ESSENTIALS OF VALUE r) 
price or at an appraised value. Usually the method of making 
the valuation is agreed upon in advance in order that there 
may be as few points of disagreement as possible. The in- 
determinate franchise may be granted subject to various con- 
ditions such, for example, as an allowance of 10 per cent or 
some other amount on the actual investment if the property is 
taken over within 10 years; or that after a certain number of 
years a part of the earnings will be turned over to the community; 
or that certain requirements relating to the character and quality 
of the service will be complied with. 
The indeterminate franchise has not yet been fully tried out, 
but in those states in which suitable provision has been made 
for the regulation of rates, there is good reason to believe that it 
will prove satisfactory. 
Capitalization of the Franchise. — The tendency has been to 
capitalize the value of the franchise, in other words, to use the 
franchise as a basis for the issuance of securities. Perhaps there 
is some reason for this in the case of a perpetual privilege, when 
thereunder the assured earnings exceed the ordinary fair inter- 
est return on other similar investments; but the capitalization 
of the franchise, except the actual cost thereof, is now quite 
generally prohibited by the laws which provide for the control 
and regulation of the public service corporations, and the de- 
cisions of the courts are adverse to such capitalization. 
The Wisconsin Railroad Commission says on this subject in 
the Antigo Water Case (Aug. 3, 1909), “ That if the municipality 
required the payment of money or its equivalent, or there was 
necessary legitimate payment made for the franchise, then the 
sum which may be reasonably said to have been paid for the 
franchise may be included in the valuation, the same as money 
necessarily invested in physical property. But the Commission 
refuses to consider the claim of some experts and corporations 
that franchises for which no money was paid may have ‘in- 
tangible ’ values which should be considered in the making of 
rates.” 
The Public Service Commission Law of New York provides: 
“ The Commission shall have no power to authorize the capitali- 
zation of any franchise to be a corporation or to authorize the 
Ec