Omaha daily bee., 1909-06-16
BATTLEOVER FREIGHT RATES
Shall State or Federal Commissions
Control the Situationi
TEST CASE PENDING IN OMAHA

Railroads Contend that Nebraska
statute DIRECTING Horizontal Re
ducton is InvHIid--Clash
in Authority.
CHICAGO. June IA special to the
Record-Hersld from Washington says: The
half dozen men in the east who control
most of the railway mileage OF the coun-
try and who dictate the policy for all have
come to the conclusion that 1t Is time to
get out from between the devil and the
deep sea. The railroad magnates regard
the Interstate Commerce commission as one
Of the two evils referred to and the state
railroad commissions as the other. The
TACT is, according to the railroad manage
ments, the situation becomes worse by
reason of their trying to serve two mas
tiers. Accordingly the railroads are going
to try to have the highest court in the
land say which is the lawful master with
respect to the making Of both freight and
passenger rates.
The question of state versus federal con-
troll of rates has been squarely raised In
the case which is pending In the federal
court at Omaha, and It will be made a test
case by the railroads., but is a proceeding
by the attorney general of Nebraska to
compel the railroads to observe the hor-
izontal reduction in the rates which was
prescribed by the legislature. Al the time
the petition was filed the railroads did not
care to protest the Nebraska rates, but
they saved their rights by filing a cross
petition, based upon the contention that
the new Nebraska law is invalid.
Flaws Are Alleged.
One argument made In support of this
CT intention is that the Nebraska law is not
in harmony with the commerce act under
which the Interstate Commerce commits
sion is serving. Another argument IN sup
port of the contention Is that the Nebraska
law 'nterferes with the relations existing
between the states Of the Union and that
It interferes with interstate traffic. A num-
Der of the roads have already engaged
counsel, among whom is w. D.. McHugh,
who ia now defending the railroads against
the order Of the Interstate COM
mission in the famous Missouri River rate
case. Regarding the Nebraska case Mr..
McHugh while in Washington, said. "The
action raises the question of the right Of a
state legislature or Of a state commission
to make a horizontal reduction in the rates
of transportation as has been done by the
state OF Nebraska"
1t will be the first case in which the
question of state regulation has been
brought directly to the attention of the
federal court and the railroads purpose to
take a mass of testimony 20 show the ef-
feet of horizontal reductions upon their in
~terstate traffic in the rates by state au-
thorities. That such reductions have a
widespread effect and are also often dis
astrous to business interests can be easily
shown, according to the railroads. Under
the reduced schedules of rates provided by
the legislature of Nebraska, for example
grain firms in Council Bluffs, just across
the river from Omaha, as well as those In
n~eighboring cities. are grossly discrimi-
mated against, as they are compelled to
pay higher freight rates from the same
fields of grain production and to sell at a
less profit. .;- & err
Would Affect Earnings. -
The railroads, of course, can come to the
relief OF the afflicted and reduce their in.
~terstate rates to correspond with the in.
~terstate rates provided for by the states
but II this process continues for any length
of time the revenues OF the railroads will
soon be dissipated. That such a genera
and wholesale process OF pairing dowr
must Of necessity be established under thu
dual system OF rate control is easily seen
declare the railroads. Owing to the frailty
Of human nature members of state legis
latures do not always look upon the sid,
OF interest to the greatest number, Blu.
to the interest of their particular constitu
ents, or particular friends, no matter whs.
the effect may be upon the general public
For this reason, presumably, many rat,
reductions and rate readjustments ar,
made, 1t is claimed, without the elemen
Of equity and reasonableness. BY so dom;
the state legislatures throw the entire rat,
adjustment Of the particular territory Ii
which the state is located out of Joint
Consequent determinations and much in
Justice and injury results to business in
situations which are just outside the pal
Of the reduced state rate. The railroad
$ are, In such event, hard pressed. The,
: must fight the state rates in the court
5 or reduce their interstate rates on tn
: basis Of the state rates Then II the stat
rates were put into effect to benefit an,
; particular class Of shippers, as has to
frequently been the case, it is claimed
/, the state authorities will have anothe
800 hNAhhb &c civ NOliulNlOIS VIII akal
be established which are unjust, but tn
general rate fabric will be on a lowe
) basis all around and this basis may, NOR
than likely, be an Improbable one.
; Clash in Authority.
\ There Is no controversy over the STATE
: ment that there is constant conflict be
tween state and federal authority in IN
matter OF general railroad control. Thi
authority clashes everywhere and upon a
|, subjects, including the manner in whic
. railroad trains shall be opeI ated and unde
! what conditions. One example is sufficien
The federal law permits a telegraph opera
tor TO work nine hours continuously 4
twehty-four. Some Of the state laws max
II illegal for him TO work more than eisb
To which shall the railroads be amendabI
! when compelled to answer in an eight
hour state for violations of the law?
A The members of the Interstate Commerc
commission are credited with a decide
leaning toward federal control rather tina
state control OF rates because of the mr.
disputed fact that 1t is impossible to di.