CHAPTER II 
DEFINITIONS 
Value. — Value is the worth of anything measured by any 
standard of purchasing power. It is the exchange power which 
one commodity or service has in relation to another. The 
word value is used in this sense throughout this volume. The 
other meaning of the word relating to adaptability for a certain 
purpose has not been brought under discussion. It is only value 
in exchange and not utility which is of interest to the appraiser. 
A careful distinction must be drawn between the cost of an 
article and its value. The cost frequently determines the price 
at which an article is offered and taken in exchange and there 
may therefore be at times a close relation between cost and 
value. But the words are in no sense synonymous and cannot 
be used interchangeably. 
Value in the sense of worth estimated by any standard of 
purchasing power, is, in the case of such properties as public 
utilities, a result of the earning capacity. In the case of certain 
properties such as highly improved residence property a de- 
termination of value from earning capacity may not be imme- 
diately apparent but the rental value is nevertheless generally 
there and can be determined. In the case of such properties as 
works of art, however, which are not ordinarily revenue pro- 
ducing, but which are desired for the pleasure which they give 
and for educational purposes, the value in exchange cannot thus 
be measured, and consideration must be given to the more 
abstract question of supply and demand. The discussion in 
these pages will be restricted to the valuation of properties which 
have an earning capacity. 
Market Value. — In the sense in which used in this volume 
“ value ” is synonymous with market value. 
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