Page:Harvard Law Review Volume 32.djvu/576

540 540 HARVARD LAW REVIEW Omaha v. Anderson &• Saline River Railway Co.,^^ in holding another lumber rate too high, the commission said: "Defendants contend that the rate of 263^ cents to Omaha is shown to be reasonable by the facts that the traffic moves freely and that the lumber business in Omaha has greatly increased. . . . We are not, as at present advised, ready to accept the theory that rates may lawfully and reasonably be increased by progressive advances as long as the traffic moves freely. . . . Some traffic must move, and reasonably freely, up to the point where the rate becomes prohibitive." A logical modern case, decided by the Supreme Court of Wisconsin, is Duluth Street Railway Co. v. Railroad Commission oj Wisconsin}^ The commission had reduced street-car fares, on the ground that the existing ones yielded the company a net return of 7^ per cent on the fair value of its property. The court sustained the action of the commission, against the company's contention that the reasonableness of rates depended not upon the company's profit but upon what the service was "worth to the public." The court observed that the value of a service rendered by a monopoly is a vague idea, and continued: "The cost of the service is the most definite and tangible guide there is to tie to in making rates, if, indeed, it is not the only one. Where rates are so adjusted as to yield a fair return on the value of the prop- erty over and above expenses and depreciation, they are reasonable. Where they are so fixed as to materially exceed this sum, they are not." The House of Lords,^^ and in one case, curiously enough, the Interstate Commerce Commission, ^^ seem to have taken the " 18 I. C. C. 532, 536 (1910). »« 161 Wis. 245, 152 N. W. 887 (1915); P. U. R. 1915 D, 192. " Canada Southern Railway v. International Bridge Co., 8 A. C. 723 (1883); contains at least a vigorous dictum to the effect that the value of the service to the consumer is practically the only thing that counts in determining how much he may reasonably be charged; that the producer's profit, unless it is "enormously dis- proportionate to the money laid out," has nothing to do with it. Of course no consti- tutional question was involved in] the case. Moreover, it is not at all clear (as a lower court had pointed out and as the House of Lords implied) that the rates which were approved as reasonable, in the absence of legislative restriction, involved any excessive return to the company; for the return was alleged to amoimt "at the utmost to 15 per cent," and the physical risk of loss to which the company's bridge was exposed was enormous. ^ Railroad Commrs. of Iowa v. Illinois Central R. R., 20 I. C. C. 181 (191 1). The complaint before the Commission asked for a reduction of the railroad passenger fares on a bridge across the Mississippi River. The income which the Illinois Central got from