Michigan. Board of State Tax Commissioners

In 1900, Governor Hazen Pingree appointed University of Michigan engineering professor Mortimer E. Cooley to be "Appraiser of Railroads." The purpose of the appraisal was to shift the basis of taxation from a specific to an ad valorem or estimated value basis. The work commenced in September of 1900 and was completed in the spring of 1901. Cooley was to be in charge of the physical property of railroads, and his colleague at the university, Henry Carter Adams, was to be in charge of the "non-physical" or intangible property. Assisting Cooley as assistants were Theodore H. Hinchman and Henry Earle Riggs. Actual examination of the railroads lines was undertaken by a staff of more than 130 investigators.

At Pingree's request, Cooley began with the Ann Arbor and Grand Trunk railroads which were established under different laws than the other state railroads. When these were completed, Cooley and his staff went on to appraise the other roads. The valuation was to cover about ten thousand miles of railroad line owned by seventy-eight corporations and about thirty small unincorporated railroads. Included in the appraisal were telegraph and telephone property owned by the railroads, plank roads and river improvements properties, and all other properties. As so-called lumber roads were not part of previous appraisals, Cooley, by adding these special roads, was able to increase the total mileage of railroad lines subject to taxation. Every mile of road was personally inspected, and its physical condition was noted.

As many of the railroads, before Cooley's work, did not have proper records from which to determine the original construction cost of various properties, it was necessary "to make a complete and detailed inventory of every piece or parcel of property belonging to each company, to inspect every item in the field, to examine its condition, to secure data which would permit an estimate of observed depreciation to be made, to make a study of cost of material, labor, and construction as of the year 1900, and to prepare as a basis for the final figure of value an estimate of 'present value,' which is the cost of reproduction less the observed depreciation." The merit of this approach was in giving a uniform result when applied to a hundred different railroads. Writing years later, Henry Earle Riggs stated that the appraisal was the first extensive, state-wide valuation in the country. It was the first to develop theories of valuation and establish definite rules for field work and compilation of data. It was the first to develop the 'Cost of Reproduction' as a basis of valuation, and to determine the amount of depreciation by field inspection."