ESSENTIALS OF VALUE ?
the legitimate investment or the present value of physical
properties by means of a close estimate of the cost of reproduction.
 Such estimates are a check upon the records of actual
cost and are valuable even when used for no other purpose than
as a check.
The fashion is growing of making the estimates of the cost of
reproduction with attention to the minutest detail. These estimates
 are frequently made with more care and with more careful
 enumeration of items, of specials, fixtures and incidentals
and of labor and overhead, than would satisfy a contractor
bidding on the work. And when this is done, when the
sleeves and elbows of the pipe lines have all been counted and
weighed and fence posts have been pulled to determine their
length, unit prices are applied — sometimes as they prevail at
the date of the valuation but more frequently as they have prevailed
 throughout a series of years 2, 3, 5 or 10, in order to give
weight in a measure to the conditions under which the plant
came into being. An approximation results. Then, perhaps,
the accrued depreciation and deferred maintenance are estimated
 by some method of approximation and are deducted and
finally appreciation of value may be allowed and an addition is
made for the “cost of establishing the business” for going
value ” or for other intangible elements such as * franchise
or “water-rights.” To the original approximation other approximations
 are added with a result not always entirely satisfactory.

Where this is the case, one may well pause to consider how
far into detail the appraisal of the physical elements should go,
and whether there are not many cases where actual cost, with
such checks as may be necessary to determine whether the cost
is strictly reasonable and legitimate, would serve as the best
starting point when a rate-base is to be determined.
The expense of making an appraisal with strict attention to
every possible detail is not always justified and it may, moreover,
 defeat its own purpose, because by the time that a first
valuation is completed, as in the case of the railroad systems of

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