Mr. Alvord's description of his method has been quoted fully, as it is an interesting one and has been often used. It is open to the very decided objection that it is purely theoretical, a rational method of computation, perhaps, but based on assumption throughout. It may be said to be a method which is within the field of pure speculation. Mr. Alvord, himself, says that where experience in financial matters and the financial management of water-works is not brought into the valuation, there is usually to be found guesses of the wildest character. Professor Mead, in discussing Mr. Alvord's method and agreeing that it is consistent and logical, says: "The method is by no means an exact one, and must necessarily lead to a very great divergence in opinions as to the 'going value,' in accordance with the assumptions on which it is based.... Its very logic is an element of danger, for if clearly presented from a biased standpoint to one previously unacquainted with its application, and if accepted without careful analyses it may lead to very unjust conclusions. If used, however, carefully and conscientiously with the desire to do justice to all concerned, it is a valuable method of estimating going value, and the only logical one with which the speaker is familiar." In addition to the element of going or business value, Mr. Alvord considers the franchise value, and presents two methods for its determination: _First._—The physical value, depreciation, and going value are entirely neglected, and the entire valuation is fixed on the basis of its earning power throughout the remaining life of the franchise and its probable sale value. The probable net revenue for each year of franchise life must be estimated and capitalized at a sum, which, if put at interest, would pay such yearly revenue and extinguish itself at the end of the franchise period. To this must be added the physical value of the plant at the end of the franchise period. _Second._—The cost of reproduction, depreciation, and present physical value are ascertained, and the going value computed. Then it is determined whether or not the net revenue is paying interest on a capitalized value greater than that indicated by the sum of the physical and business values. If such capitalized figure is less than this combined value, there is, of course, no franchise value; if it is more, there is a franchise value which should be determined by estimating, for the remaining years of the franchise, the excess income over and above that necessary to cancel all obligations (including interest on the physical and business values), and the reduction of these several sums to a basis of present worth.