The Saint Paul globe., 1897-10-22
RIVER AT 8 A. NJ.
REAsoNABLENEss IN RATES.

The decision of our state supreme
court in what has come to be known
as the Steenerson rate case is not
final assertion of definite rules Of law,
but rather a species Of comment on the
aIl-important question, what is rea-
sonable rate? The opening struggle
for the regulation of railroad rates was
finished many years ago. 1t was then
decided that the legislative power
might regulate railroad properties and
railroad rates. 1t was also decided
that such rates must be reasonable.
For a long time thereafter the reason
ableness of rates was matter that
was considered only as operating in one
direction. A rate might be unreason-
ably high, but nobody thought that it
could be unreasonably low.
After legislatures and railroad COM
missions in various parts Of the coun-
try had worked their will for a time,
and had brought down a system of
rates that were unquestionably exorbi-
tant in some sections and in some in
SldllSSo II DCS3eII4 ~ NC e1Ppc1A tAl1I
this process might be carried too far.
Railroads, as we'll as other interests,
profit by beoms and suffer in times of
depression. With the hard times and
the subsidence of immigration and set
tlement, railroad earnings dropped off
and railroad properties began to go
into the hands of receivers. When one
fourth of the entire mileage of the
country was being operated by the
courts, because the property could not
pay fixed charges, it was realized that
railroad rates might become too low;
and that this was not a benefit to the
public, any more than to the holder of
its securities, because it resulted in an
impaired service.
1t became necessary now to decide
where the line should be drawn, how
far commissions and courts may go in
reducing rate schedules fixed by rail-
road authorities, and to settle where
regulation ends and confiscation be-
gins. This is the present point of strug-
gle, and we may expect the combat to
rage about it for some years to come.
It all turns upon the question of a rea-
sonable rate, what elements enter into
1t and upon what it is to be computed
No court will ever hold that there is
any power to compel a railroad compa-
ny to adopt rate schedule that makes
it perform a public service at less than
cost. 1t is now admitted that rates
must be such as will produce an in
come. The company is entitled to a
reasonable compensation for its ser
vice and a reasonable revenue, and the
people are entitled to reasonable rates
What now shall be the test of reason
ableness? It is toward this point that
the court advances in the decision of
the Steenerson case, with steps that
are not free from uncertainty
An important feature of the decision
is the assertion that the fixing of rates
is a legislative or administrative act
and not judicial one; and that, while
the court may pass upon the work of
a commission as a matter Of review, it
is not its province to make schedules
on its own account. 1t may say that
what the commission has done is right
or wrong; but, if wrong, the matter
must go back to the commission for
further hearing and action A much
more remarkable position, and one that
seems to us not borne out by reason or
experience, is the per cent assigned
by the court as a reasonable income,
and the difference which it makes be-
tween returns from terminal and those
from other properties. 1t can hardly
be held that, in this part of the coun-
try, per cent is an adequate or aver
age return upon capital engaged in a
business where it must take great haz-
yards. Securities where there is abso-
lutely no risk to be considered, practi-
cally, such as the bonds of the smaller
municipalities and newer counties, are
considered to be fortunately placed if
they can be sold at par when bearing
interest at per cent. Now the opera
ton of railroad company shows vari-