The Montgomery advertiser., 1909-03-09
Judge McPherson Holds With Roads. PASSENGER TARIFFS
 ARE CONFISCAT0RY Statute Did Not Bring the Results
 Desired. Low Rates and Act Against Passes Found Not to Increase the Travel-GOverpor Hadley
 Will Continue
 Fight.

Kapsas City. Mo, March 8--Missou. rfs 2-cent passenger and maximum freight laws were nullihed by a decis- ion handed down here today in tho United States District Court by Judge Smith McPherson of Red Oak. Ia. As result, 1t Is believed there will be Q quick return in Missouri to 3-cent fares and Frank Hagerman for the eighteen companies involved. asserts today's de- cision sounds the death knell of the 2-cent rate in every State In the Union. Judge McPherson held that both tho commodity and passenger laws were confscatory and unconstitutional and MT. Hagerman declared it is not con- ceivable that if the 2-cent rate is con. fiscatory in Missouri. 1t can be compul. sorry in other States.
 The State. on the other hand. de- clared emphatically that Missourfs fight for lower rates would continue. Elliot W. Major, the newly elected Attorney General who succeeded Her. bert s. Hadiey to that office. and was in court today when the decision was read. said an appeal would be taken be asked to pass new rate laws that would stand the test of the courts. Hadley stands Pat.
 Governor Hadley made similar statement at Jefferson City.
 Judge Smith McPherson. who rend- cred today's decision, is presiding judge of the United States Circuit Court for the Southern District of Iowa.
 The railroads contsnded that thes rates fixed by the statutes of the State . were not remunerative. but confsca- | tory. and that the enforcement of the | statues be enjoined. The State brought proceeding to have them en- forced.
 The question:" said Judge McPher- | son in his decision, 'is whether the traffic wholly within the State of Mis- souri generally referred to in the evil dence as local traffic. can he carried l under the freight rate statute of lso7s and the passenger fare statute of 1907 at such profit as wiu give reasonable return after paying expenses upon the I investment, or whether such traffic Is carried at loss or less than such req sonable profit, The court has reached the conclusion that upon this question the statutory rates fixed by either and both statutes are not remu- nerative."
 In giving the reasons for such con- clusions, the decision says: The un- questioned and undoubted rule Is that there is a presumption both Of fact and of law in favor of the validity of every legislative enactment. The railway companies have the burden of removing this presumption. and show 1 ing that the statute clearly, or as some court say, palpably. and others say. beyond reasonable doubt. that | the statute Is invalid. In these cases the court has recognised this rule. The authorities upon this question form long and unbroken line. with the sin- gle exception of the majority opinion in the Pennsylvania case decided year ago. (eS Att. Rep. 67e). And that one authority Is not persuasive.
 All testimony and argument bear ing upon the question as to what con sideration the legislature of Missouri gave to these enactments, is utterly | immaterial. Much was said in argu- ment as to the message of Governor Hughes of New York two years ago in declining to approve the 2-cent fare statute of that State. Governor Hughes 1 had the moral courage to veto meas ure of popular favor because. as he 1 believes the question had not been fully considered. But the relation or Governor to proposed legislation and those of a court to legislation consum- mated are entirely different. A Earnings of Railroads. Most of laymen and many lawyers believe that the question Is whether the railway company as a system IS earning sufficient revenue upon the value of the property of the system
 They believe that if the Burlington. santa Fe, Wabash, or any other ratl- 1 road system Is earning such money as will pay all charges and expenses, | including taxes and interest. with req l sonable dividends to the stockholders. that State rates for State business must stand. Of course. no one be- lieyes this who has given the slight est attention to the question That precise question was before, and was decided by, Justice Brewer. and af- | 6rmed by the Supreme Court in the l Nebraska case of Smith vs. Ames. The only question Is as to Missouri rates, l less expenses properly charged against the same And if this balance does not leave sufficient to pay a reason l able return, the law is invalid. And fl the railroad system of any company Is earnings more than a reasonable re- | turn by reason of interstate rates. which affect the people many times mora than local rates, and if such | Interstate rates are too high, Congress outRer acting alone, or through commission, must make the correc- | tions.
 ..The Supreme Court. during the nresent year, in the case of the City of | New York vs. the Consolidated Gas | Company of New York. decided that six per cent was fair and right to be giV- on to the owners upon the true valua- tton My opinion Is that while gas nIant is in some respects different from a railroad. that railroad property. properly built and properly managed ! should over and above expenses make a return of six per cent per annum. And considering all the evidence. the evidence fairly shows that all of these
 roads were properly and economically built and are being properly and eco-
 nomicaIly managed. and that after having the expenses for maintenance and operation. that there Is less than
 six per cent of returns. and not more than three per cent. upon any of them. and as to some of them deficit. ta- king the property above stated within the State of Missouri at its fair valuation. And this is so without rel erence 10 bonds. because in no case 0" inc bonds bear six per cent interest
 But taking the bonds into considera-
 ton. there Is still not to exceed three
 per cent returns. and many cases a dA- hcit after considering all dAbitu and l credita upon the true valuation for the