418 TWENTY-SECOND ANNUAL YEAR BOOK— PART V 



on the proposition that no rate could be made in this country under the 

 constitution of the United States as at present constituted except on the 

 basis now selected under the present transportation act, and my first duty 

 shall be, if you please, to point out to you that that is not true. 



Justice Hughes of the Supreme Court of the United States (the present 

 secretary of state in the president's cabinet) wrote the opinion in that 

 case, in which the Supreme Court of the United States drew clearly and 

 fairly the basis of rate-making for this country. Was it that they should 

 have a fixed return? or a fair return on the money invested, in any event? 

 Not at all! Now, I am just going to read it out of the opinion of the 

 Supreme Court so that there will be no misunderstanding about it. The 

 Supreme Court of the United States, by Mr. Hughes, said that what the 

 railroads were entitled to is a fair return on the value of the property kept 

 for and used in transportation. Now, just left alone, that would sound 

 rather as if after we determined what a fair return was, that then in any 

 event they were entitled to that fair return — if we call it 5 per cent or 

 4 per cent, whatever rate is a fair return, they should have it. But 

 Hughes said more than that. Hughes said — and I want to quote the 

 language of the opinion: 



"What the company is entitled to ask " 



Note that word "ask." 



" is that it have a fair return on the value of the property used for the 



public convenience." 



He said that what the railroads were entitled to is a fair return on the 

 value of the property kept for and used in transportation. But he said 

 someing else: 



"On the other hand, what the public is entitled to demand is that the 

 rates be not fixed in excess of the value of the service rendered." 



What does he say: "On the other hand, what the public" — that's you 

 and me — "is entitled to demand" — do you notice the difference? One is 

 ask, the other is demand, — "is that the rates be not fixed in excess of the 

 value of the service rendered." That is the true basis of rate-making. 

 Fix your rate for the value of service rendered just like you fix mine. I 

 am in the law business, another man is a doctor, and another man is in 

 another business, and you are in the farming business — what are you 

 entitled to? You are entitled to have only fair pay for the work you do. 

 Now, the point I want to bring to you is this, that it is value of the service 

 rendered. The railroad should have, for transporting a car of cattle 

 from your town to Chicago what that service is worth, and no more. 



Now, somebody says there might be a conflict there; that in one breath 

 Hughes says they should have a fair return on the value of their property, 

 and then he says the public should have charged to them no more than 

 the service rendered is worth. There might be a conflict. Hughes de- 

 cided it — he saw that. Now, what did he decide? Let me read it to you. 

 This is what he said about this proposition: 



"It is property employed in a public calling, subject to government 

 regulation * * * there is attached to its use the condition that charges 

 to the public shall not be unreasonable." 



In any event, therefore, the right of the public to have the service for 

 what it is worth is paramount to the owners of the railroad to have a fair 



