ABSTRACT
Mr. Murdoch’s first objection is to the floor-space item as part of the machine rate. He says “ the site and buildings have presumably been acquired as much for the purpose of sheltering and accommodating the employees and storing materials as for affording floor-space for the machines.” Finally Mr. Murdoch objects to applying depreciation percentage to diminishing values. The reasons for doing it are two. First, that while an old machine may do same work as it did when it was new, work is unlikely to be of same value, because when a machine is new it is generally competing with older and less advantageously designed machines, and when it is old it is generally competing with newer and more advantageously designed machines. And second, if a machine as it grows older is maintained at its original efficiency it is by means of an increasing repair expense, and there is some hope of equalizing this by a diminishing depreciation charge.
