Omaha daily bee., 1896-03-05

| "reminiscences of Credit Moblier and other
peculiar transactions arose In the judicial
memory
Chancellor wcolworth will speak in the
| morning. Whether Attorney General Church
| ILL., for the appellants, and Mr. Carter for
| the appellees, will talk is not determined
upon. although the chances are that Mr..
! Woolworth viii exhaust his case. Mr..
| Churchill closing for the state.
| HISTORY OF THE CASE.
During the 1898 session of the Nebraska
| Legislature a bill fixing maximum freight
| rates for the state, known as house roll No
33, was introduced and passed. 1t was ap-
proved by the governor on April IL, 1893
| 1t provided for the regulation Of charges by
! railroads, the classifying of freights and
/ the penalties for the violation of the pro-
visions of the law. Just before the law went
| into operation, suits were commenced in the
| name of the stockholders of the Burlington
! railroad to prevent the officers from putting
| in force the rates provided for in the bill.
| Action was commenced in the circuit court
| of the United States for the district of Ne
| braska. Other similar suits We're brought.
| The cases we're heard before Judges David
| j. Brewer and Elmer S. Dundy and DEGREES
were entered in favor of the complainants,
| an injunction being granted against the Of
| fcers of the companies and the State Board
Of Transportation. In the opinion which
| was given by Judge Brewer, 1t was stated
that while the right to regulate rates was
recognized the law was repugnant to the
constitution Of the United States, "for as
much as by the provisions of said act. the
said defendants. the railroad companies
| may not exact for the transportation of
| freight from one point to another within
| this state charges which yield to the said
companies, or either of them, reasonable
compensation for such services" An appeal
| from the decision of the circuit court was
| taken to the supreme court of the United
hy the State EOarQ of Ira anSDOrtat
| on BEHALF CT the state.
| The first point touched upon in the argu-
ment of Mr.. Webster's brief was the
Theory of Profits" the opening statements
| being as follows: 1.-THE opinion Of the cir
| cult court was based upon the theory that
| the railway companies were entitled to make
| such rates as would yield profit. The
| evidence in this case was taken at time
| when there was a drought In western Ne
| brasla and a depression in business. Upon
| the theory that the railway companies were
| still entitled tu earn profit, the logic of
| this would be that the railway companies
| would be justified in increasing rates in
| the ratio CT the decrease in business. The
! converse of the proposition would be true;
| In times of financial depression, all other
| values go down and railway rates should go
! down in like proportion. Would the owner
| Of a building be justified in Increasing rents
because the number Of his tenants diminish?
| Our contention Is that when the value Of all
| of financial depression. thatlwas time when
| the producer and shipper had a right to ask
! for lower rates.
QUESTION OF LOCAL RATES.
| The next point taken up is contained in
| the statement 1.-The law should not be held
unconstitutional and the rates unreasonable
for the single reason that the enforcement
of the rates would not leave or create net
profit to roads whose local business has al
ways been unprcftable." 1t was shown that
to make rates which would be profitable to
these road would result in making rates that
would yield enormous profits to the main
lines.
The table showing the effect of the law of
the earnings of the several companies was
then taken up in detail and its credibility
attacked. The testimony of Secretary Dill
worth of the State Board of Transportation
is quoted from the evidence at the trial of
the casa, to the effect that decrease in
rates would unquestionably result in an in
crease in tonnage, and instances were cited
whore this had proved true in other states.
The data from which the table was compiled
is shown In the brief to have been Incorrect
az shoMh by the testimony of the auditors
of the railroads in the case. In the table
the net profits of the B. & M. road on local
business, under the cid table of rates, was
stated as si42,792. while the testimony of
William Randall, freight and ticket auditor
of that road gave the net profit Of the
road on local business as $3.50, ,S52 80 about
double the amount stated in the table. Re-
ducing this profit by 29A per cent, the re-
duction called for by the law, the net profit
of the road would still remain $500, ,991.17, in
stead of SIT GIT, as shown in the table. The
testimony of A. S. VanKuran. freight
auditor of the Union Pacific. Is also quoted
to show that the net earnings of that road
in Nebraska were $646.9S0, instead of $685.
262. as shown by the table
The statement Is made that the railroads
in ba sta 10 of Nehra In
their local tonnage of nearly 100 per cent
over ani above operating expenses. The
testimony of Mr. Randall OF the B. e. NJ,
James G. Taylor, auditor and treasurer of the
same road, and A, S. VanKrran of the Union
Pacific road, Is quoted to show that this
statement IL well founded, and 1t is claimed
that there IS no Justification in law or in
reason for the railway companies insisting
that the maximum rate law would operate
as a connscation of the properties of the
companies, when the earnings on local traffic
are so enormous as shown.
WHAT SHOULD BE CONSIDERED
1t Is contended that the appellants have a
right to take into consideration, first, the
whole business of the company; second
whether the rates fixed in the act are as
high as the articles composing the local
tonnage can reasonably bear leaving a mar
gin of profit to the producer and shipper
and not producing an exorbitant price to
the consumer; third, that a rate which. as to
profits. would be deemed a reasonable rate
upon line running direct from point OF
shipment to point of destination must be
deemed judicial reasonable rate, although
such rate might not yield a profit upon
other competing roads following circuitous
lines or running through sparsely settled
territory.
The startling statement is made that "the
annual net earnings Of the principal rail-
roads in Nebraska exceed rs per cent on
their value, or equal sum OF money
which. within four years, would pay the
cost Of reproducing the roads" In support
OF this assertion figures are quoted and the
testimony of railroad experts Is given, show
ing that $4,000 a mile viii construct and
equip any railroad operating in Nebraska !
On this basis in 1892 the II. & M. earned |
S2 per cent. Some attention 10 paid to al |
legged miSmanagement in affairs OF the Union |
Pacific Federal, state and municipal aid |
granted Nebraska railroads is also cited.
II IS then asserted that the railway COM |
panies of Nebraska are capitalized at much |
more than their actual value or their actual |
cost, and that in some instances the capital
ization Is four times as great as the value