reasonable value of the property at the time it is being used for the public."

What is a "fair return" is primarily a legislative question, and Mr. Justice Hughes, in the Minnesota Rate cases, supra, stated the power of the courts by saying: "We do not sit as a board of revision to substitute our judgment for that of the legislature, or of the commission lawfully constituted by it, as to matters within the province of either."

Only when the circumstances are exceptional should a finding of an administrative or legislative tribunal be set aside;279 and the carrier must have shown proper efforts to have developed traffic.280

Much difficulty is experienced in distributing operating expenses and operating revenues between the intrastate and interstate business of railroads. Some of these can be allocated, but a large part must be distributed. In Section 45, ante, are cited cases, especially the Minnesota Rate cases and the 1913 cases, in which the carriers failed to overcome this difficulty. A method was applied in the Arkansas Rate case which perhaps in the present state of railroad accounting is as nearly accurate as is possible. Judge Trieber applied the method and his decision was affirmed.281

The question depending so largely upon the special facts of each case, it is unlikely that the Supreme Court will ever prescribe a hard and fast rule as to the percentage of income that will constitute a "fair return." Congress, as heretofore stated, exercising its legislative functions has by Transportation Act, 1920, adding Section 15-a, prescribed 51⁄2 and 6 per cent. as constituting a fair return on “aggregate value.'

§ 48. Rates-Evidence That Rate Is Confiscatory-Rates on a Few Commodities. It is easy to say that a railroad is en

279 Ann Arbor R. C. v. Fellows 236 Fed. 387.

280 Darnell v. Edwards, 244 U. S. 564, 61 L. Ed. 1317, 37 Sup. Ct. 701.

281 Boyle v. St. L. & S. F. R. Co. 222 Fed. 539, P. U. R. 1916 A 49; Rowland v. Boyle 244 U. S. 106, 61 L. Ed. 1022, 37 Sup. Ct. 577. See also

Corp. Com. of Okla. v. A. T. & S. F. R. Co. 31 I. C. C. 532; Memphis v. Chicago R. I. & P. R. Co. 39 I. C. C. 256. The question at present is one of fact, Groesbeck v. Duluth & S. S. & A. R. Co. 250 U. S. 607, 63 L. Ed. 1167, 40 Sup. Ct. 38.

titled to earn a fair return upon the property devoted to the business of common carriage, but it is difficult to determine in a concrete case what is a fair return. The cost of moving one commodity cannot be definitely ascertained, much of such cost not being capable of allocation. When a rate on one or a few commodities is fixed by legislative act, and the rates are attacked in court, the presumption is that the rate is fair, and in ordinary cases the presumption cannot be overcome by any definite proof, when the rate is prescribed by a commission.

It would, therefore, seem that when the Commission, after a full hearing, and aided by the long experience and special training of its members, fixes a rate on one or a few commodities that represent in comparison a very small part of the traffic of the carrier, such rate would be binding on all courts, because no one could prove it did not yield a just compensation. This statement has reference to such orders as the Commission will issue. Of course, a rate on even one commodity might be so low as to be clearly illegal. These views are expressed by Mr. Justice Brewer, in the Florida Phosphate Rate case, as follows:

282

"The order of the commission was not operative upon all local rates, but only fixed the rate on a single article, to wit, phosphate. There is no evidence of the amount of phosphates carried locally; neither is it shown how much a change in the rate of carrying them will affect the income, nor how much the rate fixed by the railroads for carrying phosphate has been changed by the order of the commission. There is testimony tending to show the gross income from all local freights and the value of the railroad property, and also certain difficulties in the way of transporting phosphates, owing to the lack of facilities at the terminals. But there is nothing from which we can determine the cost of such transportation. We are aware of the difficulty which attends proof of the cost of transporting a single article, and, in order to determine the reasonableness of a rate prescribed, it may sometimes be necessary to accept as a basis the average rate of all transportation

282 Atlantic C. L. R. Co. V. Florida, 203 U. S. 256, 51 L. Ed. 174, 27 Sup. Ct. 108. See also Seaboard

A. L. R. Co. v. Florida, 203 U. S. 261, 51 L. Ed. 175, 27 Sup. Ct. 109.

per ton per mile. We shall not attempt to indicate to what extent or in what cases the inquiry must be special and limited. It is enough for the present to hold that there is in the record nothing from which a reasonable deduction can be made as to the cost of transportation, the amount of phosphates transported, or the effect which the rate established by the commission will have upon the income. Under these circumstances it is impossible to hold that there was error in the conclusions reached by the Supreme Court of the state of Florida, and its judgment is affirmed."

Notwithstanding this presumption, rates on particular commodities may be shown to yield such a return as amounts to confiscation. The Supreme Court has said:283 "While local interests serve as a motive for enforcing reasonable rates, it would be a very different matter to say that the state may compel the carrier to maintain a rate upon a particular commodity that is less than reasonable, or-as might equally be asserted to carry gratuitously, in order to build up a local enterprise. That would be to go outside the carrier's undertaking, and outside the field of reasonable supervision of the conduct of its business, and would be equivalent to an appropriation of the property to public uses upon terms to which the carrier had in no way agreed." This principle, as was shown in the same case, does not deny the right to classify commodities; making rates thereon according to hazard, value of service which results in large part from the value of the commodity, and other well known considerations. The court said: "The legislature undoubtedly has a wide range of discretion in the exercise of power to prescribe reasonable charges, and it is not bound to fix uniform rates for all commodities, or to secure the same percentage of profit on every sort of business. There are many factors to be considered-differences in the articles transported, the care required, the risk assumed, the value of the service, and it is obviously important that there should be reasonable adjustments and classifica

283 Nor. Pac. R. C. V. North Dakota, 236 U. S. 585, 59 L. Ed. 735, 35 Sup. Ct. 429; and to the same effect see Norfolk & W. Ry. Co. v. Conley, 236 U. S. 605, 59 L. Ed. 745, 35 Sup. Ct. 437. The North Dakota

case, infra, is explained and distinguished in Stonega Coke & Coal Co. v. L. & N. R. Co., 39 I. C. C. 523, 541. See also Nor. Pac. Ry. Co. v. Dept. of Public Works, 268 U. S. 39, 69 L. Ed. 836, 45 Sup. Ct. 412.

tions." Rates voluntarily established by a common carrier may be considered in determining whether or not the same rates are reasonable when prescribed by a state rate-making body.284

§ 49. Same Subject-Relative Cost of Different Kinds of Transportation. The same track, the same cars and, to a large extent, the same employees, are used or engaged in both interstate and intrastate commerce, and in passenger and freight transportation. When a state prescribes rates on intrastate transportation, and it is sought to show that such rates are confiscatory, to make proof thereof requires evidence as to the cost of the intrastate movement as well as of the value of the property devoted thereto. To a certain extent, this cost may be allocated, but much of the cost of local or intrastate transportation relates to the use of property and the cost of service which are employed in both kinds of transportation.

The federal trial courts in the various rate cases which reached the Supreme Court in 1913 devoted much argument to this question, and the witnesses in the cases expressed widely different opinions with reference thereto. All agreed that the intrastate movement cost more than the interstate movement. Some placed this excess cost as low as fifty per cent. and some as high as seven hundred per cent.285 There is a difference between the cost, as related to the receipts, of passenger and freight business; what this difference is, is a fact about which there are varying opinions. In the Minnesota Rate cases at page 432, Mr. Justice Hughes speaks of "the extreme difficulty and intricacy of the calculations which must be made in the effort to establish a segregation of intrastate business for the purpose of determining the return to which the carrier is properly entitled therefrom;" and, in the course of the opinion in that and the related cases reported in Volumes 230 and 231 of the Supreme Court Reports, the methods adopted by the trial courts are rejected as unsatisfactory, and the conclusion, as well as the true method, is

284 Louisville & N. R. Co. v. Finn, 235 U. S. 601, 59 L. Ed. 379, 35 Sup. Ct. 147; Sec. 109, post.

285 Shepard v. Northern Pac. Ry. Co., 184 Fed. 765, 812, et seq.

indicated by the statement in the opinion at page 455 of Volume 230, as follows:

"We are of the opinion that on an issue of this character involving the constitutional validity of state action, general estimates of the sort here submitted, with respect to a subject so intricate and important, should not be accepted as adequate proof to sustain a finding of confiscation. While accounts have not been kept so as to show the relative cost of interstate and intrastate business, giving particulars of the traffic handled on through and local trains, and presenting data from which such extra cost, as there may be, of intrastate business may be suitably determined, it would appear to have been not impracticable to have had such accounts kept or statistics prepared at least during test periods properly selected. It may be said that this would have been a very difficult matter, but the company having assailed the constitutionality of the state acts and orders was bound to establish its case, and it was not entitled to rest on expressions of judgment when it had it in its power to present accurate data which would permit the court to draw the right conclusion."286

286 For cases relating to methods to be adopted in determining the relative cost of different kinds of transportation, see Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 262, 46 L. Ed. 1151, 22 Sup. Ct. 900; St. Louis & S. F. R. Co. v. Hadley, 168 Fed. 317, 348; Ames v. Union Pac. R. Co., 64 Fed. 165; Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167, 44 L. Ed. 417, 20 Sup. Ct. 336; Smyth v. Ames, 169 U. S. 466, 42 L. Ed. 819, 18 Sup. Ct. 418; Chicago, M. & St. P. R. Co. v. Keyes, 91 Fed. 47, 55; Re Arkansas Rates, 163 Fed. 141; Missouri, K. & T. R. Co. v. Love, 177 Fed. 493, 498, 499; Love V. Atchison, T. & S. F. R. Co., 185 Fed. 321, 330, 331, 218 U. S. 675, 220 U. S. 618; Shepard v. Northern Pac. R. Co., 184 Fed. 765, 810, 812; Re Arkansas Rates, 187 Fed. 290, 320, 344; Cedar Hill Coal and Coke Co. v. Colorado

& Southern Ry. Co., 16 I. C. C. 387, 393; Gustin v. Atchison, T. & S. F. R. Co., 8 I. C. C. 277; Wilcox v. Consolidated Gas Co., 212 U. S. 19, 53 L. Ed. 382, 29 Sup. Ct. 192, 15 Am. Cas. 1034; Atlantic C. L. R. Co. v. North Carolina Corp. Com. 206 U. S. 1, 51 L. Ed. 933, 27 Sup. Ct. 585; St. Louis & S. F. R. Co. v. Gill, 156 U. S. 649, 663, 39 L. Ed. 567, 15 Sup. Ct. 484; Southern Ry. Co. v. Atlanta Stove Works Co., 128 Ga. 207, 233, 234, 57 S. E. 429; Wisconsin M. & P. R. Co. v. Jacobson, 71 Minn. 519, 7 N. W. 893, 40 L. R. A. 389, 70 Am. St. Rep. 358, 179 U. S. 287, 302, 45 L. Ed. 194, 21 Sup. Ct. 115; State v. Missouri P. Ry. Co., 76 Kan. 467, 92 Pac. 606; Pensacola & A. R. Co. v. Florida, 25 Fla. 310, 5 So. 833; Morgan's R. & S. Co. v. R. R. Commission, 109 La. 247, 33 So. 214; People v. St. Louis A. & T. H. R. Co., 176 Ill. 512, 52 N.