544 HARVARD LAW REVIEW It has been pointed out that if any value criterion were set up as coordinate with the cost criterion, rates would sometimes have to be fixed below cost and sometimes above it. Consider first the idea of fixing rates below cost. Doubtless an economy is con- ceivable in which people would not produce goods and services because it was made financially worth their while, and in which capital would not be in private hands at all. But we are living in a society in which capital is in private hands, and one which gets its work done chiefly by the economic motive. Physicians and artists sometimes may, but the owners of capital as such cer- tainly do not, do for us what does not promise to be worth their while. Now more capital is constantly needed for public utilities. The chance of its earning a great return, which is considerable in some kinds of business, is now comparatively negligible in this. The needed capital is nevertheless supplied — because a reason- able return is considered certain. If we are to continue to get this capital by voluntary induction from private sources, we must continue regularly to allow it a return.^ Doubtless the rates for some particular services might be fixed below cost; but, if capital were still to be attracted into public utilities, it would be necessary to allow such high rates at other points in the schedule as to make the aggregate return satisfac- »» Cf. Robert H. Whitten, "Fair Value for Rate Purposes," 27 Harv. L. Rev. 419, 422: "There is . . . sound reason why in the long run the public cannot pay less" than the normal cost of production. Thorstein Veblen, The Nature op Peace, 325, "So long as the price system rules, that is to say so long as industry is managed on investment for a profit, there is no escaping this necessity of adjusting the processes of industry to the requirements of a remunerative price." In Re Portland Railway, Light & Power Co., P. U. R. 1918 B, 266, 274, 275, the Public Service Commission of Oregon, in granting an application for increased street- car fares, said: "A prime consideration in the investment of capital in enterprises designed to serve the public is the attitude of the public toward its servants, and this attitude is indicated chiefly by the actions of the rate-making authorities. ... If any Public Service Commission should make a practice of enforcing rates which would not attract free capital, it is certain that the commimity would eventually lose more than it would gain." Cf., also, L. R. A. 1915 A, 30, note. Re Bronx Gas & Electric Co., P. U. R. 1918 D, 300, 331, 332 (New York Pub. Serv. Com., First Dist.): "Capital can be drawn to pubUc utilities from private enter- prises only by establishing an attractive relationship between the certainty of the return and the percentage of the return the utility is allowed to earn upon the money put into the project by investors. If the Commission cannot make a moderate return fairly certain, the percentage of return must be higher, else capital will be repelled."
