522 « HARVARD LAW REVIEW there is not siif&cieiit business to sustain it, may be taken into account." This fair-value doctrine explains the Arkansas case of Missouri Pacific Railway v. Smith, which Mr. Wyman ^^ relies on for the proposition that "a reasonable rate" {i. e., evidently, a rate rea- sonable to the public), "may be insisted upon although the result is that the company does not get a fair return from its schedule as a whole." The case contains no suggestion that the company concerned was in danger of being deprived of a fair return from its schedule as a whole. The court simply held that the sum on which the company was entitled to a reasonable return was the fair value, and not an improperly inflated value, of its property. It held that the railroad's mere inability, under the legislative rates, to "pay the interest upon its just debts and the cost of maintaining and operating its railroad," was not fatal to the rates, because, for all that appeared, the debts might have been unreasonably and ex- travagantly contracted, and debts so contracted would not con- stitute value upon which the public could be required to pay a retvun. "Rates of transportation sufficient to enable the road to realize a sum large enough to defray current repairs and expenses and pay a profit on the reasonable cost of building the road and equipping it ought to be reasonable. The earnings of a road might be sufficient for this purpose, and yet not large enough to pay expenses and interest on its debts." 28 That a company cannot always claim a return on the value of property held for future use ^^ is simply another illustration of the principle that the basis on which reasonable returns are cal- culated is the fair value of what the company is using for the pubhc service, at the time when it is using it. Clearly, cases holding that the fair value of the property em- ployed is or may be something less than the property cost do not thereby hold that rates need not provide a reasonable return on ^ Bruce Wyman, 2 ed., Beale and Wyman, Railroad Rate Regxilation (1915), § 225.
- 60 Ark. 221, 242-44, 29 S. W. 752 (1895).
The case also involves the theory, now discredited, that a utility is not entitled to a reasonable return on every branch of its business, but only on its business as a whole. 29 Capital City Gashght Co. v. Des Moines, 72 Fed. 829, 845 (1896); Southern Pacific Co. V. Bartine, 170 Fed. 725 (1909).
