Page:Harvard Law Review Volume 32.djvu/575

From Wikisource
Jump to navigation Jump to search
This page needs to be proofread.
VALUE OF THE SERVICE AS A FACTOR IN RATE MAKING
539

that they should is of course in effect, however implicitly and unconsciously, an expression of the tribunal's opinion that they may. There are an abundance of dicta[1] and decisions[2] that rates must not exceed cost (including a fair return), in which nothing is said of value. This is of course tacitly to treat value as immaterial when cost is known. In Stanislaus County v. San Joaquin Canal Co.,[3] for example, the Supreme Court, without discussing the value of the service, sustained a reduction in rates on the basis of the profits the company was making, and said:

"It is not confiscation nor a taking of property without due process of law, nor a denial of the equal protection of the laws, to fix water rates so as to give an income of six per cent upon the then value of the property actually used . . . even though the company had prior thereto been allowed to fix rates that would secure to it one and a half per cent a month income upon the capital actually invested in the undertaking. If not hampered by an unalterable contract ... a law which reduces the compensation theretofore allowed to six per cent upon the present value of the property used for the public is not unconstitutional. There is nothing in the nature of confiscation about it."

There are also some decisions (besides those already discussed) confining rates to cost, in which the contention that the value of the service concerned exceeds its cost is expressly dealt with and declared to be irrelevant. In Oregon & Washington Lumber Manufacturers' Association v. Union Pacific Railroad,[4] in disapproving certain advances in rates on lumber, the Interstate Commerce Commission said: "If the old rates were Just and reasonable, the

defendants cannot justify the advance on the ground of the prosperity of the lumber business. ..." And in Commercial Club of


  1. Turner v. Connecticut Co., 91 Conn. 692, 101 Atl. 88 (1917); Hartford v. Connecticut Co., P. U. R. 1918 C, 611, 627; (Conn. Pub. Util. Com.); Salisbury v. Salisbury Lt., Ht. & Pwr. Co., P. U. R. 1918E, 331 (Md. Pub. Serv. Com.); Re Farmers and Merchants Telephone Co., P. U. R. 1918 F, 283, 289 (Neb. Ry. Com.); Re Bronx Gas and Electric Co., P. U. R. 1918 D, 300, 329 (N. Y. Pub. Serv. Com., First Dist.).
  2. Stanislaus Covmty v. San Joaquin Canal Co., 192 U. S. 201, 213 (1904); Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa 234, 91 N. W. 1081 (1902); Home Telephone Co. V. Carthage, 235 Mo. 644, 139 S. W. 547 (1911); Garwood v. Colo. Southern Ry. Co., P. U. R. 1916 A, 911 (Colo. Dist. Ct., Div. 2); In re Colo. Springs Lt., Ht. & Pwr. Co., P. U. R. 1916 A, 872, 887 (Colo. Pub. Util. Com.). The Railroad Passenger Rate Case, P. U. R. 1915 B, 362, 368, 369 (Mass. Pub. Serv. Com.; perhaps dictum).
  3. 192 U. S. 201, 213 (1904).
  4. 14 I. C. C. I, 15 (1908).