courts is allowed to make an exclusive contract with one hack concern to use the station ground.68 According to the progressive view the whole law of public service applies to the situation and any discrimination is therefore condemned. And exclusive contract with one express company for the use of passenger trains is held illegal as a necessary consequence.69 The Commission being bound by the conservative view taken by the federal courts has held that such exclusive arrangements are not preferential in the sense of the Act.70 And of course it finds nothing wrong with special concessions for private enterprises.71 68 Compare the language in the conservative case of New York, N. H. & H. R. R. v. Scovill, 71 Conn. 136, 41 Atl. 246, with the radical conclusions in Montana Union. Ry. Co. v. Langlois, 9 Mont. 419, 24 Pac. 209. 69 For the conservative argument see the Express Cases, 117 U. S. 1, 6 Sup. Ct. 542, for the progressive case see McDuffee v. Portland & R. R. R. Co., 52 N. H. 430. 70 The Commission will assume no jurisdiction over exclusive arrangements for baggage transfer on board. Cosby v. Richmond Transfer Co., 23 I. C. C. 72. 71 Station restaurants, news stands, barber shops and similar private enterprises at railroad terminals are no part of transportation service. Southwestern Produce Distributers v. W. R. R. Co., 20 I. C. C. 458. BOOK II LIMITATION OF CHARGES PART I THE SCHEDULE AS A WHOLE CHAPTER V GENERAL PRINCIPLES GOVERNING COMPENSATION 210. Provisions of the Act. 211. General principles governing reasonableness. Topic A. Certain Limitations Fundamental § 212. Rates must be fair to the company and to the public. Topic B. The Schedule taken as a Whole § 220. Reasonableness of the schedule as a whole. 226. Company cannot justify exorbitant profits. 227. Special circumstances affecting the particular rate. Topic C. The Particular Rates Considered Separately § 228. Reasonableness of the separate rates. 229. Schedule as a whole may throw light. 230. Bearing of tariff as a whole. 231. Rule of proportionality in sharing costs. 232. Average cost always modified. 233. Application of both tests necessary. 234. Service not worth usual amount. 235. Service of unusual value. Topic D. Bases of Regulation § 236. Constitutional limitations upon commission regulation. 237. Reasonable rates not necessarily profitable. 238. When fair net earnings left. 239. Possibility of increase of business. 240. Making rates compared with levying taxes. § 210. Provisions of the Act. The fundamental obligation of the carrier, in connection with commerce subject to the jurisdiction of the Commission, to charge no more than such rate as is reasonable, was in the first section of the original Act; and the wording has only been changed in subsequent amendments to keep pace with the extension of the scope of the jurisdiction of the Commission. Much, however, has been done by adding clauses giving the Commission jurisdiction to pass upon the reasonableness of charges for other services than carriage strictly, as has been seen already. Section 1 as now revised lays it down as a principle that all charges made for any service rendered or to be rendered in the transportation of passengers or property and for the transmission of messages by telegraph, telephone, or cable, as aforesaid, or in connection therewith, shall be just and reasonable; and every unjust and unreasonable charge for such service or any part thereof is prohibited and declared to be unlawful: Provided, that messages by telegraph, telephone, or cable, subject to the provisions of this Act, may be classified into day, night, repeated, unrepeated, letter, commercial, press, Government, and such other classes as are just and reasonable, and different rates may be charged for the different classes of messages: And provided further, that nothing in this Act shall be construed to prevent telephone, telegraph, and cable companies from entering into contracts with common carriers, for the exchange of services. The machinery by which rates are established is described in Chapter XVII. § 211. General principles governing reasonableness. The question of the reasonableness of rates is a complex one. As there are two parties having an interest in the rates, the carrier and the shipper, and their interests are diverse and, to a considerable extent, opposed, a rate which is reasonable from the point of view of one may be quite unreasonable from the point of view of the other. It will be noticed that the interest of the carrier is entirely directed toward framing a schedule of rates which as a whole shall produce a certain return, and so long as the return is realized it is immaterial to him what the proportion of contribution of each individual shipper is to the whole amount.72 On the other hand, the shipper is interested in the individual rate charged to him, and in that alone. So long as his rate is a fair one it is immaterial to him that the whole schedule is so arranged as to yield a great profit to the carrier. The reasonableness of the schedule as a whole therefore especially concerns the carrier, that of the separate rate especially concerns the shipper. In order to be entirely reasonable the schedule must as a whole be fair to the carrier, and in detail to each shipper. Here, however, the opposing interests of the carrier and the shipper present a serious difficulty in the working out of the problem of rates. A carrier may be so happily situated as to be able to frame a schedule which will be fair to himself and at the same time just to the individual shippers.73 This, however, is quite likely not to be the case. A schedule may not be possible which will yield fair compensation to the carrier without at the same 72 Where the rate is fixed by the legislature or by a commission the most common inquiry is whether the schedule as a whole will bring in a fair income, and it is in such cases that this inquiry is most frequently made. Chicago & N. W. Ry. v. Dey, 35 Fed. 866, 2 Int. Com. Rep. 325. 73 The final answer as to whether a given rate is reasonable or not, is a matter of judgment. The traffic official exercises his judgment in the first instance, and the Commission, when it revises that rate, substitutes its judgment for that of the traffic official. National Wool Growers' Asso. v. O. S. L. R. R. Co., 25 I. C. C. 675. |