Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-06-10
Decision in Minnesota Case
of Far-Reaching Influence
on Railroad Traffic.
ALL AFFORDED COMFORT
BY SUPREME TRIBUNAL
Problem Made More Complex, But
Way Is Opened for Relief
Through Congress.

There was conflict of opinion among
lawyers today as to the ultimate effect
on railroad rae making of yesterday s
decision of the United States Supreme
Court in the Minnesota rate case The
decision, fanded down after fourteen
months OF deliberation. although looked
upon as a substantial victory for Mime
sofa and other states seeking to regulate
ihtrastate commerce. is regarded as open
ing the way to far more comprehensive
handling of the subject by federal legis-
lation.
Minnesota state officials in dispatches
expressed their pleasure over the result.
and Attorney General McReynolds and
members of the interstate commerce COM
mission said they were fully satisfied.
The prospect of Congress taking charge
of state rates affecting interstate COM
merce indirectly lent encouragement. to
the railroads that they would escape from
regulation by forty-eight state commits
sions
Court Is Unanimous.
The opinion Of the court which was
unanimous. was announced by Mr.. JUS
tice Hughes in a printed document OF
$4,000 words.
The effect of the judgment of the
court. in brief. was to uphold the right
of the Minnesota. railroad and warehouse
commission and of the Legislature TO pre-
scribe a passenger rate of cents a
mile and maximum freight rate within
the state on intrastate roads provided
aiways those rates are not confiscatory,
even though the roads were engaged in
interstate commerce.
Valuation of Railroads.
The attempt of railroads to establish
the cost of reproducing their property
new as equivalent to the fair value or
which they were entitled 10 earn rates
was regarded today as doomed. The fed
eral court in Minnesota adopted tina,
basis. 1t allowed the railroad to multi
ply the normal market value of land b.
two in order to arrive at the cost of re
producing new a right of way outsid,
of the three big cities in that state.
Justice Hughes held that there was nt
place for hypothetical multipliers in fix
ing the fair value of railroad prOpert,
upon which the public must pay re
turn. and that the railroads Ight to b,
satisfied il fair averag ge ma 'ket price
was given to their land. free from any
Hypothetical additions. That would ALLOW
railroads to enjoy the benefit of the gen
eral prosperity of the country by receiv
ing return not only upon their origina
investment. but on the increase in ht
value of their investment.
Bars Speculative Increment.
Where the inquiry is as to the fair
value of the property said Justice
Hughes. lin order to determine the rea-
sonableness OF the return allowed by the
rate making power. ii is not admissible to
attribute to the property owned by the
carriers a speculative increment Of value,
over the amount invested in it and be-
,ond the value of similar property owned
by others solely by reason Of the fact
that it is used in the public service That
would be to disregard the essential con-
d:tions of the public use. and TO make the
public use destructive of the public right
Several times the reproduction cost
new theory of valuation has been urged
upon the interstate commerce comm,s-
sion as the proper basis for rate making.
One Of the instances was in the advance
sought by western railroads about two
years ago. The commission ,refraincd
from establishing basis. waiting Tor the
Supreme Court to pave the way.
Members of the House and Senate when
asked for opinions as to whether Con-
gress would soon exercise the power Iouhu
to rest with il to regulate such state
rates as aifec. indirectly interstate com
merce were not inclined to come forth al
first blush with plan to reverse the pol
lev of the federal government through
the last hundred years of leaving sucf
regulation in the hands OF the states
Problem Made More Complex.
80 ,l.,ti inn ilrno n
rates. however, is rendered more complex
and perplexing by the findings of the
court. in the opinion of officials of the
interstate commerce commission.
BY the holding of the Supreme Court, il
Is pointed out. the line Of demarcatior
drawn by the commission between the in
trastate and interstate rates is practically
eliminated AS commission officials view
the matter the net results of the courts
decision will be to stimulate rate-making
and rate-reduction by every state railro I'd
commission or legislature In the country.
In their opinion, the probable action OF
the states in The fixing Of rates will clog
the dockets of courts with transportation
cases, as the courts naturally will have to
determine whether any given rate. over
which there is a dispute, is confiscatory.
Failed to Show Confscation.
The effect Of the decision on the rail
roads which We're parties TO the suit
was to declare that the Northern
Pacific and Great Northern must abide
by the action of the state. since the
rates prescribed by the state commits
sion and legislature were not confisca-
tory of the property OF those roads.
With regard to the Minneapolis and ST.
Louis railroad. it declares that the
rates were confiscatory, but gave the
state the right to make notifications
The synopsis of the $4,000 word decision
nrenared by, Mr.. Justice Hughes himself
Summarizes the points Of the decision as
follows.
..These appeals involve the validity of
the orders of the railroad and warehouse
commission and the legislative acts of the
state of Minnesota prescribing maximum
rates for freight and a ma Ximum fare of
cents a mile for passengers. The rates
relate to traffic exclusively between points
in a state.
1T was contended, however, that as APP
plied TO cities on the states boundary or
fo nlaces within the competitive districts
crossed by the state line the rates dis
turhed the rates previously existing be-
tween interstate and intrastate rates.
Thus imposing a direct burden upon in
tarstate commerce and creating discrimi-
nation as against localities in other
states. The rates were also assailed as
Northern Pacific and Great Northern
In the case of tiN Mime
q polls and st. Louis Railroad Corl4Aa Aany the