VALUE OF THE SERVICE AS A FACTOR IN RATE MAKING 517 emphasis upon the cost of the service, as the element to be given precedence in the determining of a rate." ^ If the book conveys any net impression on the subject, it is that, while the criterion of cost is gaining ground as against the criterion of value, and should for some reason be preferred to it, value is none the less a criterion substantially coordinate with cost, and there is no knowing what will be done in a particular case when the two conflict. Is value of the service, or reasonableness to the consumer, or reasonableness to the public — anything other than cost of the service (and discrimination) — a factor in public-service rate regulation? If so, in what relation does this factor, whatever it is, stand to the factor of cost? Commissions and courts have said things as inconclusive and contradictory as Mr. Wyman. The courts have long laid it down that a public utility is entitled to "a fair return upon the value of that which it employs for the public convenience"; ^ that is, rates are to be determined by the cost of the service, taking cost to include not only current out-go and depreciation but a reasonable return upon the value of the property employed. But a great deal is said about value of the service, reasonableness to the consumer, and the like, which, taken at its face, conflicts with this. Many dicta set up value as a criterion apparently coordinate with cost, and leave us to worry over the inevitable conflict. Thus the Interstate Commerce Commission said in 191 2: "Cost is generally an important element in arriving at a judgment with respect to a rate. What weight shall be given to that element as compared with all the other elements entering into a particular rate, such as the value of the service, with its bundle of constituents, and the various conditions surrounding the particular traffic, is a matter to be decided in each individual case. . . . Both cost and value must be considered as well as all other elements entering into a rate." ^^ The same opinion speaks of *' the two cardinal principles of rate making — the cost of the service and the value of the service." Again in 1916 the commission said, "The law contemplates that
- Bruce Wyman, 2 ed., Beale and Wyman, Railroad Rate Regulation (19 15),
§ 385. He adds : " ... Certainly, the adequacy of the revenue for the service performed by the carriers must take precedence over market conditions in deter- mining the reasonableness of a rate." ' Smyth V. Ames, 169 U. S. 466, 547 (1898). " Per Meyer, Commr., in Boileau v. P. & L. E. R. R. Co., 22 I. C. C. 640, 652 (1912).
