The midland journal. (Rising Sun, Md.) 1885-1947, 1933-04-14
National Topics Interpreted


Decisions far-reaching C n S e.
quence as the So
called coal agency case, decided by
the Supreme Court of the United
States, and the determination by the
United States District Court for vir-
ginia that the federal water power
act is constitutional.
In each instance, the court finding
appears on it's surface just to be
mine-run opinion. But it happens,
however, that each of the opinions d.
rectly affects you and me. Besides
that result, the coal agency decision
is of vital Importance to business.
With respect to the coal agency
case, the facts are that a group Of
coal mine operators banded together
in the Appalachian Goals, Inc, for the
purpose of distributing their output.
1t is sales agency, purely. Its pur-
pose is to reduce the cost of market
ing the product. Also, it appears like
~ that formation of such selling or
ganization may have the effect of con-
trolling production to some extent at
least, although that phase of the bust
ness did not show up in the organiza-
ton program.
1t would appear on. the surface that
such an arrangement would be in viO-
lation of the antitrust laws, but the
Supreme court found otherwise. By
the stamp Of approval which the high
est court in the land gave to the organ
iZation, it can be classified almost, if
not quite, as of the same type as a
farmers cooperative.
But the ruling gives rise to broader
significance. Other industries based
on natural resources of the country
are expected to follow in the same
pathway in order to accomplish re-
duced selling costs. Lumber, gas, Oil,
iron, steel, copper and fertilizer inter-
ests are said to be looking longingly
at the plan as one which will enable
them to operate with some assurance
of return on huge investments. The
Supreme court considered that the
plan maintained the necessary ele-
ments Of competition, and if that con-
struction be proved in practice, then
you and 1, as natural result, should
receive some direct as well as indirect
benefit. l mean we would be benefit
ted, IL we lived in the territory where
coal furnished through the selling
agency is distributed, by somewhat
cheaper prices on the same grades of
coal.
From the standpoint of business, the
coal operators have worked out the
first important program that is accept
able to the courts when viewed under
magnifying glass of the antitrust
laws and at the same time permits of
that cooperation which agriculture so
long has contended was vital to it.
Other industries probably will follow
the lead. If they do not abuse the
privileges, we have entered upon a
new era in industry. If there are
abuses, then industry will have killed
the goose that laid the golden egg.
The decision by the United States
District court at Norfolk, Va, which
held the federal water power act to
be constitutional opens the way to
complete federal regulation of utili-
ties. We will hear for some years
to come that the New River case"
affords the basis for many pieces of
legislation Of direct benefit to the
users of electricity for power and
light. OF course, it is yet to be de-
cided by the Supreme Court of the
United States where the litigation will
be carried without doubt, but the ma
jority Of constitutional lawyers enter
tain no doubt as to it's validity.
To the electric user, therefore, the
decision stands of broadest impor-
lance. BY holding the law constitu-
tional, the court removed serious OBJ
stacle to effective government control
over many of the tricks to which great
corporations devote themselves to es-
tablish cost basis for their product
which warrants the highest possible
rates. I make no comment as to the
legality or illegality of these practices.
1t remains as a fact, however, that |
every industry subject to regulatory
powers of government, whether ma
tional or state, seeks to protect its in
yestments by creating for its product |
book basis of high cost. This is |
done obviously in order to meet the |
ever-continuing demand from utility |
commissions for rate reductions.
There is another angle to the "New |
River case" Specifically, it appears
likely to be of some
Interests value to investors In |
Investors stock companies en-
gagged in develop
ment of water power for electricity.
1t works out in this way: The cor
poration which has established a high
cost basis for its electricity quite nat.
urally issues its stock on that basis.
Consequently, it is seeking a return
on an investment that, in too many
instances. is not justified by the facts.