5i6 HARVARD LAW REVIEW

VALUE OF THE SERVICE AS A FACTOR IN RATE MAKING* "'T^HE reasonableness of the schedule as a whole depends as -■- has been seen, upon whether it yields a fair return to the carrier;"* yet "the requirement that no person may be charged ^ more than a reasonable rate may be insisted upon although the result is that the company does not get a fair return from its schedule as a whole." ^ Rates may be so high as to be "unreason- able in themselves," although the company is "earning no more than a fair return"; ^ yet " the rule that a carrier should not charge more than the traffic can bear . . . does not impose upon a car- rier any duty to carry traffic at a loss." ^ These antitheses are from one work on rate regulation. It contains more statements that the cost of a service outweighs its value in determining rates than statements that value outweighs cost; ^ at one point the author casts doubt, in terms, upon the value test which he repeatedly lays down; ® in the preface he ex- presses his "preference for cost"; ^ and he tells us that "more and more, the [Interstate Commerce] Commission has been laying

• Bruce Wyman, 2 ed., Beale and Wyman, Railroad Rate Regulation (1915),

§ 220.

• Ibid., § 225.

» Ibid., § 445.

• Ibid., § 434.

' Cf. " It is certain upon fundamental principles that the company cannot justify exorbitant profits by urging that the rates are reasonable in themselves." Ibid., § 226. "Nothing is better established than that the Commission may not make the needs of the shipp>er the basis of reasonable rates." Ibid., § 434. "A railway may not impose an imreasonable rate merely because the business of the shipper is so profitable that he can pay it." Ibid., § 439.

• The statement {Ibid., § 435) that "the value of the service to the shipper should

be considered, which includes a consideration of the profit that the shipper can make," carries this comment: "The correctness of this view may be doubted: at all events, the Commission has rejected any theory to the effect that rates may be in- creased by successive advances, so long as trafl&c moves freely. But, on the other hand, the Commission has said repeatedly that consideration must be given to the value of the service in determining reasonableness of rates." ' Ibid., vi, vii.

• I am much indebted to the critical suggestions of my friend Professor Charles

K. Burdick, who kindly read the manuscript and proof.