Evening star., 1909-03-08
RAILROADS WIN CASE.
Decision Rendered Against
Missouri Rate Law.
HELD TO BE CONFISCATORY
Judge Mcpherson Announces 0pin<
ion in Federal Court.
PROFITS MADE NOT SUFFICIENT
Eighteen Lines Affected by Stats
Statutes It Is Desired to En-
ioin-Points Involved.

KANSAS CITY, Mo. March S.-A nots-
BILE decision In favor Of the railroads was
handed down today by Judge McPhereork
of the United States district court in the
two-cent fare and maximum freight rate
cases. involving eighteen Missouri hnes>
The railroads contended that the rates
fixed by the statutes Of the state were noh
remunerative. but conascatory. and thas
the enforcement of the statutes be en<
Joined. The state brought proceedings
to have them enforced.
THE question" said Judge McPherson.;
in his decision, els whether the trefio
wholly within the state of Missouri gea-
orally referred to in the evidence as locsk
traffic can be carried under the freight
rate statute Of 1907 and the passenger
fare statute OF 1907 at such profit as will
give q reasonable return after paying eX-
penses upon the investment, or whether
such traffic is carried at loss or less
than such reasonable profit. The
court has reached the conclusion that
upon this question the statutory rates
fixed by either and both statutes are not
remunerative."
In giving the reasons for such conclu-
sions the decision says:
The unQuestioned and undoubted rule
is that there is a presumption, both OF
fact and of law. in favor Of the validity
W
way companies have the burden Of re-
moving this presumption and showing
that the statute clearly, or, as some
courts say. palpably, and others say, be-
yond a reasonable doubt, is invalid In
these cases the court has recognized this
rule. The authorities upon this question
form a long and unbroken line, with the
single exception of the majority opinion
in the Pennsylvania case. decided a year
ago (6S Att. Rep, 676. And that one aus
thority Is not persuasive.
Quotes Gov. Hughes.
"All testimony and argument bearing
upon the question as to what considera-
ton the legislature Of Missouri gave tn
these enactments is utterly immaterial.
Much was said in argument as to the
message Gov. Hughes Of New York
two years ago in declining to approve the
| two-cent fare statute of that state. Gov.
| Hughes had the moral courage to veto
| a measure of popular favor because as he
| believed the question had not been fully
considered. But the relations of gov
ernor to proposed legislation and those
| of court to legislation consummated
| are entirely different.
| Most of laymen and many lawyers be-
| lieve 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
| such money as will pay all charges and
expenses including taxes and interest.
with reasonable dividends to the stock
holders. that state rates for state busi-
ness must stand. OF course no one be-
lieves this who has given the slightest
attention to the question. That precise
question was before and was decided by
Justice Brewer. and affirmed by the Su-
preme Court in the Nebraska case or
Smyth ast -Ames. The only question is
as to Missouri rates. less expenses prop
ery charged against the same And if
this balance does not leave sufficient to
pay a reasonable return. the law is in
valid And il the railroad system OF any
company Is earning more than reaS-
enable return by reason OF interstate
rates which affect the people many times
more than local rates. and if such inter
state rates are too high, Congress either
acting alone or through commission,
must make the corrections.
Entitled to Six Per Cent.
The Supreme Court during the present
year in the case of city of New York VS..
Consolidated Gas Company OF New York.
decided that per cent was fair and
right to be given To the owners upon the
true valuation. Ny opinion is that while
d gas plant 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 per cent per annun. And
considering all the evidence, the evidence
fairly shows that all Of these roads were
properly aud economically built and are
being properly and economically managed.
and that after paying the expenses Tor
maintenance and operation there is
less than = per cent returns, and not
more than ) per cent. upon any OF them.
and as to some Of them deficit.
taking the property as above stated with
in the state of Missouri at It's fair valua-
nd c IN W
bonds. because in no case do the bonds
bear 4 per cent interest
The passenger carvings under the two
cent fare law of 1907, allowing nothing
for extra cost over Interstate business.
give 10 return whatever to the Rock Is
land St Louis & Hannibal. Kansas City.
Clinton & Springfield and the Great
Western. The other companies will hayo
| the following: The st. Louis & San
Francisco, between 5 and 4 per cent:
the Santa Fe between and per cent:
the Kansas City Southern. small frac-
tion over per cent; the NJ, K. & r.
Burlington between 5 and per
cent. But all this is arrived at by allow
Ing no extra cost OF service. But to add
the extra cost for freight and passenger.
there are no earnings over expenses. This
is confiscation under the constitution.
1T being Legislative act. and not
| judicial one. this court cannot fix rates
| If il could -. cent passenger rates
would be fixed for the stronger roads
and :: for the others. But that is for
| the legislature acting itself with eN-
perts, such as the state employed in
| these cases, OF through commission
with like assistant
| Judge MCPHERSON also says in the de-
| cision: When the statutes in question
! were enacted il was believed by many
| that by reducing the fare there would be
| much more travel For a month or so
/ this proved 10 be true. But with the
novelty gone the testimony shows that
! the increase has been less than per
cent and more nearly l per cent"
! ue saws further as to the abolition
] Of passes that the evidence shows the
passenger revenue is increased by rea-
son thereof less than / per cent.
Practical Test Made.
The maXimum freight law involved
/ reductions ranging from per cent In
40 per cen, on heavy freight In carload
. lots The railways secured court or