The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1929-11-25
HIGHEST COURT
SOON To PASS
On R. R. CASE
BY MERRYLE S. RUKEYSER

The Supreme Court OF the
United States in the near fu-
ture, possibly today, will hand
down railroad decision which
may be as significant to the
future of the carriers as the re-
cent famous st. Louis and
O'Fallon decision, which as
sured the railroads as favor
able treatment in valuation
cases as public utility enter
priSeS have received.
The pending case will give
the court an opportunity to
pass on the constitutionality of
the H o C h Smith resolution,
passed in 1925 by Congress,
which in effect makes the rail-
roads nursemaid for faltering
industries.
The resolution turns the In
terstate Commerce Commission
into a general arbiter of pros
perity, authorizing it to reduce
rates for commodities in i'm
poveriShed trades without re-
spect to the cost of transports
a ton, thus in effect turning the
privately owned railways into
shock absorberS for agriculture
and industry.
Charging that the resolution
is confiscatory in the pending
California fruit rate case, the
railroads ask the court to null
lily the resolution. The issue
goes deeply into economic
fundamentals, and will test to
what an extent the railroads
are common carriers destined
to shoulder the burdens Of the
country.
According to Commissioner B.
II. Meyer the Hoch-Smith reso-
luton has been a determining
factor in all rate decisions of
the Interstate Commerce Com
mission since 1925. The resolu-
ton, it will be recalled, directed
the commission with due regard
ito the maintenance of an ade-
quate system of transportation"
to investigate and effect with
the least practicable delay such
lawful changes in the rate struc-
ture Of the country as will per-
NIT the freedom of movement
by common carriers Of the
products of agriculture, includ-
ing liv; stock, at the lowest pos
. siblc rates compatible with the
maintenance Of adequate trans
portation system"
This legislative experiment in
using the railroads as an inStru-
ment for easing agricultural de-
preston is particularly timely
now while President Hoover is
in the midst of comforting with
captains of finance, trade, agri-
culture and labor concerning the
feasibility of modifying the
business cycle.
In the California rate case,
the commission, in accordance
with tn Hoch-Smith resolution,
granted cut Of about 8 per cent
In freight rates on perishable
- fruits, following the recent de-
preston in that branch of agri-
culture.
In describing the philosophy
behind the resolution, Commits
sioner Meyer has pointed out
that the resolution attempts
ito make the railroads in the
United Sts.t ties the shock alb
Sorber and balance wheel for
the entire economic life of the
country to the extent that this
may be accomplished through
the fundamentally of railroad
, rates"
Thomas F.. Woodlock, another
commissioner, whose views lean
toward orthodoxy in economic
matters, declared that the heart
of the resolution lis the prin.
ciple that the total Transports
ton burden Of the region shall
be distributed over the COM
nodities moving in that region
in proportion to the ability of
each commodity to bear that
burden"
4 Woodlock, continuing, added:
eff the resolution does not
mean that, what does it mean?
The total transportation bur.
den of The region is determined
by the revenue needs Of the
regional carriers and the meas
ure Of these needs is the fair
return on their value, for with
out that fair return the 'mainte-
nance of an adequate system of
TRANSPORTATION is impossible. If
that be not the meaning of these
words, twice repeated in the
D resolution, what do they mean?
what warrant, therefore, is
there for reducing the rates on
commodities such rs these in
official territory where the car
riers are not at present earning
more than the fair rate of re-
turn prescribed by uS) upon
anything which can be said to
I be their ir value"
~ OF course, if the Supreme
Court should decide that the
resolution is unconstitutional,
!. it would remove another club
which has lowered over rail.
road securities, and tended TO
make them less glamorouS for
investors and spectators than
unregulated induStrialS. The
National Association of owners
of Railroad Utilities Securities,
which of course represents the
selfish interest of investors, ad-
vocating the repeal of the res
olution, has characterized it as