New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1906-02-21
RAILR04Ds Az coal DEALERS

RAILROADS As COAL DEALERS.
A railroad decision of unusual Importance was
handed down on Monday in the United States
Supreme Court. The opinion of the court which
was unanimous declared null and void certain
contracts entered inro between the Chesapeake
and Ohio and the NewYork, New Haven and
Hartford Railroad companies. The execution
of the contracts had already been enjoned by
the federal Circuit Court. but in affirming the
lower tribunals action the Supreme Court raised
and faced some broader issues and laid down
some legal congratulations which, when further
applied must seriously affect the activities and
functions of the great railroad companies
The Chesapeake and Ohio Railroad made an
agreement with the New-York, New-HaYen
and Hartford Railroad Company TO deliver
1000 600 tons of soft coal Mt New-daven he
tween July /. 1891 and July !, 1902, AT s. 40 n
ton The delivery in the last year fell short
G0oo0 tons and the New York. New Haven and
Hartford Railroad bought coal elsewhere and
presented a bill for the difference in cost In
stead Of paying the bill the Chesapeake and
Ohio undertook 10 deliver the missing 6O,oN
tons thouGh-Owing 10 a marked rise in btu
minOus prices due to the anthracite strike
there was a net loss of 81 II on each ton. The
cost of coal AT the West Virginia mines and
the cost of transportation from Newport News
10 New-Haven footed up s247 a ton. The
from the mines 10 tidewater was 81 ~ a ton.
so the company lost 81 17-either as freight
carrier or as coal dealer-On each ton deliv-
cred The Interstate Commerce Commission
brought action against the company on the
ground that il had cut the freight rate. The COM
oany defended itself on the ground that il had
not cut its published freight rate. but had
merely lost money coal vender. The state
of West Virginia has forbidden railroads within
.1an iS
other story The federal Circuit Court held
that as the Interstate Commerce act does not
explicitly forbid railroads acting vendors of
commodities. the loss might properly be con
sidered-frOm the federal point of view-as
dealers loss. Yet, as involving possible ma
nipulation of the freight rate for its own
benefit. the railroads procedure declared
illegal.
The Supreme Court not only sIstans this
view. hut amplifies ii. 1t brushes aside the
lower tribunals concession that under the terms
Of the Interstate Commerce act railroad is
free 10 becOme-on its own conditions vender
of commodities. No explicit and literal veto
on such dual activity can he found In the law.
But the court maintains that any restrictions
necessary TO accomplish the purposes of the In
terstate Commerce act may be put on the right
of a carrier TO engage in commerce. The aim
of the act to abolish determinations and
undue advantages as between shippers and the
railroad as a carrier cannot logically be allowed
10 put itself into a position in which il is pos
sible for it 10 discriminate in its own favor a
vender and shipper. 1t must never be permit
ted 10 sell commodities al n lower cost than
their market rate. plus the published rate of
transportation To the point Of delivery. When
the Chesapeake and Ohio entered into a long
term contract to deliver coal at fixed sum il
took chance that owing 10 variations in cost
of production and transportation it might at
some point of time be delivering coal at a less
cost than the price at the mines plus the pub
lished freight charges. In such contingency,
the court holds. it would be conducting an lille
cal business. Answering the arguments nut
| forward TO justify the railroads claim 10 a
free hand in making long time contracts JUS
tce White used this sweeping language
Because no express prohibition against a
carrier who engages in interstate commerce be-
coming dealer in commodities moving I'm such
commerce is found in the act, it does not follow
that the provisions which are expressed in that
act should not be applied and be given their
lawful effect Even. therefore if the result. of
preted them Will be practically TO render II
difficult If not impossible for a carrier to deal
in commodities. this affords ground for
lieving us of the plain duty OF enforcing the
provisions Of the statute as they exist
II is TO be noted that the court excepted
from the application of this rule the few rail-
road companies whose functions as vendors
have been recognized in charters existing prior
TO the passage OF the Interstate Commerce act
But il refused to put the Chesapeake and Ohio
into this class. 'since neither by its charter nor
'by legislative grant existing at the time of the
adoption OF the act 10 regulate commerce has
lit possessed the commingled attributes of car
'rier and producer. which was the controlling
consideration in the decisions made in the
'Haddock and Coke cases"
The Supreme Courts view is that II is the
railroads first and controlling duty TO be a
carrier and that functions which unfit II TO
deal impartialy with shippers should be cur
tailed or surrendered, Transportation should
be divorced from industry. for the union OF
the two interests can only lead the court
rightly says. 10 absolute monopoly" There has
been TOO great a tendency the part of the
railroads 10 expand and diversity their inter
ests. The Supreme Courts decision points TO a
future limitation OF railroad functions to a mar
ROVER and more legitimate field.