Note and Comment

Public Utility Valuation – Cost of Reproduction Theory and the World War – The very grave objections to the cost-of-reproduction theory of valuation of public utilities was pointed out at large in 15 MICH. L. REv. 2o5. The violent price changes following the World War have greatly increased the weight of these objections to calling anything a base which rests on such uncertainties and fluctuations as cost-of-reproduction. A base should be stable, but this has the stability Of a flying machine. There had been a rising curve of costs from 1893 to 1i16, but since that date the rise has been almost vertical. The public utilities by- the thousands desire to take advantage of it. They are as fond of cost-of-reproduction now as they were of original cost in 1893, while for the public the transfer of affections has been reversed. Cost-of-reproduction has not proved a friend that either party can trust, and if the present flight of prices comes back to earth the utilities will have a revulsion of feeling to the efficient investment theory of valuation for which the public just now exhibits a touching fondness. “The amusing, although regrettable,” changes in attitude toward the cost-of-reproduction rule have been stated with great clearness by the Indiana Commission in Re Indianapolls Water Co., P. U. R. i919 A 448, 464. In general, it may be said that the Commissions, being in more constant and intimate touch with conditions, are much more impressed by this than are most of the courts.