The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-06-04
CtTY'S ANSWER m GAS SUIT.
49, VIDIFt ~ re 10a.
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WeNt I" NNVWsfV wv ~'"VN WH'Nf"H
w. cHy ~ New York slI ~ represented
ihla fNbFBlna IN iIH sfatH~nfs whlch zee w
10 hrafl lafrfv IWlar ia,oa,l~ In The
tnltetl states ClrrnN Crtft On TIE 1tieat luu
N pn,lnnlns. rendiha Wlsstiou th~ ot,ler
obt alnetI Nv he Consolidated tlaa Company
frussalnihe ,lr su,hoHtira from enfoteins
thr nov " crht as lnw
Tho citV reply ~ the a'iit shich IA alss
hfouaIa aealnsa fhr state tias Commission
tho Attorney urhrfpl ard ihw Warici
Attorney. IL u dcnial ~ tho CDmpany'a
as-rrtlon that II h. = duly ofeanis"d sas
company enjoying only valid franchises
and al@p q denial ~ tt- allegation thai tbs
W vent price ia cnnfsra,ory
rh- brief prepared by Corporal hon Coun.
arl Delany. hich vas given oui laa' niFht
Asserts hat
The Consolidated Oas Company Of New
York IL not and never was u corporation
organized ~ alle ged In paragraph l., aud
Furthermore that the companies alleged IN
said paragraph to have teen consolidated
were not NJ or lpforp said consolidation. ~
alleged, duly urEanised and existing under
tho laws u the stats " New York with
the property, towers and franchises as
alleged la said paragraph,
Furthermore. the dty goes on TO say
in it, brief. the Consolidated Gas Company
did not become the owner Of or entitled TO
maintain mains, pipes and conduits In the
streets and high OF the city Of New
York. and has not laid additional mains,
pipes and oonduits with the consent Of the
municipal authorities.
In support Of the city's contention that
the Consolidated Gas Company does not
possess valid franchises an extract is given
Of the report Of the Stevens Investigating
commission in which II finds that most, If
not all. OF the franchises of the companies
now in the Consolidated nave lspsed
The city admits that in 1905 it consumed
400, 900 900 cubic feet Of gas. 1t denies.
however, that the cost of manufacturing
and distributing the gas averaged 81 cents
per 900 feet and denies thai the reason
able cost for distribution, As alleged by the
company, will he in excess of 10 cents,
Ii also denies that the price OF ~ cents will
permit a profit Of only 10 cents per 900
feet and that the penalties and price under
the new law will be oonfiscatory. The
city in its brief reCites that the state Gas
Commission, after a fair Investigation,
made the price ~ cents TO the public
and 10 cents to the city after having given
the company an opportunity to present
all the facts for its side, which opportunity
the company took advantage Of. The
act OF the Legislature, the city hoIds. was
therefore just and reasonable and such a.
to enable the company to maintain is
existence and receive OF the bona ide
capital invested u reasonable remuners-
ton.
The Consolidated Gas Company, the brief
says, with one exception WINS all the COM
panies in Manhattan and The Bronx and
enjoys a monopoly, "and such consolida-
ton and control Of aid companies was,
and IL by reason thereof, against public
policy, illegal and void, and the agreements
by which it was effected are illegal and
void under Chapter 900 Of the Laws of 1899:
that the said Consolidated Gas Company is
a monopoly and that therefore there can
be no standard or market price for gas,
and the only manner in which such can be
ascertained is through an examination of
the books and Inventories of its properties
TO determine the actual cost of production
and distribution and adding thereto the
sum necessary to provide a reasonable
return on its capital
The principal affidavit in the oity's case
is made by Engineer William D. Marks,
who has been retained by the city for this
purpose since january. He says that the
aggregate capital OF the companies in the
Consolidated was $4,000. 900, but the Con-
solidated Gas Company, which absorbed
them, divided among them $50, 900, 600 Of
securities and some 1900, 900 in cash, max
t. t-t,l -~aa, ~ NDl mn nnn
In order to find a pretext for this in
crease, says Mr.. Marks, William Farmer,
an able engineer, was engaged to make
an inventory, but he had not proceeded
far when it was discovered that he was
giving such prices to the properties as
would have resulted from a fair and open
competition in their construction.
"From William Farmers personal state
ment to him the writer knows that William
Farmer was summarily relieved and
Thomas f. Rowland, a manufacturer Of
gas works, whose views were more liberal
and in consonance with those Of the gentle
men consolidating these companies, was
appointed to make an inventory. 1t is
alleged that in this inventory he placed
an ~extravagant valuation on the properties
Of the various companies, but even then
he could not reach the predetermined
$50, 900 900 of capital stock, and 80 ST. sl 100
was added as a valuation Of the franchises
Of the New York companies"
Mr.. Marks AYERS that "the promoters Of
the Consolidated purchased the Compel
ing plants at eSorbitant prices in order to
create a monopoly and added their valua-
ton of this monopoly by oapitalizing the
franchises at s7,7sl 900 and proceeded to
wiring exorbitant prices by extortion from
the new %company's patrons to obtain profits
30 much in excess Of what was just as to
enable them to recoup literally for the
fictitious extortion to which they had sub
jected themselves in the purchase Of the
individual companies" Mr.. Marks COM
pares the cost of gas in different cities and
goes into the financial details and manage
ment OF the company in an affidavit that
fills 400 pages.