The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1915-04-08
POWER OF STATE RATE-MAKERs

| thing in Kansas just now, from the
public standpoint. is the hearing be-
fore the states public utilities COM
mission on the application of the rail-
roads for permission to increase their
passenger rates from two cents a mile
to some charge that will come nearer
to their idea of an adequate return for
the service given, it is interesting to
learn in considerable detail of the re-
cent decisions of the United States
| supreme court relative to the powers
| of states in the matter of railroad rate
making, and Of the manner in which
/ these decisions have been received by
! some of the large newspapers of the
country. Such a resume was printed
| in a recent issue Of the Literary Di-
gest, as follows:
An inspired solution of the high
cost-of-travel problem, so thought the
| lawmakers of several of our states,
was devised few years ago when
they passed laws limiting passenger
fares to two cents a mile, and told the
protesting railroad officials that they
had no cause for complaint, as they
were making money out of their
revenues. In like manner certain To-
cal enterprises were given encourage
ment by making the railroads of the
ucts, and allowing the roads to reim-
burse themselves by sufficiently high
rates on other commodities But last
week Mr.. Justice Hughes read two
opinions in the supreme court cham
Der in Washington, which the news
papers believe will put an end to such
rate-making, and which the New York
World construes as "a reminder to the
states that the era of political raiding
of railroads is over" AS the New York
Journal of Commerce succinctly put it,
the principle underlying the two deci-
sions is this: "a carrier for hire can
not be required to carry persons or
goods gratuitously, or for inadequate
compensation, on the plea that the
public interest demands it, though it
may be said to obtain a sufficient re-
turn from it's entire business Or,
as the New York Times says in a diff
ferent way, state can no more re-
quire a road to carry single COM
modify without due profit than it can
require it to carry on its entire bust
ness without charge
In the West Virginia rate case, the
Norfolk & Western railroad sought to
test the validity of the state law fixing
a two-cent maximum passenger rate
which, it commended, did not yield a
sufficient revenue to the company to
make its passenger business a paying
proposition. The state held that the
roads passenger earnings could not
be segregated and considered apart,
that all classes of railroad business
need not be equally remunerative, and
that as the company was earning be-
tween 6 and per cent on it's entire
investment. if it's passenger was not
remunerative. its freight business
more than made good the loss. But
the court, Mr.. Justice Pitney alone |
dissenting, held the law unconstitu-
tional 1t refused to admit the con-
tention that the railroad was supposed |
to compensate itself by increased |
freight rates for it's loss in passenger
rates, and it held that the validity of
the passenger rate had to be deter |
mined by the effect upon the passen-
ger business of the company, SEPARATE
ly considered" Mr.. Justice Hughes
said in part:
1T is apparent from every point of
view that the statutory rate, at most,
cost of the traffic. 1t is manifestly
not case where substantial compen-
sation is permitted and where we are
asked to enter the domain of legisla-
1--WE OlSCr0ClOn, nor IS II one IN winch
1t IS necessary to determine the value
of the property employed in intrastate
business 1t is clear that by the re-
duction in rates the company is forced
to carry passengers, if not at or below
cost, with merely a nominal reward
considering the volume of the traffic
affected We find no basis whatever
upon which the rate can be supported
and it must be concluded, in the light
of the principle governing the regula-
n hot I1n Cfo |
its power in imposing it.
The state has no arbitrary power
over rates; the devotion of the prop
erty of the carrier to public use is
rier's undertaking; that it's services
are to be performed for reasonable
and that the state may not |
select a commodity or class of traffic
and, instead of fixing what may be
deemed to be reasonable compensa-
ton for its carriage, compel the car
r1er to transport it either at less than
cost or for a compensation that is
merely nominal"
This decision the New York Sun
and World agree to call a death-b blow
to the 2-cents-a-mile passenger-rate
laws of several states if they can be
proved confiscatory as to passenger
traffic, though not to the business of
the road a whole And it is be-
tiCNSo III washington, says the sun S
that in connection with
recent recommendations by the inter-
state commerce commission, it will
have strong tendency to bring about
a reimbursement of passenger rates of
the country, so as to make them bear
a just proportion of the operating ex-
penses."
The other case, decided by the su-
preme court on March 8, involved two