The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1909-05-04
LAW IS VALID, But
SCOPE IS LIMITED
Federal Supreme Court UphOlds
Commodities Clause" but
Modifies Interpretation
Ownership Applies Only to the
Tine of TranspQrta-
ton

WASHINGTON May s.-That the
commodities clause" Of the interstate
commerce act Of 1906 known as the
Hepburn rate law. is constitutional was
IN effect declared today BY the supreme
court OF the United states The decision
was announced by Justice White. The
court reversed and remanded the de-
cision OF the United States circuit
court. but the only directions were 70
enforce and apply the statute as IL is
noE construed
LAW i CONSTITUTIONAL
Briefly summarized the decision OF
the supreme court in the commodities
clause cases holds The law % be con-
stitHtionsl but Il does not concede the
contentious OF the government as 10
Us scope An especial exception was
as 70 the ownership OF stock IN olf-
ferent corporation. which. Il was held
id not constitute SUCH ownership as
would prohibit transportation under
the terms OF the law
Il vas also held that ownership Of
The commodity applied only 10 The time
Of transportation II before transport
ing r the railroad company has IN
good faith parted with & commodity II
nay carry IL Ire principal point Of
rhe decision was IN relation 70 raii-
roads holding the stock q subordinate
companies. and on that important point
the finding was favorable 10 the roads
STOCK OF SUBSIDIARY COMPANIES
Il was decided that the provision
Of the commodities clause relating TO
interest, direct or indirect. does not
embrace an interest which q carrier
may have n Z producing corporation
as the result OF the ownership by the
carrier OF stock n such corporation tr-
respective OF the amount OF stock
which the carrier may own IN such
corporation. provided the corporation
has been organized IN good faith
HISTORY or LITIGATION
The announcement as 10 the con-
modities clause was made in deciding
the y Injunction and mandsmus cases
brought BY the government against the
Delaware and Hudson. the Erie. the
New Jersey Central. the Delaware and
LackaVanna. the Pennsylvania and the
Lehigh Valley railroads
The cases came 70 the court from the
United States circuit court for the
eastern district or Pennsylvania, whose
decision, as announced by Judge
George Gray in 1903. attracted much
attention.
They originated in the circuit court
and in its petition the government
charged that the railroad companies in
question were engaged in transporting
in interstate commerce anthracite coal
mined by themselves At their own
mines, which are located in Pennsyl-
vanis-
The Hepburn act makes il unlawful
for any railroad company 10 trans
port from any state 70 any other state
or 70 any foreign country any article
or commodity. other than timber. man
ufsctured. mined OF produced By IL. or
under its authority. or which II may
own in whole or in part. or in which
il may have any interest. direct or IN
direct. except such articles OF commod-
tiles as may be necessary and intended
Tor lis use in the conduct Of its bust
ness as z common carrier"
CIRCUIT COURT RULING
The circuit court decided against the
constitutionslity Of the provision. be-
cause. Is il was alleged. il deprives the
corporations Of their liberty and OF
property without due process OF law in
q way that Is prohibited BY the fifth
amendment 10 the constitution Il was
also held by the court that the clause
not directly but indirectly" works a
practical confscatiOn Of the property Of
be invalid and in its nature and ef-
feet q discriminative prohibition"
That verdict was reversed by today S
decision.
Justice Harlan dissented on the stock
feature. but otherwise the decision was
unanimous
Effect Of Decision
NEW YORK, May 3.-Winiam OPP
dyke Jr-. general counsel for the Della
defendants in the commodities case
said today:
This decision allows the railroad
companies TO continue as now consti-
tuted-that is, those which DO not own
the coal mines directly, but exercise
control through coal companies whose
stock they own. Reading. Pennsylva-
MIA and IN part the Erie. Lehigh Valley
and Jersey Central, as well as the On
tariO and Western, come within the in
depreciation Of the courts decision.
The Delaware and Hudson sells lis coal
in Pennsylvania and its status is not
affected by today's decision"
Slump in Stocks
NEW YORK. May philadelphia
anc Reading stock slumped points
on the stock market on the announce
ment OF the commodities decision. and
the rest Of the market weakened mod
erately. Before ! o'clock Reading re-
covered its loss and the whole market
became intensely dull. Delaware and
hudson lost = and Pennsylvania ! on
the break but both recovered the
losses.