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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.

The article discusses the regulation of public utility rates in the U.S. The statutes defining the powers of the regulating commissions cite that rates shall be just and reasonable. The state commissions adopted the economic principles that cost determines price and that the value of the plant is the most important factor in the determination of cost of service. This standard was set forth by the U.S. judicial system in the Smyth v. Ames legal case. The case revolved around the economic conditions controlling railroad operation in Nebraska. This ruling is relied upon by U.S. regulating commissions and U.S. courts to determine the fair value of rates charged by public utilities.