been suggested 23 that this provision abolished rules like those we are discussing. It is submitted that the absolute and rigorous necessity of non-intercourse across the line of war and the rule of law therefor is in no way affected by the above Convention. It enlarges the rights only of hostiles lawfully within the territory of the other belligerent or possibly in neutral territory.24

When the parties are separated by the line of war, therefore, the rule as to the Statute of Limitations not running must still apply. Access to the court by an enemy is not denied by the court, but prevented by the requirement of non-intercourse.

Mr. Phillipson in his careful monograph on "The Effect of War on Contracts," p. 74 (London, 1909), cites the rule in the United States, and says that a contrary opinion is expressed by English writers, citing Anson on Contracts, p. 120, Lindley, vol. 1, p. 53, Pollock on Contracts, p. 92. These are names of high authority, but Mr. Phillipson adds:

"The only English case relating to this matter is De Wahl v. Braune (25 L. J. N. s. Ex. 343), where a married woman, whose husband was a domiciled enemy in Russia, claimed a right to sue for debt as a feme sole, on the ground that on his return he would be barred by the Statute. Lord Bramwell held that 'the inconvenient operation of the Statute of Limitations is no answer and does not take the case out of the general rule.""

Mr. Phillipson adds:

"This is only an obiter dictum and it is conceived that the American doctrine, which is more reasonable and more conformable to justice and fairness, would now be followed in England."

It must be added that there seems some error in the reference by Mr. Phillipson to the three eminent English law writers as holding a contrary opinion. They have been consulted, and no such adverse opinion found as he indicates.

It is submitted that the authorities seem to establish that the Statute of Limitations will not run:

1. When parties are so divided by the line of war that the plaintiff cannot have access to the court.

23 See BORDWELL, LAW OF WAR, p. 210.

24 See as to the latter, Tucker v. Watson, 6 AM. L. REG. N. S. 220 (1866), holding as to interest that it did not accrue even where the enemy was in neutral territory.

2. When the court to which the plaintiff has a right to have recourse does not sit on account of the disorder of war.

It is submitted that the later rule announced in the courts of the United States is founded on reason and justice, and is consonant with the development of international law as to private rights and contracts, its tendency being to protect and preserve them if possible, only suspending the exercise of any rights, while war is flagrant, which are in their exercise incompatible with the necessities of the situation.

WASHINGTON, D. C.

Charles Noble Gregory.

HARVARD LAW REVIEW

Published monthly, during the Academic Year, by Harvard Law Students

Railroad opera

THE COST OF SERVICE AND CONFISCATORY Rates. tions present a peculiarly complex application of the economic law of increasing returns,' for not only is the initial capital outlay in permanent plant very great in comparison with operating costs, but also from onehalf to two-thirds of the expenses of maintenance and operation are relatively constant and impervious to variations in the volume of traffic.2 Under such conditions it is obvious that up to the capacity of the plant every additional unit of traffic is always worth while, provided only that it affords any return, however small, over and above the actual

1 Peculiarly complex because they present also the problem of a plant which turns out not one homogeneous commodity, but many kinds of commodities, a part of the cost of which is incurred separately for each, and a part jointly for all. In such undertakings, although generally no commodity will be sold for less than the separate cost incurred in regard to it, the price at which any particular commodity will be sold, over and above this separate out-of-pocket cost, depends not upon any mathematical apportionment of the joint cost of producing all the commodities, but upon the character and extent of the demand for the particular commodity. See MILL, PRINCIPLES OF POLITICAL ECONOMY, Book III, ch. 16, § 1; article by Professor Taussig, 5 QUART. J. of ECON. 438-465.

2 See RIPLEY, RAILROADS, RATES AND REGULATION, pp. 44 et seq.; Acworth, ELEMENTS OF RAILWAY ECONOMICS, pp. 5-50; article by Professor Taussig, 5 QUART. J. OF ECON. 438-465; NOYES, AMERICAN RAILROAD RATES, pp. 10-17. For the purposes of this note "operating expenses" are meant to include not only the cost of moving the traffic but charges for maintenance of plant, depreciation, taxes, and all other fixed charges except interest on capital and dividends. "Out-of-pocket costs" include only the actual additional expenses incurred in moving any particular unit of service, exclusive of any share of fixed charges or permanent expenditure.

out-of-pocket expense of moving it.3 It is equally obvious that there are certain classes of traffic which would not move at all at rates under which they were made to bear their exact mathematical proportion of the burden of operating the entire enterprise. Yet if they can be attracted at any rate in excess of the actual expense of moving them, the income of the railroad is increased and the burdens of other classes of traffic are correspondingly relieved.5 This has been the accepted theory and practice of railroad rates since the beginning of our railroad history." The mere existence of this law by no means justifies all the practices to which it has led,' but in two recent decisions the United States Supreme Court seems to have given it much less weight than it deserves. Norfolk & Western Ry. Co. v. Conley, Sup. Ct. Official, No. 197; Northern Pacific Ry. Co. v. North Dakota, Sup. Ct. Official, Nos. 420, 421. In the first of these cases a West Virginia statute fixing a maximum rate for the transportation of passengers within the state, and in the other a North Dakota statute establishing maximum rates for the intrastate transportation of coal in car-load lots, were held unconstitutional. In each of these cases the rates established were shown to yield a return in excess of the actual out-of-pocket cost of moving the traffic and closely approximating the share of total operating expenses chargeable to the service in question, but contributing little or nothing above this to the profits of the company.

There are two separate and distinct questions involved in the governmental regulation of railroad rates. The first is a question of policy for the rate-making authority alone, as to what is the most just basis upon which to establish rates. Upon this question there has been a considerable conflict of opinion, with the present tendency toward a more exact apportionment of rates according to the proportional share of total

3 See RIPLEY, RAILROADS, RATES AND REGULATION, pp. 71 et seq.; AcwORTH, ELEMENTS OF RAILWAY ECONOMICS, pp. 51 et seq.; HADLEY, RAILROAD TRANSPORTATION, pp. 109 et seq.; article by Professor Taussig, 5 QUART. J. OF ECON. 438-465; NOYES, AMERICAN RAILROAD RATES, p. 19.

See RIPLEY, RAILROADS, RATES AND REGULATION, pp. 169 et seq.; STROMBECK, FREIGHT CLASSIFICATION, pp. 9-34.

5 See n. 3, supra. This does not necessarily apply to all public services. See Railroad Commission of Louisiana v. Cumberland T. & T. Co., 212 U. S. 414, 426. 6 See RIPLEY, RAILROADS, RATES AND REGULATION, chs. 4, 5.

7 Personal discriminations and discriminations between localities are generally attributable to this desire of the railroad to attract traffic and build up a demand for its services. For an interesting instance see Railroad Commission of Nevada v. Southern Pacific Co., 21 I. C. C. 329.

8 For a more complete statement of the facts in these cases see this issue of the REVIEW, p. 716. For the report of the North Dakota case in the state court, see State ex rel. McCue v. Northern Pacific Ry. Co., 26 N. D. 438, 145 N. W. 135. And for the same case on a previous appeal see State ex rel. McCue v. Northern Pacific Ry. Co.. 17 N. D. 223, 116 N. W. 92; Northern Pacific Ry. Co. v. North Dakota, 216 U. S. 579. 9 See 2 WYMAN, PUBLIC SERVICE CORPORATIONS, § 1120; 4 ELLIOTT, RAILROADS, 1684 b; Louisville & Nashville R. Co. v. Siler, 186 Fed. 176, 189; Detroit & M. R. Co. v. Michigan Railroad Commission, 203 Fed. 864, 870. For this very reason cases in which the court is considering the reasonableness of a rate in the first instance or under statutory power to review the reasonableness of a rate fixed by a commission are to be carefully distinguished from cases in which only the constitutionality of a rate is in issue. See Gulf Central & S. F. R. Co. v. Railroad Commission of Texas, 102 Tex. 338, 116 S. W. 795; Morgan's L. & T. R. & S. S. Co. v. Railroad Commission of Louisiana, 127 La. 636, 53 So. 890.

operating costs attributable to the respective services.10 Under present industrial conditions this may be a wise and beneficial policy, but a scrutiny of the various accounting methods used in apportioning the total costs of operation demonstrates that any fair and exact apportionment is a mathematical mirage. At best it can be but an experienced guess, based on arbitrary ratios and percentages. Moreover, such straitjacket methods are opposed to the economic nature and growth of American traffic as shown by the practice of the railroads,12 and had they been adopted at the beginning of our railroad history, the industrial development of the country would have been seriously impeded.13

But the Supreme Court had no occasion in the principal cases to consider the relative justice of these different rate-making policies.14 The sole question before them was the narrow one of constitutional law: whether these specific rates prescribed by legislative authority constituted a taking of property without due process of law, or a denial of the equal protection of the laws under the Fourteenth Amendment. Upon this question it might be a convenient rule of procedure to hold that proof that a rate does not yield a return commensurate with its allocated share of operating costs rebuts the presumption of its constitutionality and shifts the burden upon the state of showing special circumstances to justify the rate,15 were it not for the inherent weakness of the proof itself. It is not in accord with constitutional practice to permit the strong presumption of constitutionality in favor of a legislative act 16 to be overthrown by such an arbitrary mathematical division of the economically inseparable costs of production. Moreover, it can scarcely be contended that that which has been the established practice of railroad rate-makers for three-quarters of a century is not due process of law when practised by legislative rate-makers." There are, of course, limits beyond which the 10 See 2 WYMAN, PUBLIC SERVICE CORPORATIONS, §§ 1190, 1201, 1202, 1227, 1228; Morgan's L. & T. R. & S. S. Co. v. Railroad Commission of Louisiana, 127 La. 636, 53 So. 890.

11 See 2 WYMAN, PUBLIC SERVICE CORPORATIONS, §§ 1193-1196; NOYES, AMERICAN RAILROAD RATES, pp. 17-19, 39. Modern methods of accounting have made possible a comparatively exact distribution of the separate costs incurred with respect to each particular class of service, but the joint costs, such as taxes, overhead expenses, and maintenance charges, which are incurred with practically no relation to the volume of any particular class of traffic, must be apportioned arbitrarily. The methods of apportionment are as various as the cases themselves. Cf. In re Arkansas R. Rates, 163 Fed. 141; St. Louis & S. F. R. Co. v. Hadley, 168 Fed. 317; Missouri, K. & T. Ry. Co. v. Love, 177 Fed. 493; In re Passenger Rates, Minneapolis, St. P. & S. S. M. R. Co., 1 Wis. R. Comm. 540, 556, 567; The Minnesota Rate Cases, 230 U. S. 352, 436 et seq.

12 See RIPLEY, RAILROADS, RATES and REGULATIONS, chs. 4, 5.

13 See NOYES, AMERICAN RAILROAD RATES, p. 42; RIPLEY, RAILROADS, RATES AND REGULATION, pp. 169 et seq.; MEYER, GOVERNMENT REGULATION OF RAILWAY RATES, pp. 86-92.

14 See Chicago, M. & St. P. Ry. Co. v. Tompkins, 176 U. S. 167, 173; Interstate Commerce Commission v. Illinois Central R. Co., 215 U. S. 452, 470, 478; Intermountain Rate Cases, 234 U. S. 476, 488.

15 See Northern Pacific Ry. Co. v. North Dakota, Supreme Court Official, Nos. 420,

421, p. 9.

16 See Chicago, M. & St. P. Ry. Co. v. Tompkins, 176 U. S. 167, 173; Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 264; Willcox v. Consolidated Gas Co., 212 U. S. 19, 41.

17 Cf. dissenting opinion of Baker, J., in Chicago, R. I. & P. Ry. Co. v. Interstate Commerce Commission, 171 Fed. 680, 692; Minneapolis & St. L. R. Co. v. Minnesota, 186 U. S. 257, 267; Intermountain Rate Cases, 234 U. S. 476, 486.