El Paso herald. (El Paso, Tex.) 1901-1931, 1910-02-24
NOTED RATE
CASE IS
HEARD
Arguments Before Supreme
Court to Force Reductions
in North Dakota.
POWER OF NATION
MAY BE AT STAKE

commodity OF interstate commerce be-
basis for a keen argument today before
the supreme court Of the United States.
The legal representatives Of the state
of North Dakota defended the consti-
tutionality of the state law OF 1907,
fixing the rate on coal. and counsel for
the Northern Pacific Railway company
attacked it as designating a rate be-
low the cost OF service.
Attorney general Miller and attorneys
T. F. McCue and Guy C. II. Corliss
filed a brief in defence of the decision
| rendered by the supreme court of North
Dakota in favor of the law. Charles
w. Bum, general counsel for the North
ern Pacific. had presented a brief al
lacking the law and the decision OF the
state court
The States Argument.
The counsel for the state argued
that the reason why the cost Of service
was not controlling where a single rate
was involved was twofold. In the first
place, it was contended, 1T was impos-
sible to determine with anything like
accuracy what such cost OF service was
In the second place, there was no in
jury to the equitable title OF the car
rier as a result of the cost Of service
not being controlling, as long as the
carrier was allowed on the whole to
earn a fair profit on the investment in
the business.
| Furthermore it was contended that
other elements may serve to make the
rate a reasonable one, though il is less
/ than the theoretical cost of service. In
the case of the rate on coal. il was ar
gued that il may be entirely reasonable
| for the state to put in force a low rate
for the purpose OF developing a great
natural resource by stimulating the
purchase Of local coal in place OF for
eign coal through the reduction IN the
cost OF the former.
Illogical Conclusion.
4 As to the argument that the reduc-
1 ton of the rate on coal meant an addi-
tional burden on other commodities,
counsel for the state contended that IL
was illogical TO speak of this as rob
bling Peter to pay Paul. According TO
! their point Of view. the subject was
neither more nor less than a case Of
proper rate classification with the in
cidental result that one commodity sus-
tains greater weight OF expense than
another.
A vigorous attack was made on other
arguments OF the railroad. IF the
doctrine contended for by counsel for
court" said the counsel for the state
the decision will not merely mark an
.epoch-it viii inaugurate a revolution
Ito the regulation OF transportation
charges by the railways Of the cOun-
try"
Nation Might Be Crippled
II was said that the result OF de-
cision in accordance with the contention
LOT the railroads would be to cripple
Iseriously, If not practically to destroy.
the, rate making power Of the nation
and Of every state
The burden Of proof is upon the
railroads to show that the rate in
Iv0Ived will cut down the net earnings
of the railroad from purely fntra-state
business below the point Of a fair
profit. said the states counsel. There
is no evidence as to the gross receipts
from purely intra-state business; no
evidence as to the gross expense prop
erly chargeable to such business: and
no proof OF the value Of the property
which may be fairly said to be engaged
in the carrying on OF such business. It
therefore stands admitted upon this rec
ord that despite the rate in question.
these defendants can earn at least q
fair profit upon their purely intra-
state business"
The Railroad Viewpoint.
On the other hand. the counsel for the
Northern. Pacific contended that in or
der TO be constitutional. the rate must
permit fair amount of profit for the
railroad
NO one can contend it TO be neces-
sary for the protection of the public"
said the railroads counsel. that any
rate be fixed by legislative authority
below the cost of furnishing the SER
vice. Such a contention would be con-
trary to the fundamental purposes Of
the police power. And viewing the sit
uation from the standpoint OF the pub
lie, IL can have no interest which ought
to compel a carrier TO furnish certain
classes Of service at less than cost, thus
10 charge the loss against the balance
Of the service. Such principle is con-
traTy 10 public policy.
ANY discrimination by public SER
vice company. which consists in rem
dering a service below its cost. is un-
just discrimination and unlawful. 1t Il
inconceivable that a test OF reasonable
rates will be adopted by the court
which would compel carriers to do the
very thing forbidden by law. Any just
rule therefore OF rate regulation must
lpreserve to the carrier both the right
and the ability to render all service at
remunerative rates
Who Pays the LOssf
IF the regulation cOmpels carrier to
render portion Of it's service at less
than cost" said the counsel in closing,
| Inevitably this loss must be distrfb-
uted over the balance OF its business
unless the carrier can refuse to render
the service The latter alternative IS
impossible. All service rendered at
loss results in burdening the balance
OF the carriers service; and considering
that railways are subject to regulation
Of many states. as well as to that OF
congress, the necessary result OF one
state requiring service to be rendered
ut less than cost is TO impose the loss
on citizens OF other states and on the
business of the country at large"