EDITORIAL DEPARTMENT
95
traffic as the passenger of freight business, the made applicable to the entire business and the rule or test is ... its effect upon the entire cost of service per unit is variable, the legisla business of the company, or such freight or tion cannot constitutionally ignore this vari passenger traffic." Smyth v. Ames., 169 U. S., able quantity which requires a classification of 466, lays down the rule that the company is the service and the proper adjustment of rates entitled to receive its expenditures and " just thereto. In the absence of such a classifica 'compensation." Mr. Justice Harlan sug tion and adjustment the propriety of the single gested the method of ascertaining the fair maximum rate must be tested with respect to value of the property used, the gross earnings the cost 'of rendering each separate and dis and expenses, and the probable net earnings. tinct class of service which the public may Comparison would determine whether the demand under such regulation." CONSTITUTIONAL LAW (Treaty-making probable earnings would give just compensa tion, i.e., a return .equal to that received by Power). " The Treaty-making Power of the capital invested in similar enterprises. This Government of the United States in its Inter method does well enough for the case to which national Aspect," by Everett P. Wheeler, Yale applied. But there are other cases possible. Law Journal (V. xvii, p. 151). Maintaining "The following analysis covers the field of " that a treaty when made by the President of rate regulation in respect both to its extent the United States and ratified by the Senate, is and to the uniformity or diversification of the binding upon every resident of the United States and every citizen of the Republic cost of service: "i. A schedule of maximum rates for the wherever. he may be, and that the President and the Federal Courts are vested with power entire business. "2. A single maximum rate for the entire to enforce the provisions of the treaty, and that it is the duty of Congress to pass all laws business. "3. A single maximum rate for a portion which may be necessary to carry these provi sions into effect." of the business. "In the Chinese Exclusion Cases, the Supreme "The cost per unit of rendering public •Court of the United States felt itself obliged service may be either uniform or diversified, to hold that however just might be the griev owing to varying conditions. "The various combinations under the above ance to a foreign nation, even amounting, as was conceded, to a casus belli, yet the treatyclassification will be considered separately. "First. Where a schedule of maximum had no greater force than an act of Congress, rates applies to the entire business oi a com and, consequently, that an act of Congress pany, the proper test is that employed in could change it. This, after all, is holding Smyth v. Ames, i.e., 'it such a schedule is that it is within the power of a nation to violate based upon the classification adopted by the its solemn obligations. Such power exists, railroad and consists of a horizontal reduction . and must be reckoned with. But the obliga If, however, the state does not base its regula tion of honor and duty remains. To inculcate tion upon existing classifications and rates of this obligation is a part of that campaign of the company, the situation presented is that education which William L. Wilson declared wasu in a country of universal suffrage, a considered under the fourth heading. "Second. Where a single maximum rate continuing duty." CONSTITUTIONAL LAW. "Validity of applies to a service of which the cost per unit is uniform, the aggregate net earnings of_the Statutes conferring Executive and Legislative company reflect the measure of profit for the Powers on Courts and Judges," by W. W. unit, and the reasonableness of the rate as a Thornton, Central Law Journal (V. Ixvi, p. 24). CORPORATIONS (Directors' Liability). maximum. "Third. Where a single maximum rate is " The Liability of the Inactive Corporate made applicable to a certain class of service, Director," by H. A. Gushing, Columbia Law the test of the reasonableness of such rate is Review (V. viii, p. 18). the value or cost of furnishing such service. "Briefly stated, the really passive director "Fourth. Where a single maximum rate is has been deemed not responsible for the wrong
