ELEMENTS DESERVING SPECIAL CONSIDERATION 297
suggested and which is novel, should appeal to all concerned as
logical and in accord with the common practice in ordinary
business affairs of allowing commissions based on the magnitude
of the involved transaction.
To summarize: —
No argument seems to be required to prove the owner’s right
to compensation for management.
This compensation cannot be brought into any definite or
satisfactory relation to what the author believes should be
designated as the natural rate-base, being the legitimate investment,
 usually determined from recent investment and cost of
reproduction including an allowance for cost of developing
business but without deduction of depreciation, because the
amount of business bears no definite relation to the amount of
capital invested.
If this compensation is brought into some relation to value
(including in value the going value of the concern), then the
reasoning will be in a circle and the proceeding will be illogical
and absurd.
It will always be fair to both the owner and the rate-payer to
let this compensation be brought into a proper relation to the
gross income.
The owner's share in the general prosperity of the community,
under the customary procedure of the rate-regulating authorities,
is recognized in those cases in which the utility plant includes
property which is appreciating in value. There may be some
unearned increment, in addition thereto, concealed in the allowance
 for “ going value ”” and in a rate of return in excess of the
cost of borrowed money, but so long as one concern gets the
unearned increment in large amount, due to increasing values
of real estate and other concerns apparently get none, the system
will be at fault. The participation in general prosperity should,
therefore, also be brought into relation to the volume of business
and not to a rate-base.
The business hazard is contingent in part on the amount of