upr000063 98

end result of the order was found to be reasonable. ’'Following this decision the trend toward the cost base swept through and fairly engulfed the industry as well as regulatory bodies. In times of comparatively stable prices corresponding in general to cost of re­production, it is relatively unimportant whether original cost or present fair value be adopted. Surely the^ori­ginal cost theory'commends itself by^sheer simplicity of administration, but during inflationary periods it assumes alarming aspects and it may equally prove to be alarming during'a period of deflation. From^our viewpoint, however, we cannot indulge in a choice be­tween the fundamental philosophy of the original cost on the one hand and fair value on the other. We be­lieve that we are directed, not only by the legis­lative, but by the Supreme Court, in the course which we are to pursue upon this phase of this troublesome question. In other words, both our legislature and our Supreme Court have told us that we are to operate upon the basis of fair value. "Our decision upon this subject must, by no means be taken as discarding the soundness of original cost for accounting purposes, nor are we discarding original cost as a very important and vital element to be con­sidered in determining the ultimate question of the fair value of the property. "As we see it, the determination of fair value is a matter of judgment. It is to be exercised by the Commission after giving lawful consideration to all the' various elements entering into the formation of a sound, reasonable, and intelligent judgment as to the present fair value of the property of the utility used and use­ful in its business. "We are considering this question at a time in the economic history of this country when we are experienc­ing the most violent inflationary period_of our national life. The evidence shows that the facilities and prop­erty of this utility have been constructed and acquired over a period upwards of thirty-five^years and it is^ incredible that fair value measured in 1949 dollars is not in excess of the origina.1 cost of construction or acquisition. 'If it is worth anything more than its original cost, it necessarily follows that in determ­ining its present worth, we are departing from origi­nal cost as the sole criterion of value." In the case of Indiana Bell Telephone Co., decided