Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-13

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reduced their rates by 20 cents per ton
and the commission issued an order
Suspending those rates under the au-
thority of the transportation act bi
1920. which empowered the commission
to maintain not only maximum rates
but also minimum rates chargeable by
interstate carriers.
In ordering the Southern carriers to
charge higher rates, the commission
took into consideration various trans
portation factors, but also considered
certain facts such as that the coal in
dustry in the North was in depressed
condition, while the Southern coal fields
proSpered, and that the cost Of produc-
ton in the Southern fields was less than
in the North. The commission took
these factors into consideration under
the authority Of the Hoch-Smith reso-
luton.
The Southern railroads brought suit
in the Statutory District Court in West
Virginia to set aside this order of the
commission. They argued that the
commission had no power to make or
suspend rates II such order is based
upon economic considerations and. fur
thermore, that Congress had no power
to prescribe rates based upon considera-
tions other than purely transportation
factors.
Upheld Southern Roads.
Judge Parker, who, as a circuit Judge,
sat in the special district court in this
case, upheld the contention OF the
Southern railroads and characterized
the action of the commission as an at
tempt to equalize Industrial conditions
through the power Of rate regulation.
This, he held, Congress could not au-
thorize the commission to do.
This case was later dismissed by the
United States Supreme Court as having
become moot, and thus the first case
which came to the Supreme Court on
the validity of the Hoch-Smith reSolu-
ton did not dispose Of the main ques-
tons at issue.
The deciduous fruit case, now before
the Supreme Court, involves the Hoch-
Smith resolution more directly. In this
case the commission reduced the rates
on the transportation of deciduous fruits
from the West Coast to points East and
made this reduction directly under the
authority of the Hoch-Smith resolution.
Over 400 railroads were involved in this
order of the commission. They COM
planned that the order was conflscatory
since 1t did not allow them reasonable
return on this class of freight and COM
PEELED them to carry this freight at the
expense of other freight. They argued
that the Hoch-Smith resolution was
misapplied by the commission because
it is not applicable until there has been
an entire revision Of the rate structure
throughout the country, so. that the
contemplated rate reduction on agri-
cultural products might be Offset by
profits on other classes of freight.
The commission maintained that
there was ample evidence before it to
sustain its finding that the old rates on
deciduouS. fruits were unjust and I'M
reasonable, and that the claim of the
carriers that the proposed rates would
compel them to operate at a loss was
not sustained by the evidence.
With reference to the argument Of
the railroads that the commission could
not equalize industrial conditions
through the power of rate regulation,
the commission argued that while 1t Is
true that the commission may not order
reductions Of rates solely for the pur-
merce or industry, 1t may, after finding
existing rates unreasonable. take cog
nizance of economic conditions in aid
Of its rate-making functions. Since
there is twilight zone between rates
which are unreasonably low and those
which are unreasonably high, and
since the rates within this twilight zone
are within the discretion Of the COM
mission. the commission argued that
within these flexible limits Of its discre-
ton 1t may require the lowest rates on
agricultural products affected by de-
preston, as is required by the Hoch-
Smith resolution.
(Copyright 1907