The San Francisco call., 1895-12-03
HEAVY PENAL TIES MENACE THE RAILROAD.

Now, what constitutes reason
able rate is question that has never been
decided by the Supreme Court of the
United States, and this is in reality the
pivotal question of the whole matter.
During the investigation Attorney Martin
of the Southern Pacific Company made
what l consider great bluff when he
quoted the decision of Judge Brewer as to
what constituted reasonable rate, and de-
clared the commission must in its action
conform TO that decision.
"At the time Judge Brewer rendered his
decision defining a reasonable rate he was
on the Circuit bench in illinois, so that
his decision will carry no great weight
with Judge McKenna, if it can be shown
that Judge Brewer was in error, and | be-
lieve this can be shown. Judge
Brewer declared that a reasonable
rate was one which returned to
the carrier operating expenses, fixed
charges, such as interest on its bonded
debt, taxes, rentals, etc. In this he has,
l am confident, gone beyond the law,
which says that private property cannot
be taken for public use without compen-
sation. The law does not say what the
compensation shall be, not even
that 1t shall be reasonable or just.
l merely requires that some compensa-
ton must be made. 1t certainly did not
contemplate that compensation to a car
rier should include interest on its debt as
we'll as a profit on the actual cost and
maintenance of the railroad. Let me
illustrate in order to show more clearly
how unjust such a view of it would be
under circumstances that might easily
obtain.
Suppose l built a road costing 81 900, 900
and paid for it in cash from my own
pocket. A reasonable rate on my road
would mean simply operating expenses,
taxes and certain return on my invest
ment. Now, say you, without dollar Of
your own, constructed a railroad and bor-
rowed the money to pay for it, giving
bonds secured by mortgage on the rail-
road to the man or men from whom you
obtained the loan. According to Judge
Brewers decision you would have q legal
right to charge rates which would include
the cost of operating, taxes, a return on
the investment and interest to your debtor.
In other words, the man who had 10
money of his own invested in the road
would have the right to charge higher
rates than the man who had the courage
and enterprise to build a road with his
own capital.
Take it in another light. If the road
built with borrowed M money is permitted to
charge a higher rate than the unincum-
bered road, so as to cover the interest
charges on the borrowed capital, it would
mean that the shipper was being taxed to
pay actually two profits on the money
invested in the incumbered road; one
profit to the ostensible owner and the
other profit to the creditor of the road in
the shape of interest. Now, I do not be-
lieve that any one can be found who would
declare this just.
lam certain that should Judge McKenna
agree with Judge Brewer as to what con-
stitutes a reasonable rate that his ruling
would be reversed if taken to the Supreme
Court.
ITO my mind Judge McKenna has
already made gross error in this matter
by granting the temporary injunction re-
straining the commission from making
any further reductions or from enforcing
the reduced rates already established. |
do not mean to charge, however, that
Judge McKenna was to blame for this, for
he was undoubtedly purposely mis-
led by the railroads counsel when
the latter presented their application.
The Texas decision previously referred to
and which should have been properly
called to the attention of the Circuit Court
Judge of the district, distinctly states that
the Circuit Court of Texas was in error in
granting an injunction restraining the
Railroad Commission from performing it's
prescribed duties. The only power that
lies in the Circuit Court, it is therein de-
clared, is to pass upon the reasonableness
of specific rates fixed by the commission.
the commission restraining them from en-
forcing the rates already established by
them, any such action Is simply the verl- |
est nonsense. The Railroad Commission |
has nothing to do with enforcing the rates
established by it. 1t simply makes them
and they become operative after the twenty
days notice has been served upon the rail-
road company. 1t simply remains for the
shippers to take advantage of them. Ii
the railroad company refuses to accept the
new rates, then any shipper or citizen has
the right to institute proceedings against
the carrier, under the following constitu-
tional provision:
Any railroad corporation or transportation
company which shall fail or refuse 10 conform
to sucn rates as shall be established by such
Commissioners, or shall charge rates in excess
thereof, shall be fined not exceeding
$40, 900 for each offense; and every officer,
agent or employe of any such corporation or
excess thereof, shall be fined not ex-
ceeding $4,000, or be imprisoned in the county
jail not exceeding one year.
"It will be seen that the Railroad Com
mission has no power to either fine or
impIison. This must be accomplished
through a courts intervention. There
fore, any injunction against the Commis-
sioners to restrain them from enforcing
rates established by them is like trying to
restrain man from keeping another dead
after he had killed him. To my mind, the
railroad company has been liable to the
constitutional penalty ever since the ex-
piration OF the twenty days notice of the
new rates served upon the Southern Pa
clfic Company.
''Some of the members of the Farmers
Alliance have asked me to take the matter
up, but as it may mean a long and ex-
pensive litigation l suggested that it
would be better if the matter of prosecut-
ing the railroad company were under
taken by the Farmers Alliance as an
organization, and l presume this body is
now considering the matter
GA further reason for sending my COM
munication to the Railroad Commission is
to have them cali special meeting at
once, SO as to have Congressman Mcguire
see President Cleveland and present the
matter properly to the chief executive be-
fore the hearing on Monday next. feel
sure that if the matter were properly un-
derstood at Washington, the Government |
would not attempt to intervene in the case,
as the Southern Pacific is perfectly capable |
of protecting its interests and in SO doing
will necessarily protect those or the United |
States. Personally l do not see any real
need of the Federal Governments inter-
vention. I would like to see the Govern
ment elm mated from the case simply so
as to have the issue Simplified and more