Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1909-05-04
COMMODITIES
CLAUSE HELD
TO BE LEGAL.
GOVERNMENT LOSES BATTLE
WITH RAILROADS
SUPREME COURT RENDERS DE-
clsloN IN NOTED CASE
Railway Companies Must Dlsassociate
Themselves from Products They
Carry, but Otherwise
Win Case

" ASHINGTON, May 3.-It has been
! w many a day since a decision of |
the United States supreme court
has been received with as much inter-
est as was manifested today In the re-
versal of the circuit courts "commodi- |
| ties clause" decision, affecting the an |
thracite coal carrying railroads.
These cases had been decided by the |
circuit court favorable to the railroads |
In that the clause of the Hepburn rate |
law. which prohibits interstate rail- !
roads from carrying commodities man
ufactured, mined or produced directly |
or indirectly by the roads, was de- |
clared unconstitutional.
The general impression had been that
that decision would be affirmed by the |
supreme court. When, therefore, there |
was a reversal instead of an affirmation |
| the interest was much magnif1ed. |
| When, again, it was found that the re- |
versal was based on technical grounds |
and that the effect was really favor |
able to the railroads, sentiment took |
another turn and those who had been
anxiously awaiting the announcement
We're much puzzled.
The decision was announced by JUS |
tice White, who declined to give out
more than a summary, showing the net
result of the courts finding.
Because of the courts delay in an
| nouncing it's conclusion, 1t was gener- |
ally supposed that the court would be
found to be much divided. Only one
| dissenting opinion was announced.
Justice Harlan said he did not fol- |
low the conclusion in the point that the
law did not prohibit the railroad own
| ership of stock in commodities produc-
| ing companies.
Decision Analysed
Analysed, Justice Whites decision is
that congress did not transcend its con-
stitutional authority in enacting the
commodities provision, but it was held
that the government construction OF
the provision had been entirely too
! comprehensive. AS construed by the
court, the sole object of the clause is
to prevent carriers being associated in
interest with the commodities trans
ported at the time of transportation.
Summed up, the act only conpels
companies to disassociate themselves
i from the products they carry and the
government contention that the law
applies to the ownership of stock and
prohibits the transportation of COM
modities simply because they have
been produced by railroad company
is untenable.
The effect of the decision is favorable |
to the railroads, and the government
lost on practically all points except in
the sustaining of the principle involved. |
In holding that congress had not
gone beyond its authority in enacting
the law, the court comedies the right
to legislate, and it is believed If so dis
posed congress might enlarge and eX-
tend the scope of the provision.
The decision sustained the provision
of the law exempting timber from the
operations of the commodities clause. |
This exemption was used as basis or
attack by the railroads on the law as
discriminatory, hut Justice White re-
fused to accept that view.
AS enacted the law did not apply to
the transportation of timber, and 1t is,
of course, untouched by the decision
Summary Of Decision
The following is the summary of the
opinion in the commodities clause
cases:
Il. The claim of the government that
the provision contained in the Hep
burn act approved June 8, 1906, conf
monty called the commodities clause |
prohibits a railroad company from
having commodities in interstate COM
merce because the company has manu-
featured mined or produced them, or
| owned them in whole or in part or has
an interest direct or indirect in them, |
wholly irrespective of the relation or
:. connection of the carrier with the com
modities at the time of the transporta-
| ton, is decided to be untenable.
ut is also decided that the provisions
| of the commodities cause relating TO
interest, direct or indirect, does not
embrace an interest which carrier
NAV have in a producing corporation
las the result of the aEnership by the
carrier of stock in sucn corporation, IT.
| respective of the amount of stock
which the carrier may own in such
corporation, provided the corporation
has been organized in good talth.
| ft,a. ctr
by the government upon the commodl-
| ties clause, it is decided that that
| clause. while not all its provisions are
| harmoniously constructed, has soiely
| for it's object to prevent carriers en-
gagged in interstate commerce from pc
ing associated in interest at the time
of transportation with commodities
transported, and therefore the COM
modities clause only prohibits railroad
| companies engaged in interstate COM
merce from transporting such com
merce commodities under the following
circumstances and conditions:
Conditions Set Forth
"(a). When the commodity has been
manufactured, mined or produced Ly
railway company or under its author-
ity and at the time of transportation
the railway company has not In good
faith before the act of transportation
passed with its interest in such COM
modHies; (b) when the railway COM
pany owns the commodity to be trans
ported in whole or in part; (c) when
| the railway company at the time of
the transportation has interest directly
or indirectly in legal sense, in the
commodity, which last provision does
not apply to the commodities manu-
factured, mined, produced, owned etc,
by a corporation because a railway
company is a stockholder in such cor
poration. Such ownership of stock in
producing company by a railway COM
pany does not cause 1t as the owner of
the stock to have a legal interest in
the commodity manufactured, ETC., by
the producing corporation.
"3. AS thus construed, the commodi-
ties clause is regulation of commerce
within the power of congress to enact.
The contentious elaborately argued for