The Washington herald., 1909-03-09
RATE Law INVALID
MiSSOuri'S TWO-cent Measure
Is Called COnfiScatOry.
HADLEY DEFEATED IN FIGHT
Judge McPhersOn in Federal Court
mt Kansas City, SustainS Praeti-
cAIIy All the Contentious Of the
RaiIrOads-I.ayv Does Not Permit of
Adequate Return on Investment.

Kansas City, No, March s.-The Mis-
souri, 2-cent passenger fare law and the
maximum freight rate law were knocked
out this morning by the decision Of Judge
Smith Mcpherson in the Federal Court.
In substance he held that the recucuons|
made by the law did not permit an ade-
quate return TO the railroad and had been
made without proper investigation OF con-
ditions The railroads have been operat-
ing under the 2-cent fare law. but the
freight rates were suspended by injunc-
ton
The railroads viii Immediately put into
force 3-cent passenger rates on inter
state business. but must first file a tariff
with the Interstate Commerce Commis-
sion before raising the interstate rates
The commission may hold the railroads 20
the old rate for thirty days, or may
grant special permission fer the new rates
10 go into effect ia a lesser time. The
freight rate law which was knocked out
to-day was passed in 1906 and then
AMENDED in 1871 The passenger rate law
was passed Ia 1901
Law Had Been EnjOined.
The freight rate law made reductions
from To - per cent in carload COM
modities The law had been enjoined in
1905 and the amendments IN 1907 were
intended 10 overcome the complaint In
the injunction ease. The railroads i'm
NE 1iately went into court and the freight
rate amendment was again enjoined- The
/ threatening attitude of The then Attor-
I ney General Hadley, however. forced a
compromise on the passenger rate law.
/ ana the court ordered the rates put into
effect to determine whether they would
give an adequate return. To make their
showing, the railroads used a method
/ OF computation which showed. accord
I ing 10 the States attorney. that they
never could even pay expense at any rate
Of fares The State by its method show
Z ed. it was contended. that the rates were
reasonable and compensatory.
/ Practically all OF the contentious Of the
railroads We're confirmed by Judge Nc
( Pherson in his opinion He accepted the
revenue basis as the proper theory Tor
determining the relative earnings and ex-
ipenses Of the railroads. The States attor-
lney advocated the ton-miIe theory Judge
/ Mcpherson found that il is more expen-
/ sive 90 do the state than the interstate
/ business. This was one OF the strong ar
guments OF the railroads And the Judge
/ accepted the theory OF the railroads that
/ Missouri. by reason OF its geographical
/ situation. occupies a uL4Que position in
American railroading.
Not n Reasonable Return.
The question" Judge Mcpherson said
/ in his opinion. is whether The traffic
/ wholly within the State OF Missouri gen
l eraly referred 10 in The evidence as local
( traffic can be carried under the freight
rate statute OF IgJ7 and the passenger
fare statute OF 1877 al such proat as VIII
/ give a reasonable return after paying
/ expenses upon the investment or whether
such trafic 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 remuner-
ative
Both from a geographical and railway
Z standpoint Missouri is situated differently
I from the other States OF the Union. there
[ only being two or three other States thar
/ have a resemblance 10 it IN these partfcu-
Z lars, and each Of them in a lesser degree.
I This is so because the Mississippi is its
! boundary on The east all the distance.
! From a railroad standpoint the Missouri
River - It's boundary line on the west
/ although physically the Missouri River IS
/ only the western boundary line from the
northwest corner OF the State. about half
/ way 10 the southwest corner. For q
/ third OF century or more. for reasons
I which need not be repeated rates from
/ the East were fixed 10 the Mississippi
! River. and later on from the North 10
1 the Missouri River. The interstate rate
I either in OF out was the one plus the
other II was the same from the West. -