Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Essentials of value

Collection:: Economics Books

72 VALUATION, DEPRECIATION AND THE RATE-BASE the country. The rental value is then low and the value is fixed rather by the supply of the desirable tracts of land than by the revenue which can be produced by cultivation. The unimproved farm and the unimproved town lot may be a source of expense instead of a source of income. The owner of such property expects appreciation to bring him a reward for having acquired and for hold ng the property. If he analyses his investment in such property after he has held it for a number of years, he may find that the first cost at compound interest, at savings bank rates, plus annual taxes amounts to more than other equally desirable property can be obtained for. His investment under such circumstances was not a judicious one, provided, of course, that the property while thus held was not income producing. But when real estate is held and is in use by the owner of a public utility, the intent is, whether always realized or not, to allow him to recover in the earnings at least interest on what this real estate has cost him. He is not in the position of the person who owns an unproductive piece of property. Never- theless, as already stated, in order to share in the unearned in- crement which he has helped to create for the community he should be allowed, if the prosperity of the community justifies this course, to earn more than ordinary interest on his invest- ment. In the Kennebec Water District Case, already cited, the court instructed the appraisers of the Maine Water Com- pany’s properties that “ subject to all the foregoing limitations, the owner is entitled to any appreciation due to natural causes.” If, in any measure, appreciation goes to the owner of a public utility which includes among its properties land holdings, then in the case of other utilities which include no appreciating property there should be a like opportunity for profit. In the case of these other utilities the unearned increment cannot be measured by the appreciation of land. Appreciation does not increase the invested capital. It is not essential that appre- ciation of land or of any other property be added to the rate- base; but the owner of the utility is, nevertheless, entitled to a reasonable share in the general prosperity which he helps to

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