72 VALUATION, DEPRECIATION AND THE RATE-BASE 
the country. The rental value is then low and the value is 
fixed rather by the supply of the desirable tracts of land than 
by the revenue which can be produced by cultivation. The 
unimproved farm and the unimproved town lot may be a 
source of expense instead of a source of income. The owner of 
such property expects appreciation to bring him a reward for 
having acquired and for hold ng the property. If he analyses 
his investment in such property after he has held it for a number 
of years, he may find that the first cost at compound interest, 
at savings bank rates, plus annual taxes amounts to more than 
other equally desirable property can be obtained for. His 
investment under such circumstances was not a judicious one, 
provided, of course, that the property while thus held was not 
income producing. But when real estate is held and is in use by 
the owner of a public utility, the intent is, whether always realized 
or not, to allow him to recover in the earnings at least interest on 
what this real estate has cost him. He is not in the position of 
the person who owns an unproductive piece of property. Never- 
theless, as already stated, in order to share in the unearned in- 
crement which he has helped to create for the community he 
should be allowed, if the prosperity of the community justifies 
this course, to earn more than ordinary interest on his invest- 
ment. In the Kennebec Water District Case, already cited, 
the court instructed the appraisers of the Maine Water Com- 
pany’s properties that “ subject to all the foregoing limitations, 
the owner is entitled to any appreciation due to natural causes.” 
If, in any measure, appreciation goes to the owner of a public 
utility which includes among its properties land holdings, then 
in the case of other utilities which include no appreciating 
property there should be a like opportunity for profit. In the 
case of these other utilities the unearned increment cannot be 
measured by the appreciation of land. Appreciation does not 
increase the invested capital. It is not essential that appre- 
ciation of land or of any other property be added to the rate- 
base; but the owner of the utility is, nevertheless, entitled to a 
reasonable share in the general prosperity which he helps to