The author calls attention to one or more particulars in which the methods of the Michigan appraisal may "fail as a method of determining a value for use as a basis of rate-making." Later, after quoting various court decisions, he dismisses this phase of the subject with the words: "In view of these dicta, it is needless to argue whether a rate of 6% or 10%, or 15%, or more, be reasonable." A value for purposes of rate-making might more properly be called a "permissible value." The writer holds no brief for the corporations, and would not like to fall under the imputation of being "apparently incited by, either the direct interest of corporations, * * * or an effort to confuse the subject of valuations," but will venture the following, which, while it does not exactly represent any particular case, it is hoped may be recognized as an illustration drawn from life. A, B, C, and their associates, being familiar with a certain territory, its resources, transportation facilities, and growing development, believe that the time has come to build another railroad through their State or States. They have made careful estimates of the amount of tonnage that may be expected from the development of its mines, timber, farms, etc., and conclude as follows: _First._—The road, completed along the most approved lines, will cost, with equipment, $50,000,000. _Second._—It will take five years to construct and equip the road and put it in fair running order. _Third._—The traffic, when fully developed according to their hopes and expectations, will eventually afford at usual tariffs a handsome profit, say, from 8 to 12% per annum on the capital invested. This condition, they believe, in all human probability, will be attained in from 5 to 10 years after completion. _Fourth._—That half the traffic anticipated will pay 5% on the investment. _Fifth._—They are obliged to admit (though the chances of this are so remote as to be in their opinion negligible) that, due to unforeseen causes, obstruction, competition, etc., there is a possibility that, as has so often happened in the past, the enterprise may prove a financial failure, or that the period of prosperity may be postponed so far into the future as to amount to practically the same thing. Here is a bold undertaking; but were it $5,000,000 instead of $50,000,000, the conditions would be essentially the same. Nevertheless, they have the courage of their convictions and go ahead. Now, with all the risks and uncertainties attending an enterprise of this sort, if the ultimate profits were limited in advance to 5 or 6% on the capital invested, less depreciation, who but the Government itself could afford to build a railroad? Evidently, when an existing railroad makes small additions from time to time to extend or take care of its business, the risk is not so great. Such extensions will continue more or less under any limitations.