The Montgomery tribune. (Montgomery City, Mo.) 1892-1910, 1909-03-12
RAILROADS WIN
GREAT VICTORY
MISSOURI Low RATES KNOCKED
OUT BY FEDERAL COURT
AT KANSAS CITY.
JUDGE MCPHERSON DECIDES
Passenger and Freight Statutes De
clared NEUTRALITY-SUSPICIOUS.
Of Roads Are Little or
Nothing.

Kansas City, Mo.-A notable de-
cision In favor of the railroads
was handed down today by Judge Nc
Pherson Of the United States district
court in the two.cent fare and maxi
mum freight rate cases, involving 18
Missouri lines. The railroads contend
ed that the rates fixed by the statutes
of the state were not remunerative
but confiscatory and that the enforce
ment of the statutes be enjoined. 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 evil
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 a reasonable
return after paying expenses upon the
investment or whether such traffic Is
carried at a 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
remunerative.
Real Question at Issue.
In giving the reasons for such con-
clusion the decision says: Most lay
men and many lawyers believe that
the question Is whether the railway
company as a system Is earning suff-
cient revenue upon the value of the
property of the system. They believe
that II the Burlington, Santa Fe, Wa
bash, or any other railroad system, is
earning such money as will pay all
charges and expenses, including taxes
and interest, with reasonable divi-
dends to the stockholders, state rates
for state business must stand.
OF course no one believes this who
the question. That precise question
was before, and was decided by, JUS
tice Brewer, and affirmed by the su-
preme court in the Nebraska case Of
Smyth VS.. Ames. The only question
is as to Missouri rates, less expenses
properly charged against the same.
And IL this balance does not leave suf-
ficient to pay a reasonable return, the
law is invalid. And II the railroad
system of any company is earning
more than a reasonable return by
reason of interstates rates, which af-
feet the people man times more than
local rates, and II such interstate
alone or through a commission must
make the correctins.
Six Per Cent Not Too Much.
1.-THE supreme court during the pres
ent year in the case Of City of New
York vs.. Consolidated Gas Company
of New York decided that six per cent
was fair and right to be given to the
owners upon the true valuation. My
opinion Is that while a gas plant Is in
some respects different from a rail-
road, a railroad property. properly
built and properly managed, should
over and above expenses make a re-
turn of six per cent per n And
considering all the evidence, the evil
dence fairly shows that all of these
roads were properly and economically
built and are being properly and GEO.
nomically managed, and that after
paying the expenses for maintenance
and operation, there is less than six
per cent of returns, and not more than
three per cent upon any OF them, and
as to some of them q deficit, taking
the property as above stated within
the state of Missouri at its fair valua.
ton.
And this is SO without reference to
bonds, because in no case do the bonds
bear six per cent interest. But taking
the bonds into consideration, there is
still not to exceed three per cent re
turns, and many cases a deficit after
considering all debts and credits, upon
the true valuation for the state bust
ness. There is no evidence that any
of the existing bonds were improperly
issued either as to amounts or rates
of interest.
How Value Is Fixed.
'In fixing the value the court has
considered the evidence Of witnesses