CHAPTER IV
ESSENTIALS OF VALUE
Cost of Physical Elements
Supply and Demand. — The value of any property is usually
determined by the law of supply and demand. This is perhaps
best illustrated by reference to perishable property such as
articles of food which can be preserved in marketable condition
for a limited time only. According to information that may be
available relating to the world’s supply of wheat and of coffee
the value of the wheat or coffee will be high or low. The harvest
prospect in the case of such perishable elements has a direct
effect upon the market value. Or as an additional illustration
take the limited output of a great sculptor or artist. The de-
mand, particularly after the sculptor or artist has ceased to
produce, may greatly exceed the supply and in such case the
market value may rise far in excess of what would otherwise be
the value.
The popular actor, or vocalist, the skillful musician, the poet
and the author have something to offer in the world’s market
which is unique and may be in great demand, and therefore may
command a return out of all proportion to the compensation for
ordinary individual effort.
Cost of Physical Elements in Relation to Value. — Productions
of this type which have value are not here under consideration.
It is the revenue producing property which is to be discussed
and to which the chapters of this volume are addressed. Nearly
every such property is made up of both physical and intangible
elements. Taken in the aggregate this combination of physical
and intangible elements has value” based upon earning
capacity. This is a fundamental fact which if lost sight of may
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