INTRODUCTION AND GENERAL NOTES 
these installments may be, the canal will ultimately be paid for, 
in part at least, by foreign people. And if interest only is covered 
by the toll charges, then this Nation will stand in the position 
of having made a loan to the commercial interests of the world 
of $375,000,000 for the construction of the canal. 
Once the fundamental principle has been adopted relating to 
the extent to which commerce shall recoup the United States 
for its outlay and the question has been settled as to whether 
the users of the canal shall pay interest on the investment, the 
question of operating expenses will have to be taken up. Salaries, 
wages, materials and supplies are readily determinable. All 
expenditures for repairs and upkeep will be included with per- 
haps no difficulty until the question of depreciation is to be con- 
sidered. 
Shall each element or class of elements be considered sepa- 
rately, according to probable useful life, and some sum be set 
aside which together with interest thereon will replace the worn- 
out parts, or shall the amount to be set apart for replacements 
be determined directly from the relation of probable life to the 
cost of replacement of each perishable part by setting apart an- 
nually such a fraction of the cost that these annual increments, 
without interest, added together will be equal to the cost, or 
finally shall provision be made from year to year for the re- 
placements that will probably have to be made in each year? 
It is hoped that what is presented in this volume may prove of 
some assistance in the solution of problems of this character. 
Unprofitable Expenditures and Early Losses. — Unprofitable 
and unproductive expenditures which may be the results of 
mistakes or of accidents and early losses in the business are 
elements which should not be regarded as adding value to a 
property. They belong in some measure to the hazards of the 
business. They are, nevertheless, to be taken into account 
when rates are to be fixed because they usually represent legiti- 
mate expenditures. They represent an outlay which in nearly 
every case would have been incurred under consent of the rate- 
payer, if the owner had been acting as the agent for the rate- 
0