2 VALUATION, DEPRECIATION AND THE RATE-BASE 
in the public service or not, is the task which was set in under- 
taking the preparation of this volume. It is hoped that the 
same will fill the gap for a time until wider experience of the 
valuation experts shall have eliminated the involved and ofttimes 
useless procedures which are still in practice and explanations 
of which have, therefore, been included in the text. 
The Public and the Owner. — The question may well be 
asked whether the reformer, who has been seeking protection 
against the demands of the trusts and corporations which have 
frequently been guilty of over-capitalizing, has not in his turn 
gone too far in the endeavor to reduce the earnings of the cor- 
poration-owned public utilities. The public has demanded and, 
in some measure, has obtained, from various rate-fixing bodies, 
and from the courts, the introduction of methods of procedure 
that are not always equitable, but the baleful effects of which 
are slow in becoming manifest. There has, for example, been 
no little confusion in the matter of defining depreciation and 
not a few valuation experts have had difficulty in grasping the 
fact, which when once recognized seems fundamental, that the 
repayment of capital (amortization), is one thing and that the 
making of provisions for the replacement of worn-out or dis- 
carded parts at the end of their term is another thing. 
It is fundamental that the owner of a public utility should be 
allowed: 
a. To obtain, sooner or later, a reasonable return on his 
investment. 
b. To recover at some time the capital invested for the public 
good. 
¢. To reap a suitable reward for establishing and managing 
the enterprise. 
It is the knowledge that these principles have obtained uni- 
versal recognition which prompts the capitalist to embark upon 
such ventures as those known as public utilities. 
Control of Public Utilities a Recent Innovation. — Until within 
the last few decades the control by the public of the operations 
of the public utility concern has generally been so loosely ex-