304 VALUATION, DEPRECIATION AND THE RATE-BASE 
present-day conditions may be of service in segregating ‘ going 
value.” But when earnings are to result from rates yet to be 
fixed the case is somewhat different, and the question will arise 
whether the relation between cost of development actual or 
hypothetical, however ascertained, is a safe guide to the “going 
value’ which should be created by the profits of the business in 
excess of interest on the invested capital. 
Intangible values of whatsoever nature result from high 
earnings. They include not only “ going value,” but also in 
some cases water-right values and whatever may be included in 
such terms as ‘ franchise value,” ‘ good-will,” and the like. 
Such values do not exist unless the rates are higher, as the writer 
has elsewhere pointed out they should be, than would produce 
net earnings equaling the return ordinarily expected from money 
loaned for use in similar enterprises. 
The difficulty of using a hypothetical reproduction of an 
existing utility property, as a means of estimating the cost of 
developing the business, is apparent from the following considera- 
tion. The comparative plant is assumed to be an exact repro- 
duction of the existing plant. There is no competition between 
the two plants. It might be assumed that the moment that the 
comparative plant is completed, it will be in full service at the 
same earning power as the established plant. There would then 
be no appreciable development period. If such a period is 
admitted it implies a lack of completion of the comparative plant 
or the development period should be measured only by the time 
that it would take the consumer to put himself in position to 
avail himself of the service. The market in such a comparison 
is assumed to be at hand. The expert who resorts to this method 
of estimating going value will give his judgment wide latitude, 
and his conclusions are not apt to be convincing. 
Cost of Establishing Business is Not Going Value. — It is well 
to bear in mind, however, that if a community which is served 
by a public utility had undertaken the establishment of this 
utility as a public enterprise it would have been subject to the 
same and perhaps greater costs in developing the local business