Page:Harvard Law Review Volume 32.djvu/589

553 VALUE OF THE SERVICE AS A FACTOR IN RATE MAKING 553 consequently shown for value in fixing the rates on particular services, have sometimes led to the assertion — notably by the Interstate Commerce Commission ^"^ — that very different con- siderations must govern the fixing of particular rates from those that apply to an entire schedule; that the cost of a particular service, being imascertainable, can have Httle to do with the pro- priety of a particular rate, and that particular rates must there- fore be governed largely by value of service. This assertion is true within limits, but there are two observations to be made upon it which greatly qualify its apparent meaning. In the first place, it implies that the value of a service is ascertainable, if not quite definitely, at least more definitely than its cost. But if one recalls the variety of elusive ideas which go under the name of value of the service it is evident that this is not so. On the contrary, as the Interstate Commerce Commission itself has pointed out, "the cost of the service is ascertainable with much more precision and capable of more tangible expression than the value of the serv- ice." ^°^ In the second place, the proposition more or less sug- gests that, in respect to particular rates, the criterion of value is deliberately preferred and preferable to the criterion of cost; in other words, it overrules cost. That is far from true. To allow value to influence rates within the range where cost is doubtful is not to prefer value to cost; it is simply to prefer value to nothing. The question which is to prevail can arise only when both are known; so far as either is unknown there is no conflict. And, as has been pointed out, when there is a conflict it is cost and not value that prevails. The Supreme Court has held that coal rates ^^ and passenger rates ^°^ which are below cost must be raised, and that lumber rates which exceed cost must be lowered.^'^^ From the fact that costs are less accurately determinable in the case of a particular service than in that of an entire business, it follows that the range of what may or might be found to be cost is a broader range in the case of the particular service; and this is the ^'>* Central Yellow Pine Assn. v. 111. Central R. R. Co., 10 I. C. C. 505, 539, 540 (1905)- i" Boileau v. P. & L. E. R. R., 22 I. C. C. 640, 652 (1912). "^ Norfolk & Western Ry. Co. v. Conley, 236 U. S. 605 (1915), (note 56, supra). los Southern Railway v. Tift, 206 U. S. 428 (1907); Illinois Central R. R. v. Inter- state Commerce Com., 206 U. S. 441 (1907) discussed above.
 * <* Northern Pacific Railway v. North Dakota, 236 U. S. 585 (1915), (note 53, supra).