Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-11

Clashes between State and Federal
authority in New York, growing out of
the proposed higher telephone rates,
are temporarily averted, but predictions
are made that Congress may be asked
to clear up the situation. Although the
New York Telephone Co., relying on
constitutional provision against confiSca-
ton and a Federal Court decree, hxed
It's own rates, it has surrendered by
temporary acceptance of the schedule
of the State Public Service Commission.
"a distinct victory for the State" Is
recognized by the Brooklyn Daily Eagle
with the comment on the situation:
Nobody familiar with constitutional
law can deny the right of a public utility
corporation to seek relief from insufh-
cient rates in a Federal court when the
question of conflScation arises. Private
property must be respected and pro-
tected by the Federal power whenever
it's owners are threatened with loss by
State action or inaction. But this
does not mean that public utility cor
porations for which regulation Is pro-
vided by the State law shall ignore the
regulating power of the State and evade
| the jurisdiction of State courts by first
rushing into Federal tribunals. The
supreme court Oh bHc OLlIGCu OIa1CS
rebuked the Interborough Rapid Tran
sit Co. for doing that very thing"
"A serious crisis" in the opinion OF
| the Springfield Republican, has been
avoided by the backdoWn of the tele-
phone company in submitting TO the
rate order of the commission. The
company" continues that paper, had
announced a new rate schedule to yield
z per cent return. The commission
| "a ,xrSn lou ot
Albany that it had no power to inter-
| fere: that the company was acting I'M
der a decree of the Federal court,
granting to it q Z per cent return on
fair valuation. The New York COM
mission promptly put the companyS
| legal assumption to test by reducing
many Of the company'S proposed rates
20 per cent and ordering the new rate
schedule thus revised to be put into
effect. The result is that the company
| tentatively accepts the commissions 20
per cent discount and even admits that
| it could not interfere with the commits
Sion'S order except by going into court
And it will be a State court that the
| company will first appeal to against the
commission. Which is q wise decision"
The Hartford Times, quoting the COM
| panys contention that 1.-The State could
| interfere with the company rates only
Dy SHOWING JIl6I1 10 DC OlSpIOpOIIlOAuIC
| to a z per cent return or by Offering IN
substitution its own rates which would
yield per cent" says Of the resulting
action that the Public Service Com
mission has chosen the latter method
of attack and announced a schedule OF
rates, effective as of Saturday, which
| is reduction Of 30 per cent from those
announced by the company. In arrtV-
| ing at this schedule the commission
reduced by $27,00O,000 the valuation
claimed by the company upon which
! it. was, entitled to earn q per cent re-
turn. The belief in New York is that
there will be a further litigation, prob
ably marked by another appeal to the
| Federal court"
las we look at it," remarks the SYRIA
| cuse Herald, the telephone company
| committed a serious tactical error when
it assumed that the generalized decision
of the court establishing its valuation
and standardizing its percentage of re-
turns or earnings gave it q judicial
! carte blanche for determining its own
| increase of rates in absolute disregard
| of the rate-fixing power of the State.
| The court laid down a general rule as a
new foundation for such rate regula-
ton, for the guidance of the State and
| Of its representative commission. But
the court did and could not deny or
abrogate the rate-fxing power of the
commission within the limits created by
its decision"
An opportunity is seen by the Buffalo
Evening News, in this controversy, ito
develop very important legislation re-
lating to the supervision and permits
sible pEontS o. public service corpora