centum of par value surplus by section (257) of this article.

Street railroad corporations shall not be considered railroad corporations within the meaning of this subdivision.

8. Promissory notes payable to the order of the savings bank upon demand, secured by the pledge and assignment, if necessary, of the stocks or bonds or any of them enumerated in subdivision one, two, three, four and five of this section or by the railroad bonds or any of them mentioned and described in subdivision seven of this section, but no such loan shall exceed ninety per centum of the cash market value of such securities so pledged. Should any of the securities so held in pledge depreciate in value after the making of such loan, the savings bank shall require an immediate payment of such loan or of a part thereof or additional security therefor, so that the amount loaned thereon shall at no time exceed ninety per centum of the market value of the securities so pledged for such loan.

9. Real estate as follows:

(a) A plot whereon there is or may be erected a building or buildings suitable for the convenient transaction of the business of the savings bank, from the portions of which not required for its own use a revenue may be derived.

(b) Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its business.

(c) Such as it shall purchase at sales under judgments, decrees or mortgages held by it.

The trustees of a savings bank shall not be held liable for investing in state or municipal bonds named in the last list furnished by the Superintendent of Banks pursuant to section (52) of article two of this chapter, or in any railroad bonds mentioned in such list, which have been legally issued and properly executed, unless such savings bank shall have been notified by the Superintendent of Banks that, in his judgment, such bonds do not conform or have ceased to conform to the provisions of this section.

1

ELEMENTS OF THE COST AND VALUE OF A GAS PLANT 1

The cost of a gas plant and of acquiring its business may be subdivided as follows:

1. Preliminary development, which includes:

a. Investigation of the project;

b. Assembling of parties who may be willing to participate;
c. Preliminary engineering and legal advice on the proposition;
d. Canvass of territory to ascertain if sufficient business can be
obtained;

e. Estimate of cost of plant and probable income;

f. Incorporation of the company; and

g. Securing the franchise.

2. Real Estate,

3. Labor, materials and sub-contracts,

4. General contractor's profit,

5. Engineering,

6. Expense of company organization during construction, 7. Interest during construction,

8. Taxes and insurance during construction,

9. Stores, supplies and working capital,

10. Acquiring or establishing the business, which includes:

a. Expenses of canvassing for business;

b. Advertising;

c. Setting meters free of charge;

d. Interest on cost of plant in excess of income until business becomes self-supporting; and

e. Taxes and insurance during that time.

11. Legal expenses;

12. Financing, including banker's commission, discount on bonds and promoter's profits.

Many of these items are overlooked by those who have had no experi ence in the actual establishment of such a business, and that, no doubt, is the reason why the cost of such a plant and establishing such a business almost always largely exceeds the anticipated outlay.

The value of a gas property and business, however, exceeds the sum of the items I have mentioned, if the property is well located, and the property now in question is favorably located. (Case, pp. 446-453; also pp. 1278 and 1279.) If such a plant were not worth more than it cost

1 From Brief for the Prosecutor, Public Service Gas Company, Prosecutor, vs. Board of Public Utility Commissioners, et als., Defendants, New Jersey Supreme Court.

it would be unwise to construct it. And if it were known that the value of such a plant would be cut down for rate making to its actual cost less depreciation, capital could not be found to build it.

Actual disbursements in money for the construction of a gas plant must be made:

1. For preliminary development prior to beginning the actual work of construction,

2. For real estate,

3. For material and labor.

These expenses are sometimes called structural cost. After construction of the plant additional disbursements must be made.

4. For the development of the business.

These four elements of value of a gas plant are actual disbursements of money. There are also other outlays which are commonly called overhead charges, to which reference will be made hereafter. Such charges are really a part of structural cost. Besides, there are other elements of value of such a property, the principal of which are:

1. The value created by an organization of pieces of physical property into an income producing unit. This value was recognized and stated in the case of Newark v. State Board of Taxation, 37 Vr., 466; and has been repeatedly recognized and asserted by the courts. Adams Express Co. v. Ohio, 165 U. S., 194, and 166 U. S., 185.

2. The value created by uniting two or more plants or properties engaged in public service, whereby greater efficiency and reduced operating expenses produce better results at less cost; Cleveland Ry. Co. v. Backus, 154 U. S. at p. 444.

3. The rights or special franchises which confer the easement in or right of way through lands, indispensable to the construction and operation of the plant, and which also confer vitality and earning power on physical property.

The Lima Eastern Railway Company was incorporated under the Laws of the State of Ohio in nineteen hundred and five for the purpose of constructing an electric railroad from Lima, Ohio, to Marion, Ohio, a distance of fifty-five miles.

1 Prospectus of the Lima-Eastern Railway, proposed electric road connecting Lima-Kenton-Marion, Ohio. The F. A. Pease Engineering Company, engineers, Cleveland, July, 1906.

The various electric lines contemplated and constructed to the north, west and south from Lima have been shown to be profitable financial enterprises, and the patronage of roads in operation has been fully up to expectations. The lines in operation extend south to Springfield, Dayton, Xenia and Cincinnati; west to Fort Wayne, Muncie, and Indianapolis, and north to Findlay, Fostoria, Fremont, Tiffin and Toledo. The projected lines extend to Ottawa on the north and Bellefontaine on the south.

At Marion, the eastern terminus of proposed road, lines are in operation to Delaware, Columbus, Newark, Zanesville, Lancaster and Chillicothe, while other lines are projected north to Tiffin with Toledo and Sandusky connections; northeasterly to Bucyrus, and east to Galion, which will connect with Mansfield and, by the lines now under construction, with Ashland, Creston and Cleveland.

With the transportation facilities, with which each of the terminal cities is provided for traffic in other directions, there is no present connection between them except the Erie Railroad which, while having four through trains in each direction daily, has but one train which stops at all local stations. It is therefore impossible, under present conditions of transportation, for the residents of local towns along the line to go to and return from either of the cities at terminii during the same day.

PRINCIPAL FEATURES

The construction of The Lima Eastern Railway would connect three prosperous cities, the county seat of Allen, Hardin and Marion counties, and provide transportation facilities for an extensive and prosperous territory. The western part of this territory is at present inadequately served by a steam road; the eastern part, although paralleling the steam road, is remote from railroad at such a distance. as to give the proposed electric line practically all the local traffic. While the Erie Railroad passes through the three principal cities along proposed electric line, in every case the station is at such a distance, remote from the business center, that it becomes necessary for the traveling public to use the city cars or other conveyance. The electric road would accommodate passengers at the most advantageous points, thereby providing accommodations to the public which should secure. practically all the through passenger traffic as well as local.

The cities of Lima and Marion are among the most prosperous in the State of Ohio, both being noted for their extensive manufacturing and commercial enterprises. Allen and Marion counties, which are traversed by proposed road and in which are located the above-named cities, show an increase in population of eighteen and sixteen per cent.