have yielded large profits for many years, could not justly complain if their returns should be based upon the present fair value of their physical structure, but when the losses incurred in the developing period of the business of any public utility have not been requited, it would be doing grave injustice to the investors in such concern to so limit the returns upon the capital actually and prudently sunk in the enterprise under economical administration. We have taken the position, in certain cases, that the losses necessarily incurred in building up the business during its formative period are a legitimate charge against the public and should in such instances be considered in fixing rates. It is my personal opinion that unearned depreciation, unearned interest on the investment, and any operating charges that have not been paid out of operating revenues, from the inception of the enterprise until it reaches the point where the operating revenues are sufficient to pay fair returns on the legitimate investment, are generally as much a part of the value of the active property as interest, taxes, insurance, and other fixed charges incurred during the period of construction. The former may often be computed accurately from the records available and constitute the cost of establishing the business on a profitable basis. It is, in fact, the cost incurred in converting the property from a static state to a dynamic state, and forms the monetary measure of going value. Whether the full amount of such losses should be allowed in any given case, depends upon all the facts and circumstances surrounding the same."
The law provides for a system of uniform accounting, especially for construction and depreciation accounts. It is generally thought by the men who drafted this bill that these as well as publicity features were necessary protections to the public against the commission.
