effect that rates may be increased by successive advances, so long as traffic moves freely.74 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.75 It is tolerably well settled by authority that value is nothing but a factor to be considered, and by no means a controlling factor in the determination of the reasonableness of a rate.76 The determination of a reasonable rate rests in the service performed, the risk involved, the value of the article, and the degree of care required to be exercised; but the use to which articles are put, without any difference between them and dissimilarity in conditions under which the transportation is performed, may not lawfully be made the basis for a difference in charge." It follows that carriers are not justified in raising rates on the ground that the industries served have greatly prospered under the old rates and can bear the advance; but the lawfulness of an advance in rates must be determined by their reasonableness.78 § 436. Value of the goods. The value of the goods carried is obviously to be considered to a certain extent in determining the reasonableness of the rate, since the greater the value the greater the risk.79 But the value of the goods cannot be made 74 Commercial Club of Omaha v. A. & S. Ry., 19 I. C. C. 419. 75 Coke Producers Ass'n of Connellsville v. B. & O. R. R., 27 I. C. C. 125. 76 See generally, Cincinnati Freight Bureau v. Cincinnati, N. O. & T. P. Ry., 4 Int. Com. Rep. 592, 6 I. C. C. Rep. 195; F. Schumacher Milling Co. v. Chicago, R. I. & P. Ry., 6 I. C. C. Rep. 61; In re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382; Central Yellow Pine Assoc. v. Illinois Central R. R., 10 I. C. C. Rep. 505; Tift v. Southern Ry., 10 I. C. C. Rep. 548. 77 Davis v. West Jersey Express Co., 16 I. C. C. 214. 78 Oregon & Washington Lumber Mfrs. v. V. P. R. R., 14 I. C. C. 1. 79 Interstate Commerce Commission v. Delaware, L. & W. R. R., 64 Fed. 723, 5 I. C. C. Rep. 144; Interstate Commission v. Chicago G. W. Ry., 141 Fed. 1003; Howell v. New York, L. E. & W. Ry., 2 Int. Com. Rep. 162, 2 I. C. C. 272; Colorado F. & I. Co. v. Southern Pacific Co., 6 I. C. C. Rep. 488. 82 an arbitrary standard for fixing the compensation, regardless of other factors.80 The value of an article is but one of many elements to be considered, especially where there is no additional cost or extra service rendered in transportation of articles of greater value.81 Thus a higher rate on hardwood than on yellow-pine lumber is not warranted by additional returns derived from the transportation of hardwood. Although value is one element considered in fixing rates, how important it is depends upon circumstances of particular cases.83 But certainly no impropriety exists in a graduation of rates scheduled by the carrier scientifically in accordance with the actual values of specified commodities.84 Likewise the quality of the commodity is to be considered in determining the reasonableness of rate, to the extent that this affects transportation itself. But to make charges correspondingly fluctuate with values of products, and resultant fluctuations of carrier's risk is impossible. It follows that rates on manufactured products ought generally to be higher than the rates on the raw materials from which they are made.85 And smithing coal, being of greater value, may properly be charged a higher rate than ordinary bituminous coal.86 While there is no objection to a special rate based on depreciated value of damaged goods, there is no justification for special rates on unsalable goods.87 And the Commission has recognized that scrap tin plate, being of little value, can move only under rate relatively 80 Grain Shippers' Assoc. v. Illinois Central R. R., 8 I. C. C. Rep. 158; Georgia Peach Growers' Assoc. v. Atlantic C. L. Ry., 10 I. C. C. 18; Ohio Allied Milk Product Shippers v. E. R. R., 21 I. C. C. 522. 81 Blue Grass Lumber Co. v. L. & N. R. R., 26 I. C. C. 438; Keller v. St. L. S. Ry., 21 I. C. C. 488. 82 In the Matter of Released Rates, 13 I. C. C. 550. 83 Browne Grain Co. v. F. W. & R. G. Ry., 20 I. C. C. R. 410; Rosenblatt & Sons v. C. & N. W. Ry., 20 I. C. C. R. 447. 84 Ponchatoula Farmers' Ass'n v. I. C. R. R., 19 I. C. C. R. 513. 85 Bulte Milling Co. v. C. & A. R. R., 15 I. C. C. 351. 86 Sligo Iron Store Co. v. V. P. R. R., 19 I. C. C. 527. 87 In re Reduced Rates on Returned Shipments, 19 I. C. C. R. 409. 88 low compared with other articles usually classed as junk. On a demand formerly made that the rates on chinaware be graded according to value, the Commission, while declining to do so in that instance, suggested that there are many reasons for adopting such a basis of rates, and referred the consideration of such a plan to the carriers.8 As the Commission has repeatedly recognized that value is one of the established measures of a rate, it has recently held that value justified a difference in rates between liquid sheep dip and liquid tree spray.90 $ 437. Limit of value of service. It is clear, at any rate, that the charge is not necessarily limited to the advantage which the customer derives from the service. Thus where farmers in the west were shipping their grain for sale to the eastern markets, and they complained of the freight rates because after paying the rates they could not always realize the cost of production, the Commission held that the freight rates could not be so limited that the shipper should always be able to realize a profit, while they also held that the charges should have a reasonable relation to the cost of production and the advantage obtained by the producer from the shipment.91 "Unfortunate it may be, but still of necessity the claims of the shipper must wait upon the rights of those whose services he employs and whose property he uses. The employees who run the train may have neither brick, corn nor railroad investment, but they must be paid for their services. The road must be repaired and bridges mended. Actual and honest investment must receive fair reward. All this must be paid before the profits or actual cost of producers are paid unless the services and property of others are to be appropriated to the use of those who for 88 Vulcan Detinning Co. v. U. P. R. R. Co., 21 I. C. C. R. 93. 89 Union Pacific Tea Co. v. Penn. R. R., 14 I. C. C. 545. 90 Bernheim & Co. v. O. R. R. & N. Co., 25 I. C. C. 156. 91 In re Rates and Charges on Food Products, 3 Int. Com. Rep. 93, 4 I. C. C. Rep. 48. the time may be engaged in an unprofitable business or disadvantageously located industry. We think it is true that at the prices which have at times prevailed since the gathering of the last crop, corn from the most distant fields could not be marketed at actual cost of production and pay reasonable rates. But the evil cannot be remedied without taking the services or property of men engaged in one business or employment and transferring them to those engaged in other employments. To make such transfer is a prerogative not to be exercised by any tribunal." 92 § 438. Traffic will continue to move at unfair rates. From a legal point of view it is a conclusive answer to the economic argument, that people will continue to ship goods even at unfair rates: 93 "When, therefore, these traffic managers met in New York and determined to advance these rates, they simply laid upon the people of this country a tax of 2 1-2 cents per hundred pounds. If they were entitled to it, that action was justified; otherwise it was unjustified. The fact that the traffic still moves, that people still eat flour and cornmeal, does not by any means conclusively show that the rate is reasonable. As we have already said, the reasonableness of every rate may be presented in two aspects: First, is it reasonable as tested by cost of service, by comparison with other rates, with respect often to commercial conditions? Second, is it reasonable as a tax imposed by a public servant for the performance of a quasi-public duty?” 94 92 An element of importance in the fixing of rates is the value of the article shipped, since it affects the value of service to the shipper. When, however, the carrier has established a reasonable rate on a given commodity, it cannot be required to change that rate to accord with the differing values of the commodity produced by various shippers. Hafey v. St. L. & S. F. R. R., 15 I. 93 Re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 382. 94 While the fact that traffic moves freely has some bearing upon the reasonableness of the rates, it is not true that merely because traffic does not move the rates are therefore unreasonable. R. R. Com'rs of Fla. v. S. Exp. Co., 28 I. C. C. 634. § 439. Worth of the service to the owners. A railway may not impose an unreasonable rate merely because the business of the shipper is so profitable that he can pay it.95 Certainly, a rate that nearly approaches the value of the shipment is suggestive of error, or inadvertence, in the adjustment.96 However, it is unsound to say that, except for increased risk, rates upon cheap and valuable commodities should be the same.97 In other words, while it is a matter to be taken into account, the value of a commodity is not controlling; and while an increase in value may be considered in advancing rates, there is a general rule against charging what traffic will bear.98 The Commission, therefore, is clear enough that rates cannot be made solely with reference to the value of the article transported.99 But it has said, on the other hand, that the ad valorem principle of rate making can never be altogether ignored.1 Therefore, the quality of a commodity is to be considered in determining the reasonableness of the rate. And, generally speaking, value must be taken into. consideration in framing classifications.3 But minute variations in value cannot be precisely reflected in classification.1 A rate cannot be based upon the use to which an article is put, even if that use makes it more valuable to its owners. And to adjust rates to fluctuate correspondingly with the values of products moving under them is impossible. It is for this reason that there can be no justification for special rates on unsalable goods." The Com 5 95 R. R. Com. of Kans. v. A., T. & S. F. Ry., 22 I. C. C. 407. 96 Beekman Lumber Co. v. St. L., I. M. & S. Ry., 15 I. C. C. 274. 97 Union Tanning Co. v. S. Ry., 26 I. C. C. 159. 98 National Hay Ass'n v. M. C. R. R., 19 I. C. C. 34. 99 In re Advances in Rates, Western Case, 20 I. C. C. R. 307. 1 Rosenblatt & Sons v. C. & N. W. Ry., 20 I. C. C. 447. |