tary Savery reports "the character of the meetings has been instructive and entertaining, the subjects being presented by local and outside speakers. An outing is held every summer, the one this year being our ninth and we find that they are more popular every year." At the meetings of this section, topics of importance to everybody in the industry were discussed. Among the subjects were the following: "Future of the Street Railway Industry," Motor Bus Operation," " Street Railway Fares," "Track and Roadway Construction," "History of the Jitney," "Railway Equipment and Shop Efficiency," "Maintenance Costs of Equipment," "Saving Made by the Reclamation Shop," "A Study of the Actual Performance of Labor Saving Devices."

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Company Section No. 10, Hampton, Virginia, held nine meetings during the year, the attendance varying from twenty to eighty out of a total membership of eighty-two. Local speakers and representatives of various electric railway supply companies addressed the meetings. Talent found among the members gave musical programs and vaudeville sketches. This section appears to be very much alive.

Company Section No. 13 at Camden, New Jersey, held twelve meetings during the year. This is one of the most active of all the company sections. The programs included addresses by officials of the various cities and towns served by the members of this section, business men, lawyers and others who are particularly interested in the development of good transportation service. For relaxation there have been athletic entertainments, radio phone programs and various other features.

Company Section No. 2 has not been active during the year but Secretary Nelson reports that plans are being made for activity this fall and winter.

Company Section No. II at Toledo is conducted jointly with the N. E. L. A., A. G. A. and H. D. H. A. and is doing excellent work. The review of the company sections merely hints at what can be done through organization of these sections. It would be a great mistake, however, for executives to bring about establishment of sections and then leave them to run by themselves because unless the heads of the companies take active interest in the sections they cannot possibly accomplish the greatest good. The officers should attend the meetings, serve on the committees and manifest their keen interest in the successful career of the sections. Furthermore, in our opinion, the small amount of money required to provide the sections with meeting places and for whatever other expenses the members themselves may not feel able to pay, is repaid in a hundred different ways. If the company section idea were pushed to its ultimate possibilities,

it seems to us we might have one hundred thousand men enrolled in them. The good that could be done by such a membership is beyond calculation.

The Association headquarters' staff is glad to assist in organizing new Company Sections and in serving those that already have been established. We urge everybody who takes interest in this subject to call upon the Association for assistance in establishing sections.

Respectfully submitted,

WALTER A. DRAPER,
J. P. BARNES,

J. H. MALLON,

F. G. BUFFE,

CHARLES C. PEIRCE,
J. W. SHANNAHAN,

MARTIN SCHREIBER, Chairman,
Committee on Company Section
and Individual Membership.

APPENDIX

COMPARISON OF INDIVIDUAL MEMBERSHIP AS OF OCTOBER 31, 1921 AND SEPTEMBER 15, 1922

PRESIDENT TODD:- Is there any discussion on the report of Mr. Schreiber? If not, we will receive the report of the Committee on Nominations, Mr. Charles L. Henry, Chairman.

REPORT OF COMMITTEE ON NOMINATIONS

To President Todd:

The Nominating Committee submits the following nominations for the officers and members of the Executive Committee to be submitted at the Convention of the Association to be held on the Municipal Pier in Chicago, October 2-6, 1922:

PRESIDENT.-C. D. Emmons, President, United Railways and Electric Company, Baltimore, Md.

FIRST VICE-PRESIDENT.- Britton I. Budd, President, Metropolitan West Side Elevated Railway Company, Chicago, Ill.

SECOND VICE-PRESIDENT.— J. N. Shannahan, President, Newport News and Hampton Railway, Gas and Electric Company, Hampton, Va.

THIRD VICE-PRESIDENT.- Frank R. Coates, President, Community Traction Company, Toledo, Ohio.

FOURTH VICE-PRESIDENT.-W. H. Sawyer, President, East St. Louis and Suburban Railway Company, East St. Louis, Ill.

TREASURER.- Barron. Collier, President, Barron G. Collier, Inc., New York City.

Members of the Executive Committee representing railway companies whose terms expire in 1925.- Paul Shoup, President, Pacific Electric Railway Company, San Francisco, Cal.; James P. Barnes, President, Louisville Railway Company, Louisville, Ky.

Members of the Executive Committee representing manufacturer companies whose terms expire in 1925.- H. D. Shute, Vice-President, Westinghouse Electric and Manufacturing Company, East Pittsburgh, Pa.; Arthur Hale, New England Representative of the Griffin Wheel Company, Boston, Mass.

The report originally presented by the Committee included the name of C. K. Knickerbocker, but owing to the fact that he was not able to devote the necessary time to the position he has asked to be excused, and in his place the Committee has presented the name of Mr. Arthur Hale of the same company.

Respectfully submitted,

GEORGE H. HARRIES,
H. B. FLOWERS,

B. A. HEGEMAN, JR.,

E. F. WICKWIRE,

EDWARD DANA,

HORACE LOWRY,

CHARLES L. HENRY, Chairman,

Committee on Nominations.

C. L. HENRY :— Mr. President, I move the approval of this report and the election of the officers and members of the Executive Committee as reported.

PRESIDENT TODD:- Gentlemen, you have heard the report of the Committee and the motion made. Is there a second to the motion?

L. H. PALMER: I second the motion.

PRESIDENT TODD:- It is moved and seconded that the report of the Nominating Committee be received and the officers and members of the Executive Committee recommended by them be elected to the respective offices.

(The motion was put to vote and unanimously carried.)

PRESIDENT TODD:- The next business is the report of the Valuation Committee, Mr. J. P. Barnes, President, Louisville Railway Company, Louisville, Ky., Chairman.

(Mr. Barnes presented the report.)

REPORT OF THE COMMITTEE ON VALUATION

To the American Electric Railway Association:

GENTLEMEN:-`' -Your Committee on Valuation submits the following report, which is in effect a report of progress and running comment with special reference to "a continued study of the recommendations as to economic procedure for appraisals" as recommended by the 1921 committee.

One of the most recent and important pronouncements of the courts up to the date of preparation of this report is to be found in City of Houston vs. Southwestern Bell Telephone Company, 42 Supreme Court Reporter 486 (official citation not yet available).

In this case, the Supreme Court of the United States was called upon to determine whether the rate base should be ascertained by actual money invested, or by present value. The Supreme Court said: 'We think * * *that the proper base for rate making in the case is the fair value of the property, useful and used by the Company, at the time of the inquiry."

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There is evident in the writings upon the subject much confusion in the use of the terms "depreciation" and "deferred maintenance." Some writers object to the principle outlined in the well-known Carter-Ransom memorandum filed with the Depreciation Section of the Bureau of Accounts, on the ground that the principles therein outlined would operate to discontinue all present depreciation accruals. Depreciation is necessarily a function of maintenance, and with proper accruals to meet deferred maintenance charges, it may well be argued with considerable force, as in the memorandum referred to, that abandonments for obsolescence or inadequacy (which would be the only remaining reasons for abandonment), should properly be met by amortization rather than anticipatory accrual. This, however, is a matter of accounting rather than valuation, save for its very important effect in the determination of value by any "cost less depreciation" theory.

It is well to note in this connection the case of Kansas City Southern v. U. S. and Interstate Commerce Commission, 231 U. S. 423. In this case the Supreme Court recognized, as against the contentions of the Interstate Commerce Commission, the right of a public service corporation to amortize present abandonments out of future earnings. The court said:

"The railroad company may, if it sees fit, anticipate general depreciations, and make provision for them by establishing a reserve for the purpose; but if no such provision has been made the abandonments should be taken care of by charging them to present or future operating expense."