of unlawfulness is made, the Commission has authority "to · prescribe the rate, fare, or charge or the maximum or minimum, or maximum and minimum thereafter to be charged.'

Under Section 15, after the investigation therein provided for, and if on a proper record the Commission finds that a rate is or will be unjust or unreasonable, or unjustly discriminatory, or unduly preferential or prejudicial, or otherwise in violation of any of the provisions of this Act," authority exists to prescribe what rates shall supplant the rates so found to be lawful.

Paragraph (7) of Section 15 gives the Commission the right to suspend the operation of a schedule of rates. After such suspension, "and after full hearing whether completed before or after the rate, fare, charge, classification, regulation or practice goes into effect, the Commission may make such order with reference thereto as would be proper in a proceeding initiated after it had become effective." This grant of power in paragraph (7), with the same limitations, confers the same power in suspension causes as is granted the Commission in other cases described in paragraph (1) of Section 15. This power in all cases, however, is predicated upon the finding that existing rates are unlawful. In a suspension case, if the rates carried in the suspended tariff are unlawful, the Commission may order the cancellation of such tariff.

These provisions state and limit the power of the Commission with reference to prescribing minimum rates. Differences of opinion have developed, however, as to the exact extent of the Commission's power. In the Lake Cargo Coal case,477 the Commission denied the right of the carriers under the circumstances of that case to make competitive rates. The order of the Commission was set aside by a three-judge court478 and an appeal therefrom taken to the Supreme Court. The Supreme Court dismissed the appeal because the question had become moot, thus leaving the rights and powers of the Commission in this respect undertermined by that court.

In numerous cases, carriers seek to obtain the right to make what they call "less-than-maximum-reasonable rates"

477 Lake Cargo Coal, 139 I. C. C. 367.

478 Anchor Coal Co. v. U. S., Fed. (2d) 462.

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and contend that the minimum-rate power of the Commission does not prevent them from doing so. The Commission, in some cases, notably in the Hosiery case,479 has approved rates lower in one direction than in the opposite direction where the rates were filed to comply with the claimed necessity of making competitive rates. The Commission, discussing the matter, has conceded that carriers still have the option of establishing rates lower than reasonable maximum rates, and the Commission has further said that it will "sparingly" exercise its power to prescribe minimum rates. In one case,480 the Commission says (p. 410) that it does not possess the power to make minimum rates "so long as such rates do not impose a burden upon other traffic and so long as they do not go below the cost of service." Of course, in a proper case, the Commission would say that if two competitive rates produced unjust discrimination, its power to make minimum rates exists. In the Lake Cargo Coal case," the Commission said: "It is not enough that rates clear confiscation and yield something toward a fair return."

Summing up the decisions of the Commission, that tribunal may prescribe minimum rates to prevent carriers from violating Section 3, to prevent the making of rates that are so low as not to yield something in excess of the cost of service, and, as a corollary to this, to prevent rate wars. Of course, in determining these questions the Commission must exercise judgment and where there is substantial evidence its judgment is conclusive on the courts. It is not believed that the Commission's power goes so far as to refuse to carriers the right to make competitive rates unless such rates violate some of the provisions of the Acts to Regulate Commerce.482 § 90. Cost of Service.-The cost of the service is one of the elements entering into the determination of a just and rea

479 Hosiery from Southern Points, 156 I. C. C. 117. See also American Distilling Co. v. A., C. & Y. Ry. Co., 140 I. C. C. 633. For a contrary decision, see Pig Iron from Southern Points, 159 I. C. C. 671.

480 Salt Cases, 1923, 92 I. C. C. 389. See also Cement from Linwood, 140 1. C. C. 579.

481 Lake Cargo Coal, 139 I. C. C. 367.

482 Carriers still possess the right to initiate rates and rate-making policies, United States v. Ill. Cent. R. R. Co., 263 U. S. 515, 68 L. Ed. 417, 44 Sup. Ct. 189.

sonable rate,483 but it is not the controlling element except to the extent of indicating the minimum below which a rate cannot legally be made. In speaking of this matter, District Judge Bethea, in an important rate case,484 has well said: "The cost of service to a carrier would be an ideal theory, but it is not practicable. Such cost can be reached approximately, but not accurately enough to make this factor controlling. It is worthy of consideration, however." Commissioner Clements expressed the rule of the Interstate Commerce Commission as follows:485

"While in the relative adjustment of rates as between places on its line a carrier cannot rightfully ignore the relative cost to it of the respective services rendered by it, and since it ordinarily costs more to haul freight a longer distance than a shorter one, the carrier cannot rightfully ignore substantial differences in distance where all other circumstances and conditions are equal, or substantially similar. There are other matters of equal importance to that of cost of the service and often more controlling which must also be considered. Among these is competition both of carriers and of markets. The greater the inequality or dissimilarity in other potent circumstances or conditions the less controlling becomes the matter of relative cost."

In determining the cost of service, Mr. Commissioner Clem

483 Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418; Minnesota Rate Cases, 230 U. S. 352, 57 L. Ed. 1511, 33 Sup. Ct. 729; Kansas City Southern R. Co. v. U. S., 231 U. S. 423, 58 L. Ed. 296, 34 Sup! Ct. 125; Northern Pacific Ry. Co. v. North Dakota, 236 U. S. 585, 59 L. Ed. 735, 35 Sup. Ct. 429; Vandalia R. R. Co. v. Schnull, 255 U. S. 113, 65 L. Ed. 539, 41 Sup. Ct. 324; Banton v. Belt Line Ry. Corp., 268 U. S. 413, 69 L. Ed. 1020, 45 Sup. Ct. 534; Northern Pacific Ry. Co. v. Dept. of Public Works, 268 U. S. 39, 69 L. Ed. 836, 45 Sup. Ct. 412; I. C. C. v. C. G. W. Ry. Co., 141 Fed. 1003; Re Proposed Advance in Freight Rates, 9 I. C. C. 382; Western

Advance Rate Case, 20 I. C. C. 307; Southern Class Rate Investigation, 100 I. C. C. 513; Consolidated Southwestern Cases, 123 I. C. C. 203.

484 Int. Com. Com. V. Chicago Great W. R. Co., 141 Fed. 1003, 1015, and cases cited; affirmed, same styled case, 209 U. S. 108, 52 L. Ed. 705, 28 Sup. Ct. 493. Some attempts have

been made to devise a formula for ascertaining the cost of transporting particular commodities. For such a formula, see appendix B to the report in Upson Co. v. Ann Arbor R. R. Co., 157 I. C. C. 586.

485 Cannon v. Mobile & O. R. Co., 11 I. C. C. 537, 542.

ents said in another case: "Expenditures for additions to construction and equipment should be reimbursed by all the traffic they accommodate during the period of their duration, and improvements that will last many years should not be charged against the revenue of a single year."486 The principle, however, must be applied in connection with the holding in the Knoxville Water Co. case,487 that earnings should be sufficient to pay a reasonable return on the property employed in the public service and provide against depreciation. "Cost of service" could not, in any event, require an unreasonable rate, and, under some circumstances, a carrier may be compelled to perform a particular service to the public at an actual loss.

The Transportation Act, 1920, prescribes as something to be accomplished a definite return for the use of capital. Here the Congress has said that all the cost of service shall be paid by all the shippers, and that, included in this cost, there must be a definite return to the investor. Elsewhere in the 1920 Act are repeated provisions of the original Act requiring that all charges must be reasonable. The Congress has now made one factor, "fair return" on capital invested, an essential part of a reasonable system of rates, guaranteeing, in a sense, that the sum of all rates shall yield a fair net return on the sum of all investments, or all investments in each rate group. There is yet undertermined what portion of this "fair return" must come from each particular service. The problem of what constitutes a reasonable rate on one commodity or a few commodities is not simplified by this 1920 legislation.488

That cost of service should be considered in determining the reasonableness of a rate or a schedule of rates is but a

486 Central Yellow Pine Assn. v. Ill. Cent. R. Co., 10 I. C. C. 505; Ill. Cent. R. Co. v. Int. Com. Com., 206 U. S. 441, 51 L. Ed. 1128, 27 Sup. Ct. 700. 487 Knoxville v. Knoxville Water Co., 212 U. S. 1, 53 L. Ed. 371, 20 Sup. Ct. 148.

488"There is nothing in the act [the Act as amended by the Transpor

tation Act, 1920] requiring the use of the net return as evidence to fix a particular rate." Dayton - Goose Creek Ry. Co. v. U. S., 263 U. S. 456, 68 L. Ed. 388, 44 Sup. Ct. 169. See also Sec. 92, post, and Alldredge on Rate-Making for Common Carriers, Chapter IV, pp. 94-96, incl.

corollary of the proposition that each is entitled to his own,489 but this principle, like all abstract principles, must be regarded as merely a fact to be considered, and not an inflexible rule to be followed. The principle must be considered in connection with all the circumstances surrounding the transportation, the rate for which is sought to be determined. Regardless of the cost of service, some traffic can and should bear a higher rate than other traffic, thus necessitating the employment of judgment as to how much profit over and above the cost of service, even if such cost could be ascertained with certainty, a carrier should make in each instance. But it is impossible to determine with accuracy the cost of moving a particular kind of traffic as, under present systems of accounting, cost of each different service cannot be definitely allocated. As was said by Mr. Commissioner Lane,490 "once we have learned the comparative costs for various services, it is not fanciful to say that a schedule of rates may be made which will approach justice as between services. Supplement cost with scientific classification of freight, giving their due to all the various factors, such as value, bulk, and hazardespecially to value,-adding return for use of plant, and we have something certainly more nearly akin to reason than the hazard of a traffic manager, no matter how benevolently inclined. Such a theory gives force to every factor which the Supreme Court has said should be considered in the fixing of rates for public utilities. The investor would have his return, and the value of the property would be cared for as a part of the rate, though this return would, of course, vary with the rates as at present, one service making a larger return tơ capital than another."

But, until the facts suggested by the commissioner are available, cost of service is one of the factors to be considered in determining the reasonableness of rates. But, "neither the cost of the service, nor any of the other factors, of which there are many, should be taken alone as conclusive, "491 and this rule is not abrogated by the Transportation Act, 1920.

489 "Justice is the having and doing what is one's own."-Plato. 490 Advance in Rates, Western Case, 20 I. C. C. 307, 362.

491 Mr. Commissioner Clark in Coke Producers Association of the Cornellsville Region v. Baltimore & O. R. Co., 27 I. C. C. 125, 140.