FACING A DEFICIT 153 



It is this obvious difference in conditions that first suggested 

 and led to the sliding scale. 



Let us take for consideration the case of a small town which 

 has recently built a water works plant. The amount of water 

 required could not be ascertained with certainty in advance, 

 and in any event it is wise to build works to anticipate a con- 

 siderable amount of future growth The result is that the 

 plant when first built has a capacity that is necessarily con- 

 siderably greater than sufficient to furnish the quantity of 

 water for which there is a remunerative market. 



Let us take concrete quantities, because they are easier to 

 talk about. Assume that the works have been built to supply 

 two million gallons of water per day year in and year out. These 

 works start in business and get what business they can, and at 

 the end of the second year, when most of the business readily 

 within reach has been secured and connected, it is found that the 

 amount of water sold is only half a million gallons per day. 

 Three-fourths of the capacity of the system is still in reserve 

 and unutilized. 



Under these conditions it is hard to make the business pay 

 its way. It is running behind and there is something of a deficit 

 in the interest payments and the deficit is beginning to be 

 embarrassing. 



There is a factory in town that as yet has not taken water. 

 It has a supply of its own for manufacturing purposes and that 

 supply is so readily obtained that there is no hope of selling to 

 it water from the public works at the rates that have been 

 adopted. If a rate could be made that was sufficiently low, 

 there would be a chance to do business. 



What naturally happens? The superintendent of the water 

 works and the manager of the factory get together, estimates are 

 made of the cost to the factory of supplying itself with water, 

 various matters are taken into account, and a contract is made 

 to sell some of the surplus water to the factory at a rate which 

 the factory can afford to pay. The price of water under this 

 contract is a mere fraction of the cost of water to the small 

 takers, but the amount paid for water under the contract adds 



