Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1898-03-29
STATE CONTROL OF RAILROAD RATES

Recently the Supreme Court of the
United states rendered decision
which sets aside law of the state of
Nebraska prescribing maximum rail-
road freight rates. and has excited n
good deal of comment by western news
papers. The tribunal named has re-
pcatedly held that state legislatures
had power to fix maximum rates, pro-
vided the same We're reasonable. but
the statute referred to Is set aside on
the ground that the highest rates 1t
permitted to be charged were too
low.
The interesting feature of the de-
cision is the method by which the
court reached this conclusion, and 1t is
this feature that provokes discussion
and threatens to neutralize state legis-
latlon on the subject, particularly In
the West. The court laid down the
principle that state, In reducing rates,
must concern itself with local traffic
only. The road must be permitted to
make u fair profit upon business begin
ming and ending in the state, without
regard to the profit made upon the
whole volume of business done within
the state. The contention of counsel
for the state had been that the reason
ableness of the rates established by the
Nebraska statute is not to be deter
mined by the inquiry whether such
rates would leave n reasonable net
profit from the local business affected
thereby, but that the courts should
| 9th
things, the whole business of the COM
pany--that is, all its business, passen-
ger and freight, interstate and domes-
tic. To this the court replied:
"If we do not misapprehend coun-
| sci, their argument leads to the conclu-
| sion that the state of Nebraska could
legally require local freight business
| to he conducted even at an actual loss,
II the company earned on It's interstate
| business enough to give 1t just COM
| pensation in respect of its entire line
and all its business. Interstate and do
| nestle. We cannot concur in this
view. In our judgment. 1t must be
| held that the reasonableness or un-
| reasonableness of rates prescribed by
| a state for the transportation of per-
| sons and property wholly within It's
| limits must be determined without ref
erence to the interstate business done
by the cartier, or the profits derived
| from 1t. The state cannot Justify UNI
reasonably low rates for domestic
| transportation, considered alone, upon
the ground that the carrier Is earning
large profits on It's interstate business,
over which, SO far as rates are con-
cerned, the state has no control. Nor
| can the carrier Justify unreasonably
| high rates on domestic business upon
the ground that 1. will be able only in
that way to meet losses on its inter-
state business. So far as rates of trans
portation are concerned. domestic bus-
ness should not be made to bear the
losses on interstate business, nor the
latter the losses on domestic business.
1t Is only rates for the transportation
of persons and property between points
| within the state that the state can
prescribe. And when 1t undertakes to
prescribe rates not to be exceeded by
the carrier.it must do so with reference
| exclusively to what is just and reason
able. as between the carrier and the
public, in respect of domestic business.
The argument that railroad line Is
an entirety. that it's incom' 'oes into
and its expenses are provj for out
OF common fund,and thai ,pitnl-
ization Is on Its entire line, ~ N and
| without the state, can have no applica-
ton where the state Is without author
| lily over rates on the entire line. and
can only deal with local rates and
make such regulations as are necessary
to give Just compensation on local bust.
ness"
The practical bearing of this. says
the Chicago News. is that in most
western states local business, consid-
cred alone. does not pay large profits.
a road that may be making excessive
profits upon its entire business within
n state may yet be able to show that
a reduction of rates for traffic begin
ming and ending in the state, consld-
cred by itself, is unreasonable. This
d, sion is highly advantageous to rail-
roads, and will no doubt be used as an
argument in favor ot antl-railroad
legislation by Congress,