New-York tribune., 1920-11-28
Enforcement of Higher Fare
Within State Over Protest
of n. Y. Commission Ad-
vances Centralized Control
Benefit to Public Is Seen
Supreme Cour, Expected TO
Uphold US. Order; Other
Controversies RecaIle e q
By Frank Haigh Dixon
Professor OF Economics, Princeton
University.


rate-regulating power over rail-
ways, which began with Justice
Hughes's decision in the Minnesota
case in 1913, was taken fortnight ago
when the Interstate Commerce Com
mission ordered into effect increased
passenger, sleeping car and parlor car
fares, baggage charges and milk and
cream rates which the Public SerVics
Commission of the State of New Yorf
had declined to grant upon petition O.
the RAILWAYS. To be sure the decision
Of the Federal body is not final, ano
New York will appeal it to the Suprem'
Court, and will undoubtedly have
goodly company Of state commission
a. intervenors But there is more thal
a probability that the Interstate Com
merce Commission will be sustained
and that one more Of the bulwarks OF
state sovereignty will be demolished
In order to appreciate fully the sig
nifcance Of this latest case 1t Is neces
ssry to trace briefly the history OF this
conflict of Federal and state jurisdic
ton. The controversy In its acute
form hrst appeared in the Minnesota
case In 1913 Testimony was offered
to demonstrate the existence and eN-
tent Of the influence Of state action
upon interstate commerce. POINTS
served by two railways, one Of which
was wholly intrastate, another inter
state, must necessarily have the same
rates bv either route Hence the lower
ing Of the intrastate rate by the state
regulating authority nccessltated an
immediate compliance on the part Of
the interstate road The entire traffic
structure was so interviewer that re
ductions of intrastate rates threatened
decentralization of the entire rate sys-
tenn.
Decision of Justice Hughes
The case seemed clear, but Justice
Hughes held that the powers exercised
by the State of Minnesota in Drescrlb-
ing these ntrastate rates could not be
impaired, even though they affected in
terstate commerce, except by action Of
Congress; and that Congress had not
acted in this instance because the rail
ways had taken the case directly to
the courts without the intervention Of
the Federal regulating authority. To
the layman, the simple depreciation
of Justice Hughess reasoning seemed
to be that the inability of the Federal
government to assert it's power was
due to the method of procedure in get
ting the matter before the courts. Had
the case filtered through the Interstate
Commerce Commission, the agent of
Congress, another outcome might have
resulted.
This assumption was soon to receive
confirmation, for in the next year the
Shreveport case in the hands of the
same justice, emphatically sustained
the Federal power. But here the pro-
cedure was different one. The case
was q problem in geography, politics,
state pride and railway economics
Shreveport Is forty miles from the
Texas line and distributes commodities
into Texas territory in competition with
Texas jobbing centers like Dallas and
Houston. The Railroad Commission of
Louisiana and the Shreveport jobbers
were up in arms because the intrastate
rates prescribed by the Texas commits
sion were Intentionally made so low
that "foreigners' could not compete
To give but one illustration: Shreve-
port Is on the Texas & Pacific, which
runs due west 189 miles to Dallas
Rates from Dallas on the Texas g.
Pacific that would carry traffic 16C
miles eastward would carry the same
class Of traffic out of Shreveport west
ward only fifty-fve miles into Texas.
United States Commission Acts
The Interstate Commerce Commits
sion prescribed maximum reasonable
rates out OF Shreveport, but these rates
we're not low enough to enable that
Joobing center to do business against
the mblnation Of the Texas iobbjnl
centers and the Texas Railroad Com.
mission. Observe that in this case thu
interstate Commerce Commission hat
acted The court was asked to pas:
upon the constitutionalty Of the com
missions order. which directed The
railways to remove the prevailing dis
cIim'nation by raising their lntrastatt
rates Congress had therefore asserted
KS power Inc Supreme Court decidec
1hat the state would have to give wav
The court concluded it's review q
the case with the following very defnit,
instructions: 80 far as the interstet,
rates conformed to what was found y
be reasonable b. the commission ~
carriers are entitled TO maintain them
ana they are free TO comply with tn
order by so adjusting the other rate
TO "hlcn tne order relates as TO remoy
AO'NuCH OiotllHliHdtlON But thI
result they are required TO accom-
Up to this point Congress had no
spoken except through the decisions q
us delegated agent. the Interstat,
commerce Commission. But in Tn,
transpo rtatIon act passed last Feh
ruary II was specifically provided tha
whenever the commission. after fnI
nearing. shall find that the rate -,
regulation OF state authority cause,
any undue preference, or gives anv nm
reasonable advantage as between jntra
state and Interstate commerce ~,
creates any unjust discrimina,jo,
against Interstate commerce. "whicb +,
hereby forbidden and declared "a b.
unlawful" the commits ion shall nro
senDe the rate thereafter TO be charDed
AND such rate shall be observed VII ~,
IN eHect by the carriers, The law -
any state or the decision or ordey NJ
any state authority to the contrar,
notwithstandin
Powers of Commission
Tho ONLY courtesy that the rornn,,.
sion Is compelled to extend TO the .,at,
concerned IL TO notify IL Of the nrn
ceeding 1t may confer with ,,a,,
authorities, with respect 20 rate ntrnc
lures and the practices OF carriers. {
may hold joint hearings Win state rey
siAting bodies; 1t may avail itseN {"
sns cooperation, services, records am
facilities of state autborities: buf q 4
under compulslon to do none OF th..,
things. The new law virtually enact,
the ShYeYeDOrt deriatnn ard s..x-ft