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cc--Mr.Bracken (with copies Re*. Water rates- Las Vegas* Los Angeles, Mar 28, 1932 Bear Leo: I am enclosing herewith- copy of letter from Mr, Gray to Mr. Knickerbocker under date of March 17th, to which Is attached - profit and loss sheet of Las Vegas Land and Water Co. covering operations from 1920 to 1931, Indusive,*** also copy of letter from Mr. Knickerbocker to me under date of March 25th, with request for our "reaction to the President’s comments and questions on page 2 of his letter". Our Instructions were to ask for a 100 per cent in­crease; my file shows that the first schedule prepared was for an increase of 100 per cent, which was later revised by you and Walter to an increase of about sixty per cent— accord­ing to Jackson’s figures, and after conferences from time to time thereafter-- we finally agreed upon a new scheduls-- whieh was finally submitted to the Public Service Commission, resulting, as Mr. Gray says, in an increase of about twenty per cent. The reasons a larger percentage was not allowed by the Commission- are pretty well stab ed in our Petition for Recon­sideration, namely, (a), reducing the depreciation from four per cent to two per cent, (b) allowance of only #6,000 on val­uation of water, and, in addition, our being unable to show our full capital investment- on account of the annual reports theretofore filed with the Comm|»ssion, as our reports for 1928, 1929 and 1930 showed a capital investment of a little over #81,000. (see copy of my statement of physical values enclosed herewith). The actual capital investment as determined by the Valuation Department was #102,332.00, plus the value of the water we acquired under our permit So.7201* However this may be, I would like for you and Walter to give me your answer to Mr. Gray’s question, namely,— "Will you please advise why the application did not ask for the 100 per cent increase in all rates", for I can give no reasons other than that the schedule or rates and charges were adjusted and Increased to fix the total earnings at such an amount as to take care of all expenses and to earn such maximum profit on our in­vestment as it was believed would be permitted by the Public Service Commission; but you and Walter will have to furnish the details as to why the rates were not increased 100 per cent, but 100 per cent on some and less on others, making an average of about 60 per cent Increase, as you on, t£e ground and must be familiar with the reasons. ^ J