Page:Harvard Law Review Volume 32.djvu/590

554 HARVARD LAW REVIEW truth in the statement that cost has less, and value more, to do with rates for particular services than with entire schedules. The proposition that the value of the service does not count at all in fixing rates is evidently only less erroneous than the proposi- tion that it is of coordinate importance with cost. To say that nothing counts but cost is to say that courts require a rate of profit which is absolutely uniform on a fair value which is defi- nitely ascertainable; whereas the fact is that the fair value of an entire property is matter of opinion, the proportion of it which should be attributed to a particular service is matter of guess, and various rates of profit are thought proper in various cases. The value of the service, in the sense of some of the considerations of public policy which affect the question, what the rate ought to be, is an actual rate-making criterion, although subordinate to cost. And it seems highly desirable that this subordinate effect should be allowed to some of these considerations. The argimient rests in part on the assumption that a general diffusion of things is de- sirable. As time goes on, more kinds of things are used by more people in more places. This constitutes progress in the sense that it is the direction in which we are moving, and it is generally as- sumed to be progress in the sense of being desirable. And atten- tion to the value-of-the-service sort of consideration in the making of rates encourages this diffusion. Take the prosperous or depressed condition of an industry which a public utility serves. To say that an industry is prosperous means that it is disposing of an unusually large amount of its product, or selling it at an unusually high price, or both. From the fact of large sales it follows that the dissemination of the product does not, relatively to other commodities, need encourage- ment, and is not likely to cease or become insignificant if it is made necessary to charge a higher price. From the large margin of profit it follows that a higher rate to the public utility might not make it necessary or feasible to charge a higher price for the commodity. From both circumstances or either it appears that the use of the article will not be disastrously interfered with by a higher charge on the part of the public utility. The reverse of all this is true in the case of a depressed industry. It is, by hypothesis, marketing unusually httle of its product, or selling it on an unusually narrow