VALUE OF THE SERVICE AS A FACTOR IN RATE MAKING 547 profits. Whether a company's net profits are more or less than is normal for similar companies has an immediate bearing on the question whether its profits, and consequently its rates, are rea- sonable; but a comparison of the rates themselves is significant only indirectly. As to the value of the article, of which much is made in discus- sions of the value of the service, it is hard to see why the shippers of valuable articles are not as well entitled as the shippers of cheaper ones to be served at cost, including risk and a reasonable profit. There is no public policy against owning or shipping valuable articles, and consequently no reason for imposing a tax on their circulation. Even if and when it is well to im.pose a tax on the circulation of some things, as being harmful or luxurious, the tax should be collected by the state and not by utility com- panies. To charge something in addition to cost for the transportation of a commodity has the same sort of effect as a customs tariff between the places affected. That interstate customs tariffs are forbidden by the Constitution is not the worst that can be said of them. They would prevent people in one part of the country from getting the maximum benefit from the low cost of produc- tion of particular things in other parts of the country. They would injure the consuming region by reducing consumption (and consequently the production of other things for purposes of exchange), and the producing region by reducing production (and consequently the consimiption of other things got by ex- change). A transportation charge which exceeds cost acts in the same way. In practice it would nearly always be impossible to fix rates below cost, whatever legal theory might have to say about it; while it would be very easy, if the law permitted, to fix them above cost in every case in which competition would not be stirred up by doing so. The net result of adopting the two halves of the value-of-the-service theory would therefore be a serious increase in public utility rates as a whole. It appears, then, that the various circumstances other than cost which are sometimes referred to, under the name of value of the service, as bearing on rates — such as the prosperity or de-
