Law and the Great Plains: Essays on the Legal History of the Heartland

By John R. Wunder | Go to book overview

out that "the potential for abuse, particularly for free riding by the states, was substantial, and federal control by either legislation or judicial intervention was clearly necessary." The federal courts, he added, were "the only competent federal arm to control state free riding and protect the integrity of the national railroad system." 53

Although criticized for granting the federal courts authority to review the substance of rates, the justices of the Supreme Court followed sound instincts. Judicial review placed some restraint on the marked tendency of legislators and regulators to set railroad rates at unrealistically low levels, often at the behest of special interest groups. Despite the rule of Smyth v. Ames, governmental regulation of railroad charges steadily increased in the early decades of the twentieth century. Indeed, several scholars have identified heavy-handed rate regulation and cumbersome rate-setting procedures as major factors in the decline of American railroads. 54 Arguably the Court should have reviewed rates more aggressively to protect the security of capital investment and thus encourage maintenance of an adequate rail service.

Lastly Chicago, Milwaukee has demonstrated impressive staying power. Following the constitutional revolution of 1937, the Supreme Court abandoned economic due process, retreated from meaningful review of rate fixing, and relegated property rights to a secondary position. 55 But the Supreme Court has never overruled Chicago, Milwaukee and continues to require judicial review of administrative decisions touching on constitutional rights. Recently the Supreme Court has even shown renewed interest in constitutional restraints on utility rate making. In Duquesne Light Co. v. Barasch ( 1989) Chief Justice William Rehnquist, speaking for the Court, reiterated the longstanding rule: "The guiding principle has been that the Constitution protects utilities from being limited to a charge for their property serving the public which is so 'unjust' as to be confiscatory. "56 Rehnquist stressed that a rate must afford adequate compensation. Thus after one hundred years Chicago, Milwaukee continues to influence constitutional law and provide at least symbolic protection to property rights.


NOTES

I wish to express my appreciation to Herman Belz, Jon A. Bruce, Barry Friedman, and Nicholas Zeppos for their helpful comments on earlier drafts of this article. I also wish to acknowledge the valuable research assistance of Susan E. Raines.

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