lem. The Supreme Court, speaking of the basis of a whole schedule of rates, said: "We hold, however, that the basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. And, in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that there may not be other matters to be regarded in estimating the value of the property. What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth."883 In the same case, the court further said: "In passing upon questions arising under the act, the tribunal appointed to enforce its provisions, whether the commission or the courts, is empowered to fully consider all the circumstances and conditions that reasonably apply to the situation, and that, in the exercise of its jurisdiction, the tribunal may and should consider the legitimate interests as well of the carrying companies as of the traders and shippers, and in considering whether any particular locality is subjected to an undue preference or disadvantage the welfare of the communities occupying the localities where the goods are delivered is to be considered as well as that of the communities which are in the locality of the place of shipment." In a later case, Covington & L. Turnpike Co. v. Sandford, 164 U. S. 578, 596, 597, 41 L. Ed. 560, 566, 567, 17 Sup. Ct. 683 Texas & P. R. Co. v. Int. Com. Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. Rep. 666. 198 (Section 130, ante), it was held, that "the rights of the public are not to be ignored." The Supreme Court, in the Minnesota Rate cases,684 speaking of how to determine the "fair value" upon which a fair return was legally required, said: "The ascertainment of that value is not controlled by artificial rules. It is not a matter of formulas, but there must be a reasonable judgment having its basis in a proper consideration of all relevant facts." There is, however, a flexible limit of judgment which belongs to the power to fix rates,685 and, as to rates within the purview of the Interstate Commerce Acts, "the Commission is the tribunal that is intrusted with execution" of such laws.686 § 132. Same Subject-Some Statements of the Commission as to Such General Principles.-The Commission, in Delaware State Grange v. New York, P. & N. R. Co., 4 I. C. C. 588, 3 I. C. R. 554, 560, 561, in speaking of the general principles to be considered in rate-making, said: "The mandate of the statute is that all rates must be reasonable and just, but how the reasonableness and justice of a rate are to be determined is not prescribed by the statute, nor has any satisfactory test been evolved by transportation experts. Conflicts about rates arise from the conflicting interests of carriers and shippers. As carriers make their own rates, they have primary regard for their own interests, and often give less weight than they ought to the interests of those they serve. This is more frequently the case in the absence of competition. Under stress of competition, or sometimes for the purpose of developing business, rates that are equitable or even very low are likely to be made. But when a controversy arises between the public and a carrier, the question of the reasonable limit of a rate usually involves many considerations, and is often difficult to determine. A rate that might be regarded as reasonable and just by a pro 684 Simpson v. Shepard, 230 U. S. 352, 57 L. Ed. 1511, 33 Sup. Ct. 729. 685 Atlantic C. L. R. Co. v. North Carolina Corp. Com., 206 U. S. 1, 26, 51 L. Ed. 933, 27 Sup. Ct. 585. 686 Int. Com. Com. v. Chicago, R. I. & P. Ry. Co., 218 U. S. 88, 108, 54 ducer and shipper, might, from a carrier's standpoint, be deemed extremely unreasonable and unjust, and, so, conversely a rate that a carrier might claim to be reasonable in itself, and that it might support with strong reasons based upon the cost of the service, the quantity of the business and the characteristics of its line of road, might exhaust the greater part of the proceeds of the producer's commodity and be destructive to his interests. It is only stating a truism, therefore, to say there is no recognized test of a rate mutually reasonable for a carrier and for the producer of the traffic. "The reasonableness of a rate must consequently be ascertained in every instance in which the question arises, by its relations both to the carrier and to the shipper, and by comparison with rates normally charged for like or similar service." In Thompson Lumber Co. v. Illinois C. R. Co., 13 I. C. C. 657, 664, the Commission says: "In determining what is a reasonable and just rate many considerations are involved. Among these are the general financial and physical condition of the road, the character of the commodity in question, whether it constitutes a large or small part of the business of the carrier, whether it is economical or expensive to handle, how it compares with other commodities hauled, and, as evidencing the railroad's own judgment, whether a different rate has been in effect on this commodity at some other time." Cost and value of service are discussed by the Commission in Boston Chamber of Commerce v. Lake Shore & M. S. R. Co., 1 I. C. C. 436, 1 I. C. R. 754, 760, 761, as follows: "The element of cost of service which may at one period have been recognized as controlling in fixing rates has long ceased to be regarded as the sole or most important factor for that purpose. The value of the service with respect to the articles carried, the volume of business, and the conditions and force of competition are justly considered to have controlling weight in determining the charges for transportation. But even with regard to the cost of service the cost is at least somewhat greater to Boston than to New York." Import-tariff duties should not be counted as part of a transportation charge.687 "A railroad company may be operated with a less return than it ought to enjoy or even at a loss, but neither condition of affairs would justify the exaction by it of rates that are higher than they reasonably should be for services performed, all things being considered. ''688 The problem is difficult, the facts to be considered multitudinous and of an infinite variety of modifying conditions, from which the Commission, without applying any policy which runs counter to the power granted and the duty imposed upon it, seeks by "slow evolution" to develop a satisfactory system of rates.689 In the Eastern Advance Rate case," 690 the Commission said: "This Commission is called upon to deal with rates as they exist, and in so doing we ordinarily consider them, not from the revenue standpoint, but rather from the commercial and traffic standpoint. At the same time it is now the settled law that there is a limit below which the revenue of railroads can not be reduced by public authority, and if there were no such constitutional limitation it would nevertheless behoove every regulating body to permit the existence of such rates, when possible, as will yield just earnings to the railways. The question of revenue is therefore fundamental and ever-present in all considerations as to the reasonableness of railroad rates, although it may not be and seldom is, where single rates are presented, the controlling question." § 133. Same Subject-Discussion of Principles in Chicago Live-Stock Exchange Case.-In speaking of the factors to be considered in rate-making,691 Judge Bethea, citing authorities, said: 687 Florida Fruit & Vegetable Assn. v. Atlantic C. L. R. Co., 17 I. C. C. 552, 561. 688 R. R. Comrs. of Iowa v. Illinois Cent. R. Co., 20 I. C. C. 181, 186, citing Canada Southern Ry. Co. v. International Bridge Co., 8 App. Cas. 731. 689 Advances in Rates-Western Case-20 I. C. C. 307, 379. 690 Advance in Rates Eastern Case-20 I. C. 243, 248. 691 Int. Com. Com. v. Chicago G. W. R. Co., 141 Fed. 1003, 1015, 1016. Sustained in Supreme Court, Int. Com. Com. v. Chicago G. W. Ry. Co., 209 "A careful examination of the opinions of that court (as well as the evidence taken in these cases) shows that there are a great many factors and circumstances to be considered in fixing a rate.-Noyes, Am. R. R. Rates, pp. 61 et seq., 85-109. Among other things: (1) The value of the service to the shipper, including the value of the goods and the profit he could make out of them by shipment. This is considered an ideal method, when not interfered with by competition or other factors. It includes the theory so strenuously contended for by petitioners, the commission, and its attorneys, of making the finished product carry a higher rate than the raw material. This method is considered practical, and is based on an idea similar to taxation. Interstate Commerce Commission v. B. & O. Ry. Co. (C. C.) 43 Fed. 37, 53; Noyes, Am. R. R. Rates, 53. (2) The cost of service to the carrier would be an ideal theory, but it is not practical. Such cost can be reached approximately, but not accurately enough to make this factor controlling. It is worthy of consideration, however. Interstate Commerce Commission v. Baltimore & O. Ry. Co., 43 Fed. 37, 3 I. C. R. 192; Ransome v. Eastern Counties Railway Company (1857) I. C. B. N. S. 437, 26 L. J. C. P. 91; Judson on Interstate Commerce, §§ 148, 149; Western Union Telegraph Co. v. Call Publishing Co., 181 U. S. 92, 21 Sup. Ct. 561, 45 L. Ed. 765; Interstate Commerce Commission v. Detroit, Grand Haven & Milwaukee Railroad Co., 167 U. S. 633, 17 Sup. Ct. 986, 42 L. Ed. 306. (3) Weight, bulk and convenience of transportation. (4) The amount of the product or the commodity in the hands of a few persons to ship or compete for, recognizing the principle of selling cheaper at wholesale than at retail.-Interstate Commerce Commission v. B. & O. Ry. Co., 145 U. S. 263, 12 Sup. Ct. 844, 36 L. Ed. 699. (5) General public good, including good to the shipper, the railroad company and the different localities.-Interstate Commerce Commission v. B. & O. Ry. Co., 145 U. S. 263, 12 Sup. Ct. 844, 36 L. Ed. 699. (6) Competition, which the authorities, as well as the experts, in their testimony in these cases, recognize as a very important factor.-Pickering Phillips v. Lon U. S. 108, 52 L. Ed. 705, 28 Sup. Ct. 493. In this case the order of the Commission in Chicago Live Stock Exchange v. Chicago G. W. R. Co., 10 I. C. C. 428, was held invalid. |