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Hon. F. J. Swayze '79, Justice of the Supreme Court of New Jersey and member of the Board of New Jersey and member of the Board of Overseers of the University, delivered the second of two lectures on "The Fourteenth Amendment and the Limitation of the Right to Regulate Public Service Corporations" yesterday afternoon, giving the interpretations of cases which involved the reasonableness of rates of a corporation on the basis of the value of its property, the service it renders, and the question of legislative and judicial control of these rates.
Reasonable Regulation Is Legal.
Justice Swayze cited several cases dealing with the reasonableness of rates of a corporation. In Illinois a railroad was ordered to reduce its rates and similarly, in California, a water-works company, whose rates where established by a board of supervisors in which the public was represented, was ordered to make a reduction. In the question of what constituted reasonable rates in accordance with the value and service of the properties, the courts maintained that the state had the power to fix the reasonableness of rates, on the presumption that the power to regulate is not the power to destroy, and limitation of rates is not equivalent to deprivation of property without due process of the law.
Commission Regulation of Railways.
Railroads claim that the fixing of rates deprives them of property. In Minnesota the Railroad Commission ordered a reduction in the rates on milk shipments and car haulage. The Court decided that the Commission was not clothed with judicial power, and that the railroad was constitutionally entitled to reasonable profits. The question was summarized in the Nebraska Maximum Rate Case. The court held that the matter of compensation over total expense was a matter to be determined by public policy and not by fixed rates. In short, the property right of the railroad is the right to operate economically with reasonable compensation.
Property Still Undefined.
Justice Swayze stated that he definition of property has become a matter for the courts to decide. In the case of Inter-state carriers this is difficult. In spite of recent litigation it remains unsettled and may be forever without solution. Courts have attempted to base rate schedules on the value of the corporation's property, and according to the services rendered. On the basis of valuation and service many things have to be considered. A growing concern spends money in getting under way, establishing communications, obtaining a franchise, and in adding new appliances. It finally renders the public service. The value of property and the value of service are difficult to determine. They are both incommensurable.
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