These are not by any means all the perplexing questions that arise; each valuation offers some that are special, but these cover the more important points. (_a_) _Classification of Properties._—In making an appraisal involving the properties of a large number of companies, such for instance as any of the State railroad appraisals, it becomes evident that there are certain properties which are small, badly run down, and either built to serve a very limited trade or located in a territory which has not developed, and that such properties cannot be compared equitably with the large trunk-line roads, or even with smaller roads in a good territory and doing a good business. Several such properties exist in Michigan in a district which was originally a lumber-producing country, and at the time they were built local conditions were such that prices of timber and labor were far below any cost that it would be reasonable to assume to-day. Whether taxation or rate-making be the ultimate end of the work, it is certain that these carriers are entitled to some classification which will separate them from the more prosperous roads. Many of these roads would not be built to-day under any circumstances, yet their maintenance and continued operation is absolutely essential to the people of the district served by them. Whether this classification should be undertaken at the time of making the appraisal of physical property, and an attempt be made to classify unit prices, or whether this should be taken up in connection with the intangible values, and solved, as far as the valuation is concerned, by the adoption of such a method as will affect these physical values by a subtractive or negative non-physical value, or whether the entire matter should be left for the subsequent work of rate-making or assessment, is one which must be determined at the outset of the physical valuation. It may not be left without determination, as the question will be raised in all probability in the form of an attack on the valuation, if it is not considered and a conclusion reached. It is the writer's opinion that the application of an intangible subtractive value is the proper solution, except in the case of roads which would not to-day be rebuilt. In fixing a uniform price for identically the same labor or material, whether on a small poverty-stricken road or a main trunk line, no serious injustice is done, provided the price fixed is one which, from a strictly engineering standpoint, is a reasonable figure for cost of reproduction. The differences in class are due, not to special differences in cost of physical property, but rather to differences in earning ability on account of good or poor territory served, efficient or inefficient management, or other reasons not connected with the physical structure; hence such differences are reflected in the earnings, and are clearly elements to be adjusted in the non-physical valuation.