128 VALUATION, DEPRECIATION AND THE RATE-BASE 
plant which is to continue in service beyond the term of # years, 
is supposed to be held inviolable for the replacement of the plant 
at the end of its life. The owner reaps no benefit from it what- 
ever, beyond holding it as the means for replacing a worn-out 
plant. 
The value of the plant in its varied stages of depreciation, 
plus such amortization fund, should at all times be at least equal 
to the original investment. The owner, even if he gets an an- 
nuity, as here assumed, is entitled at all times to the interest, 
not on a plant valued at first cost or investment less deprecia- 
tion, but on the entire first cost. Had he determined, instead 
of building the plant, to keep his funds invested in safe securities 
at ordinary interest rates, he would, at the end of # years, have 
been in possession of his entire capital plus interest on the full 
amount thereof for the entire time. If, under the assumed 
facts, he were not allowed interest on the full amount invested 
in the public service plant, an injustice would be done. 
This is true even when replacement takes the place of amorti- 
zation. The owner in this case is entitled to interest on the 
entire capital invested in the plant, and, at the end of the 
plant’s usefulness, he is also entitled to a return of the capital 
itself. Suppose that a city constructs a plant, paying cash for 
it, and collects rates which will just yield a fair rate of interest 
on the investment. At the end of # years the plant is replaced 
with a new one of the same capacity. As the city has not 
included in its rates, theretofore charged, an increment for 
amortization, it now finds itself in possession of a new plant and 
a total investment twice as great as the cost of the first plant. 
Applying the same principles to the second plant, as to the 
first, rates should be doubled. This, of course, would be an 
absurdity. 
A charge by a city for service rendered which is less than 
sufficient to amortize the cost of the plant within its life may 
yet be equitable and proper, when the cost of the plant is inten- 
tionally put upon the whole community and not upon the rate- 
payer.