526 HARVARD LAW REVIEW vailing rates exceed the reasonable worth of the services rendered and unduly discourage consumption of water." "Lower rates should at least be fairly tested." ^^ In each of these cases the tribunal treated with respect, and believed that it applied, the theory that rates must not exceed the value of the service, but in neither was that theory at all necessary to the result. There remain an abundance of dicta that rates may sometimes be fixed below cost. These examples from the United States Supreme Court are much quoted: "We do not wish to be understood as laying down as an absolute rule, that in every case a failure to produce some profit to those who have invested their money in the building of a road is conclusive that the tariff is unjust and unreasonable. . . . There may be circumstances which would justify such a tariff." ^^ "The public cannot properly be subjected to unreasonable rates in order simply that stockholders may earn dividends." ^^ "It would not ... be claimed that the railroads could in all cases be allowed to charge grossly exorbitant rates as com- pared with rates paid upon other roads in order to pay dividends to stockholders. . . . The rule stated in Smyth v. Ames . . . that the railways are entitled to a fair return upon the capital invested . . . might not justify them in charging an exorbitant mileage in order to pay operating expenses, if the conditions of the country did not permit it." ^^ These sayings are all frankly dicta. In San Diego Land and Town Co. V. National City,^^ the court in sustaining rates of which the company complained spoke of the original-cost basis for comput- ing proper returns as "defective in not requiring the real value of the property and the fair value in themselves of the services rendered to be taken into consideration"; but, as there is nothing in the case to suggest that the rates of which the court approved would yield less than a reasonable return on the fair value of the property, the intimation that rates must in any event be kept down to the "fair value in themselves of the services rendered" is another dictum. '^ Goldfield Consolidated Water Co. v. Pub. Serv. Com. of Nevada, 236 Fed. 979, 986 (1916). ^* Reagan v. Farmers Loan & Trust Co., 154 U. S. 362, 412 (1894). '* Covington & Lexington Turnpike Co. v. Sandford, 164 U. S. 578, 596 (1896).
- » Minneapolis & St. Louis Railroad Co. v. Minnesota, 186 U. S. 257, 268 (1902).
« 174 U. S. 739, 757 (1899).
