Daily Arizona silver belt., 1909-03-10
so SAYS JUDGE IN HANDING IN DECISION IN MISSOURI
 RATE CASE.
SMALL RETURN IN LOW RATE
EXPERIENCE SHOWS ROADS DO NOT AVERAGE PROFITS OF
 SIN PER CENT.

roads handed down yesterday by Judge McPherson, of the United States Dis
 trict court, in the two cent fare and maximum freight rate cases, involving eighteen Missouri lines. The railroads contended that the rates fixed by the statutes of the state were not remun- erative but confseatory, and that the enforcement of the statutes be en-
 joined.
 The state brought proceedings to
 have them enforced
 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 evi
 dence as local traffic, can be carried
 under the freight rate statute of 1907
 and the passenger fare statute of 1907
 at such profit as will give reasonable
 return after paying expenses upon the
 investment, or whether such traffic is carried at loss or less than such reas-
 onable profit *t* The court has
 reached the conclusion that upon this
 question the statutory rates fixed by either and both statutes are not remun-
 erative.'
 In giving the reasons for such con- clusions the decision says: "The un-
 questioned and. undoubted rule is that
 there is presumption both of fact and of law in favor of the validity of every legislative enactment. The rail way companies have the burden of re- moving this presumption, and showing that the statute clearly, or as some courts say, palpaby, and others say, beyond 8 reasonable doubt, that the statute is invalid In these cases the court has recognized this rule. The authorities upon this question form long and unbroken line, with the single exception of the majority opinion in the Pennsylvania case decided year ago. (6s Att R. 676.) And that one authority is not persuasive.
 "All testimony and argument bear ing upon the question as to what consd- eration the legislature of Missouri gave to these enactments, is utterly immater- ial. Much was said in argument as to the message of Governor Hughes. of New York two years ago in declining to approve the two cent fare statute of that state. Governor Hughes had the moral courage to veto a measure of popular favor as he believed the ques- tion had not been fully considered. But the relations of governor to proposed legislation, and those of court to leg islation consummated are entirely diff ferent.
 Most of laymen and many. lawyers believe that the question is whether the railway company as a system is earning sufficient revenue upon the val. ue of the property of the system. They believe that if the Burlington, Santa Fe, Wabash, or any other railroad sys tenn is earning such money as will pay all charges and expenses including tax es and interest, with reasonabft divi- dends to the stockholders, that state rates for state business must stand. Of course no one believes this who has given the slightest attention to the question. That precise question was be fore, and was decided by, Justice Brew CT, and affirmed by the Supreme Court in the Nebraska cose of Smyth V. Amos. 1 The only question is as to Missouri | rates, less expenses properly charged ] against the same. And if this balance | does not leave sufficient to pay a reas- 1lNla rat, lo ;, if the railroad system of any company is earning more than q reasonable re- | turn by reason of interstate rates. | which affect the people many times | more than local rates, and if such in | tcrstate rates are too high, congress, either acting alone or through com | mission, must pake the correction.
 "The supreme court during the pres ent year in the case of the City of New | York V. Consolidated Gas company of | New York, decided that six per cent was fair and right to be given to the f owners upon the true valuation. My opinion is that while gas plant is in some respects different from a rail 'oad, that railroad property, properly built, and properly managed, should 'ver and above expenses make re- turn of six per cent per annum. And considering all the evidence. the evi- lence fairly shows that all of these pads were properly and economically built and are being properly and eco managed, and that after pay ng the expenses for maintenance and operation, that there is less than six ,er cent of returns, and not more than hree per cent, upon any of them and IS to some of them a deficit. taking he property as above stated within the1 tate of Missouri at it's fair valuation !, And this is so without reference to 'onds, because in no case do the bonds 'ear six per cent interest. But, taking he bonds into consideration, there is till not to exceed three per cent re- urns, and many cases deficit after ons:dering all debits and credits, upon