Hudson & Manhattan Railroad v. United States

Background

A railroad company asked the federal regulator to approve a new 10-cent passenger fare for interstate trips on its downtown line, replacing an existing 6-cent fare. The Interstate Commerce Commission suspended the proposed tariff, held a full hearing, and concluded that an 8-cent fare would produce better revenue than the 10-cent proposal. The railroad implemented the 8-cent fare after the Commission canceled the 10-cent schedule and the Commission denied a rehearing.

Reasoning

The central question was whether the Commission had enough evidence to reject the 10-cent increase and to allow an 8-cent fare instead. The Court explained that raising fares can sometimes reduce revenue by driving away riders, and that the Commission had evidence about local traffic and likely diversion of passengers. The Court found that evidence adequate to support the Commission’s judgment and affirmed the lower court’s decision upholding the order and findings.

Real world impact

The decision means the railroad may not charge the proposed 10-cent downtown interstate fare and must operate under the 8-cent fare the Commission justified. It confirms that regulators can rely on local traffic and revenue evidence when denying fare increases. This ruling resolves this dispute on the merits and leaves the Commission’s fare decision in place for the affected interstate downtown service.