Public interest demands that, in any valuation, certain figures shall appear which shall show the amount of _bona fide_ capital actually existing in the property at the date of appraisal. The fact that a given amount of money was invested in building a railroad in 1880, and that certain other sums were spent for additions in subsequent years, does not necessarily indicate that these amounts of capital will still be found in the property in 1910. The removal of timber from surrounding lands, the destruction of industries and the removal of tracks leading thereto, the destruction of equipment and facilities, the depreciation in value of adjacent property, along with wear and tear, and obsolescence, have gone to effect the destruction or loss of capital on many Michigan railroads. The case in 212 U. S., 1, clearly directs that the valuation must not take into account this destroyed capital, but must return a "fair value of the property as it is." On the other hand, the amount of money actually spent in producing a given property in the past may be far below the present value. The appreciation of value of lands by reason of development of cities and growth of industries, the increase in cost of the materials entering its construction, and many other causes, may lead to an appreciation of the value of the property, and this appreciation should appear in the valuation and the company be entitled to the benefit of it. It is in the nature of an increase of the investment, and should appear as capital. It is clear that there are two classes of elements of value in the final value of a public service property: those which are physical, and those which are intangible. There are various of the physical elements of value which are not material or susceptible of inventory, but which, nevertheless, attach themselves to the physical property, are capable of determination, within reasonable limits of certainty, and should be taken into account and computed as physical property. In the subsequent discussion of physical and intangible values, it is attempted to differentiate between such elements as should attach to the physical value, or capital remaining in the plant, and the purely intangible or franchise values. It is contended by the writer: That the Physical Value, or present value of the physical property, should fairly represent the actual capital invested in the property at the date of appraisal; that it should be made up of the sum of the various elements which constitute the cost of reproducing the property together with any appreciation which may have been added to any of them, less all depreciation. That the Non-Physical Value is the difference between the "fair value" as defined by the Courts, or the reasonable value of the property as a business or producing property, and the physical value, or actual present worth; and that the only proper method for determining such values involves a study of income accounts.