Herald and tribune. [volume] (Jonesborough, Tenn.) 1869-current, 1883-09-27
CORPORATIONS AND THE STATE.
An Elaborate Opinion from a High An
thority.

CuOge OOOi9y, OF michigan, WHO IL
regarded as N of the highest arthor-
tiles On railroad matters, and thor
oughly equipped with the law on the
subject, In the leading paper Ola late
issue of the North Review
discusses the question of State regus
lasion OF corporate profits. Judge
Cooley, if will be remembered, was
one OF the commissioners appointed
last year, with ex-senator Thurman,
TO investigate the management of
railroads and make a report on the
subjeea. It may. therefore, be taken
Cor granted sthas wlaihe saye about
the regulation OF railroads by State
faction is the nature outcome Of his
reading snd observation. He holds
that. not railroads only, but ell cor
poraS;ons serving public ends, when
invested with special privileges are
under an obligation to perform cora
responding duties. The law IN res
jspecs TO railroads permits persons to
assume the character OF common car
! riers only upon certain conditions.
One of these is that they shall carry
! impartialiy for all persons. Another
/ that they shall carry persons and
~i.properfy at reasonable charges. AS
TO what are ~areasonable charges
Judge Cooley defines them to be
"sueh prices in general as are deter
mined by demand and composition,
and they do not,2 he says, snecesaari>
" lose their character as reasonable
because, under the pressure of des
mand and in the absence Of competi-
ton, they become very profitable"
!: But when q company receives from
the Sse5e special privileges and grants
Of power on tho understanding tha5
these are conferred in the public in
tereet and 90 ~subserve public ends, 1t
isnos by any means certain that its
. profits may not Justly be used as 3
| test.o2 the reosonableriess of it's char
| geg. an determining this point duo
! regard must be had to the risks to
! which such an Investment is Subject,
and,as the company ought not TO be
tho exclusive Judge, 1t seems TO fol-
+, low OF necessity that the State may
interEene to Iai9 profits as well as
! charges. x x
J When q maximum of charges is au-
| t~horita1i7eiy established, these char
| ges are to be deemed primo facie, at
| ieast, reasonable In the case Of 3
/; telegraph company Judge Cooley
! goes on to say there is the same rea-
| son why the State should regulate its
business end keep It's charges with
in the limits OF reason that applies TO
railways. 'It is as much within fhe
proper police authority Of the State
to keep 8 telegraph company from
abusing it's powers In the matter OF
charges as it is 20 prevent other abus-
es.'
a second point made by Judge
Cooley is that where charters exist
which have been granted without the
reservation Of the power TO amend or
repeal, the State must abide by the
grant, and if II was i~mprovident, must
suffer the consequences. But any
charter which authorizes the company
to establish such rates for the con-
veyance of persons and property as
may be determined from time to time
BIZ its bylaws, confers tho power
only subject to the higher authority
of the State, which may regulate it
self the rates if the circumstances
shall seem to demand its interposi-
ton Even in cases where n corpor~
alton has beer granted the exclusive
right to fix its own charges, the inn
Piled condition is that the right shall
not be abused; and in extreme cases
Of abuse the penalty wout0 be fors
fixture of the franchises by judicial
proceedings at the instance Of the
State.
His third point is that Whenever in
granting corporate franchises the
power to amend or repeal at will has
been reserved, the control Of the
State must be deemed practically alb
solute.' If that power should be ex-
ercised to the extent Of a judicial for
feiture of the franchises, the right of
the company to use its property Un~
der and above ground would not be
in any way affected. 1t could sell it
to any other company for use under
its own charter, or by procuring a
new one, or it could dispose of it in
any way it might deem most to It's
advantage.
With regard to equality OF charges
for long and short distances, Jud6e
Cooley points out that q fatal impe-
diment to the control Ct this vexed
question by State law is that tthe
States and the nation have, in respect
to it, q divided power, and while it is
for the interest of the nation a large
to encourage the competition which
favors long hauls, it is for the inter-,
est of localities to make competition
active in short hauIs.' A State
would, therefore, favor legislation
compelling proportional charges, or
nearly such, for all distances; but as
this would preclude the trunk lines
from competing for the graiD-carry-
ing trade of the Northwest, and re-
duce such links as are wholly within
O State to the condition Of mere local
roads, they would be compelled TO
make high charges for through
freight or go into bankruptcy. 1T
can hardly be doubted, therefore,,
that whenever State power should be
thus exerted prejudicially, Congress
would interfere under its authority
over interstate commerce..
We have thus given The main points
of Judge Cooley's arguments. They
show that there is ample power YES
ted in State to regulate corporations
serving public ends to the extent of
prescribing q maximum of charges
for the carrying of persons and props
erty. or for any other public service
to be performed, whether it be teles
graphic or the lighting and water
ing of cities; while in cases where
the franchise has been grossly abus,
ed the State has the power to for
felt tho charter Of the offending CONS
pany. But the sovereignty Of thei
State does not extend beyond its
own borders, and in attempting to-
establish for short hauls on railroads
the same or nearly the same rates as
for long hauls, it would bring itself
into conflict with Cnnrrasa to whinh