The Birmingham age-herald., 1912-05-28

OPINION.
 Jones, District Judge.-Contrary to its earlier view, it is now the settled doc Urine of the supreme court of the United States that rate statute is obnoxious to the fourteenth amendment if its operation prevents the earning of just remuneration on the value of the property devoted to the service, although 1t yields some net profit. To use the language of the su- preme court in different cases where the issue arose, a legislative act to avoid con- fict with the fourteenth amendment must not prevent the earning of compensation which is adequate" "full,' just" and reasonable.' or, to quote the words oi one of the latest cases, "a fair return upon the reasonable value of the prop erty at the time 1t is used for the public I In Central of Georgia Railway company vs. railroad commission, ct al. 16l Fed 9ho, this court held, upon the facts ther before it, that carrier in Alabama should bc permitted, without legislative interfel. ence, to earn above the costs of render in6 the service. and its fixed charges, per cent upon the value of the property devoted to jntrastate service, provided its charges are reasonable and the service is rendered without unjust discrimination 1t was then said:
 The carrier is made by law an in- surer of freight, and is required to use the highest degree of skill known to the art to prevent injuries to passen- gers. It must have and keep it's equipment up to the standard of mod ern excellence. Necessity and policy alike demand that it maintain sui hciently high standard of wages to attract and retain the services of competent and faithful men in all its departments. Its business is in q degree hazardous when best con- ducted, and shares for good or i'll the fortunes of the communities and To- calities 1t serves, and it must maintain and increase it's facilities as their wants require. In all these matters It's interests and those of the public are in large sense, legally and nor ally, identical. If schedule of rates does not permit the carrier to earn sufficient income to properly dis charge these duties the rights of the public, as we'll as the private interests of the owners, are invaded The right to remuneration for the cost of whatever Is requisite to main- tain it's service so as to meet the just wants of the public and ful- ly discharge the duties exacted of 1t by law, is therefore, as vital to the public welfare as to the well being of the property owner, and when we state the rights of the carrier, and enforce them in that respect, it is only another mode of stating and enforcing the rights of the public" (P. 992)
 The same considerations apply to the right to earn enough more than the costs of the service. to enable the property owner to obtain just compensation for the value of the use of his property in the service.
 The railroad securities commission. ap- pointed pursuant to the act of Congress, approved June is, 191o, reports:
 "A reasonable return is one which under honest accounting and responsi- ble management will attract the amount of the investors money needed for the development of our railroad facilities More than this is an un- necessary burden. Less than this means d check to railroad construction and to the development of traffic. Where the investment is secure, a reasonable return is rate which ap- proximates the rate of interest which prevails in other lines of industry. Where the future is uncertain the in- vestor demands, and is justified in de- manding, a chance of added profit to compensate for his risk. We cannot secure the immense amount of capital needed unless we make profits and Y. I to be reduced whenever dividends ex- ceed current rates of interest, inves- tors will seek other fields where the hazard Is less or the opportunity greater. In no event can we expect railroads to be developed merely to pay their owners such q return as they could have obtained by the pur- chase of investment securities which do not involve the hazards of con struction or the risks of operation"
 The interstate commerce commission. 9 |. C. c. 413, discusses the question and asks:
 Ought not railway be allowed to accumulate, in some form, surplus during fat years which may tide over subsequent lean years?'
 It answers its own question by saying:
 ITO this we unhesitatingly answer in the affirmative. In times like the pres ent railroad companies should be all lowed to earn something more than a mere fair return upon their invest ment.'
 In Wilson vs. Consolidated Gas com pany, PIP Y. S. ds. 49, the supreme court deolared
 There is no particular rate of com pcnsation which must in all cases and in all parts of the country be re- sarded as sufficient for capital in vested in business enterprises. Such compensation must depend greatly upon circumstances and locality: among other things. the amount of risk in the business is most i'm rortant factor, as well as the locality where tiie business is conducted and tho rate, expected and usually received there upon investments of a somwhat similar nature with regard to the risk attending them. There may be other matters which in some cases might also be properly taken into account In determining the rate which an in- vestor might properly expect or hope to receive and which he would be en- titled to without legislative interfer- ence. The less risk, the less right to san unusual return upon the invest ments. One who invests his money In g business of a somewhat hazard ous character is very properly held to have the right to a larger return without legislative interference, than can he obtained from an investment in government bonds or other perfect ly safe security"
 EIGHT PER CENT A REASONABLE
 RETURN.
 Applying these general remarks to th. proper measure of return on the invest. iaen. of the Gas company-which was the mater De1ore 1.-the supreme court heid that q rate which would permit a rr. turn Of six per cent would be enough It avoic the charge of confscation. and fol the reason that a return of such al amount was the return ordinarily souels, and obtained on investments of that de sree of safety in the City of Now York it applied this rule to corporation which, as it says, 'monopolizes the gas