THE LAKE CARGO COAL CASE.

The article discusses conflicts pertaining to federal rate-making standards in the U.S. railway system. The Lake Cargo legal case brought before the U.S. Supreme Court in the late 1920's focused on the rate-making procedures of the U.S. Interstate Commerce Commission. Two principles of railroad rate-making have been employed to govern both the individual rate size and the differentials that exist among rates. There is the distance or cost principle which considers the costs to the hauling of a given unit of goods to a given distance. There is also the standard of "what the traffic will bear," which considers the shipper's production costs. Analysts say the U.S. courts and the Commission will have to set railroad rates based partly on economic significance and partly on their respect for vested interests.