(_e_) A reasonable profit on the fair value of the property. It is improbable that a reasonable profit on the fair value of the property could be construed to mean less than the interest or revenue from a like amount of Government bonds or other non-taxable securities. This ruling of the Courts fixes the rates at such a figure as to preclude the possibility of a deficit; from which it must follow that a negative going value cannot be created by a compulsory reduction in rates, for such action would be confiscation of property to the extent of the negative intangible value thus created; that is to say, if the Courts are right in the above ruling, then all intangible or going values are positive, and must be determined by using the most unfavorably situated railway as the basis of computation in determining the question of reasonableness of rates; and the rates in turn must be reasonable and proper before they can be applied to determine the intangible value. This raises an interesting and far-reaching query. Assume that a negative going value is the result of real competition between two roads such that the "fair value" of the less fortunate competitor is 20% less than its physical value. If rates are based on this valuation, are they really fair rates? For, suppose the rates had always been maintained at a point where the less fortunate road could just support its physical valuation. Clearly, no rate could then be enforced which would compel it to operate for less than a reasonable profit on the fair value of its property, and the fair value under this assumption is 25% greater than before, due to no effort of its own, but simply to the fact that its competitor has not cut rates, and has thereby preserved the original "fair value" of the less fortunate road, and at the same time increased its own positive going value by an equal amount. In view of this analysis it is doubtful if it is ever proper to consider the existence of negative intangible values, although it is true that the commercial value does fluctuate, and may be less than the physical value, due to rates which are too low, perhaps, or due to other temporary causes. The method quoted from Mr. Alvord for determining going value applies to non-competitive enterprises only, as was stated by Mr. Alvord in his paper before the American Water-Works Association. This method is open to the criticism that the forecast of the business of the older works, and of the new hypothetical works as well, is reduced to a monetary value, based on the present rates, regardless of whether or not such rates are reasonable. Rates are subject to legislative control in many States, and there is absolutely no assurance that any other State may not adopt legislation at any time permitting regulatory ordinances to be enforced. Therefore, any forecast of the value of future business must be based on reasonable rates, for otherwise it is merely an unwarranted estimate based on a fond hope.