Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1913-06-10
Supreme Court Holds
States Have Right to
Fix Charges.
MAY AFFECT EARNINGS
However, Railroad People Ap-
pear to See Loophole That
Will Aid Them.

Washington, D. C., June 10.-Law-
yers who gathered today at the SUI
preme court TO listen % the applica-
tion Of the principles laid down by
Justice Hughes in the Minnesota rate
cases 20 rate cases from Missouri. Ar
kansas, Kentucky, Oregon and West
Virginia. we're OF the opinion rate
making both in the states. and before
the federal government, had been re-
duced TO q much more accurate basis
than ever before.
All sorts of opiaions prevailed as
20 where victory rested in the Mime
sofa decision. Minnesota state Off
.cials in dispatches expressed pleas
ure over the result and Attorney Cen
oral McReynolds and members Of the
Interstate commerce commission said
they were fully satisfied
The prospect OF congress taking
charge Of state rates affecting inter
state commerce indirectly lends en-
couragement to the railroads that they
would escape from regulation by A.
state commissions.
The attempt OF railroads to estab.
lish the cost OF repro< cling their
property new as equivalent TO their
value" on whi they were entitled TO
earn rates, was regarded as doomed.
When the federal court of Minnesota
adopted that basis it allowed a rail
road TO multiply the normal market
value of land by two in order to ar
rive at the cost of reproducing new
right OF way outside of the big cities
of that state. Justice Hughes neld
there was no place for hypothetical
multipliers in fixing a fair value" of
railroad property upon which the pub
lie must pay a return and that ran
roads ought to oe satisfied IL fair
average market price was given their
land free from hypothetical additions,
that would enable the railroads to en-
10y the benefit OF general prosperity
Of the country by receiving a return
not only upon the original investment.
but on the increase in value Of their
investment.
SPECULATION BARRED.
Where the inquiry is as 10 a fair
value OF property" said Hughes, "in
order TO determine reasonableness of
return allowed by the rate-making
power. Il 10 not admissible TO attribute
20 property owned by carriers specu-
lative incremen. OF value over the
amount invested in it, and beyond the
value Of similar property owned by
others solely by reason of the fact
that IL is used In public service. That
would be to disregard the essential
conditions OF public use and make the
public use destructive Of the public
right"
Members OF the house and senate.
when asked their opinion as To wheth-
er congress would soon exercise the
power found by the court to rest with
II. to regulate such state rates as af-
feet indirectly interstate commerce.
were not inclined 10 set forth at first
blush with a plan 10 reverse the policy
OF the federal government through the
last 100 years OF leaving such. regula-
ton in the hands of the states.
The decision is OF momentous i'm
partance 70 the country. riva.ing in its
effect those rendered in the Standard
Oil and tobacco trust cases.
II sustains the power Of STATE legis
latures and state railroad commits
sions-in the absence of conflicting
national legislation-to fix cent oil
other rates on business exclusively
within the states. provided such rates
are not confscatory and even though
such rates incidentally affect inter
state commerce.
Il makes the railroads subject TO the
control OF forty-eight state commits
hions and legislators. as well as 10 th'
Interstate commerce commission.
WILL AFFECT Raj. EARNINGS.
The decision viii affect railroad
earnings in Minnesota and in othel
states where the intrastate rates ar
lower than interstate rates. since tn
latter necessarily must fall TO the leve
OF tse intrastate rates.
Il announces the refusal OF tn
courts TO provide a system of railroai
regulation. holding that this lies solel.
within the legislative power OF the gov
eminent.
II holds that the showing on va.U
alton made by the Great Norther-
and Northern Pacific was not sufficien
70 demonstrate that the rates wer
confiscatory. and they will therefor
60 into effect; but the rates fixed b
the Minnesota authorities in the cas-
Of the Minnesota and St Louis raj
road company are confisca;ory an
therefore will not go into effect
incidentally the decision leaves III