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 165

COST OF CARRIAGE

METHODS

OF

ASCERTAINING

COST

OF

CARRIAGE

By John B. Daish THE purpose of this paper is to consider the several methods which have been used by tribunals to ascertain the cost of transporting freight — that cost being the cost to the carrier. It is assumed, first of all, that charges for transportation should bear some rela tion to the cost of transportation. What this relation shall be, and whether or not cost shall exceed charges or vice versa, we shall not now attempt to concern ourselves with; we simply assume the fact that some relation should exist between these figures when ascertained. It may be argued that, from a legal point of view, the cost of transporting goods having been once obtained, we are scarcely wiser than before. The Supreme Court of the United States has held that as a matter of law, it is improper, in considering the reasonableness of a rate, to make a com parison of the intra-state rates of two states, and it is likewise improper, as a matter of law, to compare the intra-state rates of one state with the rates applying on interstate traffic originating in, destined to, or passing through the state which we have under consideration. However this may be as a matter of law, certain it is, that as a matter of business, no stronger argument can be adduced than to show by mathematical process that the rates of one state are greater or less than those of another, or that the local state rates are very much more than the interstate rates for traffic which, in its transit, enters the state one may be considering.1 We shall further assume that there has been determined and crystalized into cur rency, what we mean by the term "fair valuation" of the carrier's property. We are supposed to have agreed to consider 1 Smyth v. Ames (169 U. S. 466).

some figure which may not be entirely dependent upon any one, but in fact an inference, if you please, from all of the following items: the cost of construction, the cost of reproduction, the valuation as a going concern, the valuation of the services of the entrepreneur; in short, we have placed in figures the "fair valuation" of the carriers property in accordance with the rules of law, the demands of justice, and the requirements of good business.1 One other assumption, and that is that the carrier has given us upon oath such testimony as we shall have called for. It should be remembered in considering this matter that cases involving the cost of traffic to the carrier may take either one or two forms, namely, of the schedule as a whole, or of a particular commodity. If we con sider the schedule as a whole, we must per force conclude that we have simply arrived at the beginning when we get our final figures, for we shall then be compelled to determine what relation each of the eight thousand articles in the classification shall bear to this average cost. If, on the con trary, we consider the cost of transporting a particular article, we shall then be under the necessity of determining what relation should subsist between the charges to be made for transporting this particular article 1 The "fair valuation" of the carrier's property must be taken into consideration in determining the reasonableness of its rates and charges. The elements which must be taken into consideration to ascertain the "fair valuation" have been named by the Supreme Court, but no definite mathe matical rule by which to crystalize the "fair valuation" into currency has as yet been expressed. The elements are to be found in Smyth v. Ames (169 U. S. 466, 546). Upon the general subject concerning the necessity for considering the "fair valuation" of property as an element of reason able charges, see Lindsley: "Rate Regulation of Gas and Electric Lighting "