Purchase of this book includes free trial access to www.million-books.com where you can read more than a million books for free. This is an OCR edition with typos. Excerpt from book: CHAPTER II DEFINITIONS Explanatory.—Because of the present confused use of words and phrases in connection with rate-making and valuation, some brief definition of the terms used by the author is necessary. In too many instances the English language uses the same word for different meanings. In valuation work the call for words to define new meanings, or confused and indefinite ideas as to what is intended, has resulted in the use of the same word to mean different things. Value.—Academically the word "value" relates to "barter and exchange." One of the principal causes of demand—there are several—is usefulness or utility; consequently "value" may properly be used to measure utility. In valuation work, as a rule, loss of utility results in loss of value; maximum utility determines maximum value. The ratio of existing to possible utility, measures by the same ratio, when applied to cost as used in its largest sense, the existing value, in dollars, of the commodity or service. If the term related exclusively to barter and sale, only second-hand or scrap values would be considered, which is not the basis on which any appraisal has been or is being made for determining fair values of the "used and useful" property belonging to an operating organization. Physical or Structural Value.—As the term indicates, physical value relates to material things or substances, the property which can be "seen and felt," It includes, primarily, "those things which are visible and tangible, capable of being inventoried," but secondarily, certain non-physical charges "which are an inseparable part of the cost of construction but which do not appear in the inventory of the completed property." These secondary costs, which are usually included as a part of the physical property, either dire...