New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-05-29
THE GAS FRANCHISES.

The contest of the Consolidated Gas Com
pany against the S0-cent gas law may engender
such a fight as Chicago carried on against its
traction companies. The end of the contest in
Chicago was that the United States Supreme
Court declared that all the important franchises
of the traction trust had expired. That gave
Chicago the upper hand, aud the city and the
companies compromised on a basis that prom
Uses an adequate car service 10 the public and
a sharing of profits with the city.
The issue is, specifically at least much the
same in the Chicago case and in the New York
one. The Chicago railroads had capitalized fran
chises, unearned increment. goodwill practical
impossbiity OF competition. everything in sight
and much that only the future would disclose
They had issued such an amount of securities
that they could not afford to buy new cars or
to run enough cars to carry the public comfor
tably, or to electrify their lines; they were
straining every nerve to earn dividends on the
outstanding stock. The Consolidated Gas Com
pany has not INDUCED In equally extravagant
capitalization, but it has issued stock against its
franchises against IFS unearned incrementS and
against many other things which cannot be cap
italized under the utilities bill. With its cap
itallzation it cannot afford to sell gas at so
cents-at least, there is the masters decision TO
support it In that contention Thus the Chicago
company could not afford to give the public
DeItef service. ana the New York company can
not afford to give it cheaper service, because
of the amount of outstanding stock 1t may be
that If the case against the S0cent law reaches
the Supreme Court Mr.. Masten's report will be
sustained and the captalizing of franchises and
unearned increments under the old practice
which left the issue of capital by public service
corporations discretionary, may be adjudged rea-
sonable and proper, but If the franchises be
proved void the gas company will have an ex-
perience somewhat like that of Chcagos trac-
ton companies.
The invalidity of franchises does not put
public service corporation absolutely at the
mercy of the city. The Chicago franchises were
declared invalid, but the streetcars went on
running just as usual. The public had to have
the streetcar service, and the people of this
city will have to have light. If the franchises
are inyalidated, the city cannot for practical
reasons order the gas companies TO take their
mains and pipes out Of the city streets. That
gives the public service corporation a GER
tain strength of position when it comes to
compromising with the city, but by no means
enables it to make its own terms. In the Chi
cago case, which is doubtless an extreme in
stance, though the cars went on running and
earning much as ever for the company it's
stock dropped off in value until there was left
little more than corresponded to the physical
assets of the company. Naturally there We're
no intangible assets left whose value would
show in stock quotations The franchises were
gone The goodwill was gone. The monopollstic
hold upon the city was gone. SO the interests
were reOrganized as a single company. with
its capital on a basis Of something like the
physical value of the company's property. The
company began business on a capitalization at
which 1t could afford to furnish an adequate
service and still earn dividends. If the courts
should decide that the gas franchises have ex-
pired, the gas company might have to look for,
ward TO some such result as that