Evening star., 1924-01-13
COURT DECISION GIVES u. S.
TIGHTER REIN ON CARRIERS
Constitutionality Of Recapture Clause of
Transportation Act One More Step
in Government Control.

equipment in such a state Of ef-
hciency that they can carry we'll this
burden. To achieve this great pur-
pose, IT puts the railways OF the
country more completely than ever
under the fostering guardianship and
control OF the Commission
ut was insisted in the two cases
referred to, and it Is insisted here,
that the power to regulate interstate
commerce is limited to the fixing of
reasonable rates and the prevention
of those which are discriminatory,
and that when these objects are. at
tafned the power of regulation Is
exhausted. This is too narrow
view Of the commerce clause. To
regulate in the sense intended is to
foster, protect and control the COM
merce with appropriate regard to the
welfare of those who are Immediate
ly concerned. as we'll as the pub
lie at large, and to promote its growth
and insure its safety.
If Congress may builo
railroads under the commerce clause,
it may certainly exert affirmative con-
troll over privately owned railroads,
to see that such railroads are equipped
to perform and do perform, the requi-
site public service"
Limitnti0 Upon Business.
+. Concerning the property rights Of
the carriers and the interest of the
shipping public, Chief Justice Taft
thus defines the limitations placed
upon a business dedicated to the pub
lie service:
The carrier owning and operating
a railroad. however strong finan-
cially. however economical in it's IA
cilities, or favcrably situated as to
traffic. is not entitled as of constitu-
tional right to more than a fair net
operating income upon the value of
its properties which are being de-
voted to transportation. BY invest
ment in a business dedicated to the
public service the owner must recog-
nize that, as compared with invest
ment in private business, he cannot
expect either high or speculative
dividends, but that his obligations
limits him to only fair or reasonable
profit. If the company owned the
only railroad engaged in transporta-
tfon in a given section and was do
Ing all the business. this would be
clear. If it receives a fair return on
It's property. why should It make any
difference that other and competing
railroads in the same section are per-
ri
service which costs them more to
render and from which they receive
no better net return
One conclusion can be reached very
naturally from the courts decision,
and that is that government owner
ship of the railroads, to all intents
and purposes, is here. without the at
tendant ills usually cited by those
who oppose complete government
ownership in the sense Of direct oper-
alton and maintenance.
"Fair Value Undehn~d"
If the Goose Creek railroad had put
a higher valuation on its own rail-
road. and thus shown that it's rev.
enue did not exceed per cent Of its
investment, and, in addition. if the
Goose Creek railway had waited for
the governments valuation Of its
which might have shown
a much lower value and therefore an
excessive net return, and then gone
into court to protest this valuation,
there might have been different
story to tell. While the courts have
defined fair return" there has been
no definition Of "fair value" and
this is one of the main stumbling
blocks in the way of the transporta-
tion act
The Interstate Commerce Commits
sion has set tentative valuation"
in the case Of many railroads which
falls far below the valuation put upon
themselves by the railroads. In this
case there is no way to determine
what Is and what isn't revenue in ex-
cess of per cent, and so the matter
now rests. There have been. other
cases where severely honest rail-
roads, such as the Goose Creek affair.
frankly placed valuation on their
property which allowed their oper-
ating revenues to exceed per cent.
Still others have had their properties
valued by the Interstate Commerce
Commission, and there Is now an ap-
peal on its way to the Supreme Court
upon this valuation which may re-
suit In a definition Of what actually
constitutes fair value"
In the meantime. Senator La Fol-
lette makes hay while the sun shines, f,
and introduces bill to amend the |
transportation and the valuation acts
by providing a scientific method" of |
fixing rates. His rates would be based
on operating expense plus interest ON
bonds and fair dividends for stock
that represents money actually in
vested.
Re E.1ov,oo,,+