CHAPTER X 
NOTES ON THE DETERMINATION OF THE VALUE OF 
REAL ESTATE IN EMINENT DOMAIN PROCEED- 
INGS AND FOR RATE-FIXING PURPOSES 
Market Value of Real Estate and the Rate-base. — The 
market value of real estate is not to be confounded with the 
amount at which it is carried in the rate-base. While consider- 
ation must sometimes be given to market value in fixing the 
rate-base this is not always necessary. In fact the determina- 
tion of the rate-base should ordinarily be independent of market 
value because it is not “value” but “investment” which 
should be made the guide and control when rates are to be 
fixed. When there is uncertainty about the reasonable cost or 
when the first dependable valuation for rate-fixing purposes is 
made long after the acquisition of the property, circumstances 
may, however, point to market value at some agreed time as 
the best starting point. 
Market Value Defined in Court Decisions. — The U.S. 
Supreme Court in Boom Co. vs. Patterson (08 U.S. 403, 408; 
25 L. Ed., 206) says in discussing market value: 
“ The inquiry in such cases must be what is the property 
worth in the market, viewed not merely with reference to the 
uses to which it is at the time applied but with reference to the 
uses to which it is plainly adapted; that is to say, what is it 
worth from its availability for valuable uses. . . . Its capa- 
bility of being made thus available gives it a market value which 
can be readily estimated.” 
In this case the Boom Company had brought suit in Minne- 
sota against Patterson, a citizen of Illinois, to condemn three 
islands which were desired for use in connection with a series of 
log booms. A verdict was returned by the jury for $9358.33, 
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