This article focuses on the prudent investment theory in public utility rate making. It is author's opinion that successful regulation of public utility rates cannot be accomplished under the fair-value doctrine and that the investment method must be sanctioned if justice is to be done to the consumer, the utility, and the general public as well. Stated somewhat differently the author believes the fair-value basis of rate making altogether impracticable and unworkable, that it is basically wrong in its economic concept, that the circumstances which gave birth to the principle have long since ceased to exist, and that is a reasonably good job of public utility rate regulation is to be achieved it is through investment approach. No review of rate regulatory procedures in this country would be complete without a brief reference to leading decisions of the Supreme Court of the U.S. on the subject. Not only did the fair-value doctrine, which plagued regulation for many years, have its real genesis in a decision of that Court, but the decisions of that body have greatly influenced the thinking and pretty well dominated the practices in respect to public utility rate regulation

The Revenue Act of 1942 established legislation regulating the manner of taking war losses. The right to deduct such losses in computing taxable income had already existed under the casualty-loss provisions of the income tax law. After the World War I, property losses were difficult to establish, because there was a lack of specific provisions in the law and regulations, and this gave rise to delays, complications, and numerous inequities. Section 127 of the 1942 Act was provided to avoid a repetition of the previous experience. The taking of deductions was facilitated by allowing them on the presumption that the property had been destroyed or seized. The major point to be observed is that the new provisions made it possible for taxpayers to get the benefit of the loss deemed sustained in an enemy country at the approximate time deemed sustained, without actually proving the destruction or seizure of the property involved. At the time of writing the 1942 Act, it was recognized that after the war many properties deemed destroyed would be recovered in whole or in part

In 1937 certain justices of a U.S. state supreme court were of the opinion that there is no greater justification from the standpoint of public welfare for a law regulating accountancy than there would be for laws regulating rivet-catchers, janitors, or drain-layers, that the title "certified public accountant" is a trade name and that manifestly it was intended to give a monopoly of the accounting business. Happily, and as irrefutable evidence that progress as well as time marches on, this legal opinion was a minority dissenting one. Nevertheless, the statement that accountancy is a profession can scarcely be said to have attained the freedom from attack enjoyed by the statement that two plus two is four. On the other hand, the statement is now accepted as fact among the enlightened everywhere. One of the most difficult and misunderstood phases of defining the term "profession" is that of distinguishing it from the term "business." This distinction does not imply any superiority of the professions as such over business as such. The two are simply different. As a matter of fact, each is complementary to the other, for the professions could not exist without business and business would surely perish without the professions

Today small business binds together many diverse threads of a current problem which is visualized as containing jar-reaching implications, not alone economic but also social and political. Big business is seen as growing ever bigger, more concentrated, and more firmly entrenched, with small business at an ever-increasing disadvantage. The World War is blamed for much of the condition, because the productive power and the know-how in the hands of the larger companies gave them, during that period, an opportunity for tremendous growth and expansion in facilities and permitted them to add materially to their resources. Capital is, of course, essential in some degree to almost any business. In a merchandising venture funds must be available for the purchase of inventories and to finance sales during the period between shipment and collection. The condition of governmental red tape, regulation, and annoyance is a troublesome one for small business. The government of a complex industrial nation like the U.S. must impose controls, limitations, and restrictions on its subjects for the betterment of small businesses in the country