as individuals. The value of the services in themselves is to be considered and not exceeded." The company engages in a voluntary enterprise. It is not compelled, at the outset, to enter into the undertaking. It must enter, if at all, subject to the contingencies of the business, and subject to the rule that its rates must not exceed the value of the services rendered to its customers. It has accepted valuable franchises granted by the state, franchises ordinarily exclusive for the time being, franchises which ordinarily debar the public from serving themselves satisfactorily in any other way; and in return it must perform the duties to the public which it has voluntarily assumed at rates not exceeding the value of the services to the public taken as individuals, and this irrespective of the remuneration it may itself receive."

321. The complexities of the general problem.

So many considerations must be taken into account in passing upon rates that the problem is always a complex one. The difficulties, many of them, arise from the desire to give scope to a variety of principles which must inevitably come into a more or less irreconcilable conflict. The language of the Interstate Commerce Commission in dealing with the reasonableness of a particular rate called in question before it will be helpful again in gaining an appreciation of the conflicting principles involved.4

"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

4 Delaware State Grange v. New York P. & N. Ry., 3 Int. Com. Rep. 554, 4 I. C. C. Rep. 588 (1891).

weight than they ought to the interests of those they serve. This is more frequently the case in the absence of competition. Under the 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 producer 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."

§ 322. Application of both tests necessary.

It must therefore be assumed, as the basis of further discussion, that not only is it desirable that the company performing the service should have a fair return, but that it is also desirable that the person served should pay no more than a fair price for the service rendered. And it must be recognized, as in many legal situations, that both of these desirable things cannot be brought about in a particular case very often to their full extent; but that it is a case where concession must be made from each principle. This point was well made by the Interstate Com

merce Commission in dealing with a difficult problem, which could not have been solved without some compromising of the sort just described. The opinion is a long one, but its basis may be seen in the following paragraph:

Counsel representing the western roads in the progress of the investigation insisted that the rate of charges which a road may justifiably and reasonably make on its business largely depends upon how much business it has to do, and that the much greater tonnage on eastern roads indicated the much higher basis of charges necessary to be made and which might reasonably and lawfully be made on western roads; that every road has a right to live and must derive from the business it has to do a sufficient income to meet its obligations, which are to operate its road, pay interest on its indebtedness and a dividend on the capital stock; and that any rates which, with other rates on the same road, taken altogether, do not yield a revenue more than sufficient for these purposes, are neither unreasonable nor unjust to the shipper. We have already shown that some qualification need be made to the rule here laid down as the measure of reasonable rates. The rule insisted upon would involve the right to increase rates as often as a new road was built, where roads were already ample for the business. There are eight roads or lines carrying between Chicago and Kansas City; a less number might do the business as well and cheaper. If eight more were built the rates might need to be doubled if all roads constructed have a right to such income as will meet the obligations of the companies owing them.”

5 Re Freight Rates on Food Products, 3 Int. Com. Rep. 93 (1892).

6 Much the same language is used in Covington & Tex. T. Road v. Sanford, 164 U. S. 596, 41 L. Ed. 561, 17 Sup. Ct. 198 (1896), reversing s. c. 20 S. W. 1031; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418 (1898), affirming s. c. 64 Fed. 165; San Diego Land & T. Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, 19 Sup. Ct. 804 (1899), affirming s. c. 74 Fed. 79; San Diego Land & T. Co. v. Jasper, 189 U. S. 439, 47 L. Ed. 892, 23 Sup. Ct. 571 (1903), affirming 110 Fed. 702; Kennebec Water Dist. v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856

§ 323. Relation of a particular rate to a whole schedule.

The general method in passing upon the reasonableness of rates is therefore to discover whether the particular rate is fair, judging the schedule as a whole. As has been seen, this involves the consideration of many factors, some of them conflicting, but it may be said that rates fixed are fair to the company if from the schedule as a whole it gets a reasonable return, and fair to the people served if they pay in each particular case no more than the service is worth. In order to meet, as far as may be, both requisites, a particular rate should seldom be passed upon without considering the relations to the schedule as a whole, especially as the reasonableness of one rate may be judged with reference to other rates in the same schedule. An example of the way in which such problems are worked out, considering all factors and then giving most weight to one held to be controlling in the particular case, may be seen in various cases before the Interstate Commerce Commission, for example, in one case the problem and its solution are stated thus: "The Central of Georgia Railway Company insists that if compelled to make the rate to Macon and Griffin the same it must either raise the Macon rate and thereby lose entirely that business, or lower the rate to Griffin and other intermediate points, and thereby lose in revenue the difference between the present and the reduced rates; and it earnestly maintains that any reduction of its present revenues would be unwarranted. To inquire whether the revenues of this railway company might be or ought to be reduced below the present point would raise several interesting and important questions, for the consideration of which we have not before us in this case the necessary data. We are furnished with a statement of the funded debt and capitalization of the road, and also with a statement of its financial operations for the last year. We are not informed how this debt was created, what

(1902); Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371, 59 Atl. 537 (1904).

7 Brewer & Haulerter v. Louisville & N. Ry., 7 I. C. C. Rep. 224 (1897).

it would cost at the present time to replace the property represented by this capitalization, nor what that property is fairly worth, if indeed there be any standard by which its value can be measured. It appears that the company is now earning at the present rates a fair return on considerably more than the probable cost of constructing and equipping the road at current values. If the rates to all intermediate points between Atlanta and Macon were adjusted to the Macon rate, the loss in revenue would be $1,231.35. We should hardly assume that a reduction in revenue to this small amount would cripple a railroad with a net income from operation of over $1,000,000. Nor is it certain that there would be any reduction in earnings since the increased business consequent upon the lower rate might more than make good that loss. We see nothing in this phase of the case which would cause us to hesitate in requiring this defendant to bring its rates into conformity with the statute.

8 The relation of particular rates to the whole schedule is elaborately discussed in Book II, Part I, Title II, of this treatise. Very few judicial cases discuss the elements of the problem. In the following cases the matter is treated at large:

UNITED STATES SUPREME COURT:

Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. Ed. 176, 12 Sup. Ct. 400 (1892), affirming s. c. 83 Mich. 592; St. Louis & S. F. Ry. v. Gill, 156 U. S. 649, 39 L. Ed. 567, 15 Sup. Ct. 484, affirming s. c. 54 Ark. 101, 15 S. W. 18 (1895); Lake Shore & M. S. Ry. v. Smith, 173 U. S. 684, 43 L. Ed. 858, 19 Sup. Ct. 565 (1899), reversing 114 Mich. 460, 72 N. W. 328; Chicago, M. & St. P. Ry. v. Thompkins, 176 U. S. 167, 44 L. Ed. 418, 20 Sup. Ct. 336 (1900), affirming s. c. 90 Fed. 363 (1898); Minneapolis & St. L. Ry. v. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 901 (1902), affirming 80 Minn. 191, 83 N. W. 60 (1902). FEDERAL COURTS:

Trammel v. Dinsmore, 92 Fed. 714, reversed in 102 Fed. 794 (1900), and judgment in last case affirmed 183 U. S. 115, 46 L. Ed. 111, 22 Sup. Ct. 46 (1901); Louisville & N. Ry. v. McChord, 103 Fed. 216 (1900); Chicago, M. & St. P. Ry. v. Smith, 110 Fed. 473 (1901); Interstate Com. Com. v. Louisville & N. R. R., 118 Fed. 613 (1902).

STATE COURTS:

Florida-State v. Seaboard Air Line (Fla.), 37 So. 314 (1904); State v. Atlantic Coast Line, et al. (Fla.), 37 So. 652 (1904); State v. Atlantic