New-York tribune., 1911-01-04
BANK DEPOSITS MAY Be
GUARANTEED BY STATES
Supreme Court UpholdS OKLA
homa, Nebraska and
Kansas Laws.
MNITlAL CARRIER" LIABLE
Carmack Amendment Lawful
Justice Hughes Deals Blow
at Peonage in
South.

Washington Jan. S.-The bank guarantee
laws Of Oklahoma, Nebraska and Kansas
were declared constitutional by the Su-
preme Court OF the United States to-day.
and thus the fight over the establishment
of the policy Of guaranteeing deposits in
hanks by states was won by the advocates
of such a policy.
The opinion OF the court was announced
nv Justice Holmes He said the main OBJ
lection TO the laws was that the assess
uent Of banks by the state. In order to
create a fund TO guarantee the deposits in
other banks within the state took private
property of one bank for the private use Of
another without compensation
Justice Holmes admitted that there might
be taking of private property without
return to pay debts of failing rival in
business. but he said there were more
powerful considerations on the other SIDE
of the question.
an the first place" he said, 1T is es-
tablished by a series Of cases that an ul-
terror public advantage may justify a COM
paratively insignificant taking Of private
property for what in it's immediate pur-
pose is private use. 1t would seem that
there may be other cases besides the every
day one of taxation, In which the share Of
each party in the benefit OF a scheme Of
mutual protection is sufficient compensa-
tion for the correlative burden that 1t is
compelled to assume. At least. II we have
a case within the reasonable exercise Of
the police power as above explained, no
more need he said
The police power. he said. may he put
forth in aid OF what Is sanctioned by
usage or held by the prevailing morality
or strong and preponderant opinion to be
greatly and Immediately necessary 70 the
public welfare" The laws came within
this limit. he held.
The three acts were passed by the state
Legislatures as a result Of the financial
stringency beginning in 1907.
No Absolute Freedom Of Contract.
The new policy of law making an initial
carrier OF interstate commerce liable for
loss to shipments while in transportation,
not only on its lines but OH those of con-
Meeting carriers, was declared constitu-
tional by the Supreme Court This policy
was Incorporated in the so-called Car
mack amendment 10 the Hepburn rate
law. Justice Lurton announced the opinion
Of the court. Strangely enough Justice
Lamar, who to-day took his place as
member Of the court. argued the case be-
fore the court on behalf of the railroads
One obiecNon to the law was that IT in
terfered with the freedom Of contract JUS
tice Lurton replied that there was no such
thing as absolute freedom OF contract.
contracts which contravene public pol
icv." he said, cannot he lawfully made al
all. and the power to make contracts may
in all cases be regulated as 10 form, evil
dence and validity as to third persons
The power Of government extends to the
denial of liberty Of contract TO the extent
of forbidding or regulating every contract
which IS reasonably calculated 70 injuri'
ously affect the public interests
Opinion by Justice Hughes.
Unfolding the Constitution and laws
Hereunder az a safeguard to the freedom
of labor. the Supreme Court, through JUS
tice Hughes, declared unconstitutional the
contract labor law OF Alabama. The law
In question provided that II a laborer with
intent n defraud entered into a contract 10
labor for another and quit his employ
mont before money advanced under the
contract had been repaid, he should DC
suiltv OF misdemeanor. The quitting
was made by the law prima facie pre-
sumption OF intent to defraud.
The court held that the law In It's opera
tion furnished a convenient instrument TOT
,ho coarc,on which the Constitution and
the acts OF Congress forbid. and that II
was IAN instrument Of compulsion peculiar
" effective as against the poor and the
ignorant. it's most likely victims
The provisions OF the Constitution and
tho laws designed to secure enduring pros
nerity, which depended upon freedom o'
contract would soon become barren
form" said Justice Hughes. 'if 1t were
nossibIe to establish a statutory presump'
t;on of this sort and 10 hold over the heads
Of laborers the threat Of punishment io'
crime under the name Of fraud but mercy
,,non evidence Of failure TO work out their
debts