New-York tribune., 1907-11-05
CRIT[CISE MR.. MASTEN.
Counsel for City and State attack
Gas Franchise Valuation.

The findings of Arthur H. Masten, the special
master appointed to hear the evidence as to the
constitutionaIity of the S0-cent gas law. were
severely criticised yesterday by counsel for the
city and the state when the argument on the
confirmation Of the report and on the exceptions
taken thereto was begun before Judge Hough
in the United States Circuit Court.
Ex-Judge Alton B. Parker. special counsel for
the city of New York, paid particular attention
10 that section of the report in which Mr Mas
ten allowed the gas company TO add $20Oo0ooo
its own estimate OF the value Of its franchises
70 the Capitalization on which It asserted it
should be permitted 10 earn fair return for It's
investment. No precedents, he declared couIo
he found for permitting a corporation to capl-
talize the value of it's franchises with the mere
motive of increasing the total capitalization on
which IT has a right to earn fair return
The fnding of the master. he said, meant noth-
ing but that the corporation could capitalize It's
franchises from time TO time at Whatever
amounts il saw fit He failed to see any reason
for such an asset when the company itselr hau
never invested a dollar Of good VIII. Why' II
.re- are pernlitted to do this said the citys
,,o,,nsel there will be constructed a financial
SNOWFALL that will go rolling down through the
ages until finally the money invested VIII De oul
as a fly speck IN comparison!
Nv parker asserted that the decision on the
a
ZION presented for the first test was whether
.,a Iee;sIat,,re Of a state could, after official
Investigation, such as had been made by the
stevens committee. compel a corporation TO live
nm IN the terms of a franchise or contract by
,,rto1, If agreed 10 furnish a commodity at
reasonable cost.
The legality Of allowing the uncompleted As
.oria plant of the company TO be included IN
the Capitalization was also questioned by the
citv's counsel This plant is valued at Sl2'oVV'-
010 Il, the masters report. but Judge Parker
., toeY ~. nc rtzsor3 for its inclusion, as the
nIert was not needed by the company as yet
~ the elimination OF other items which had
taen allowed the proper value of the capitaliza-
ton would be S44,O0O,000. on which, Judge Far
ker declared. the figures would show that the
company was receiving net earnings OF % ID per
cent. a reasonable profit. Mr. Masten had also
failed entirely take into consideration he said
that profit on gas increased with the increase
in consumption. This increase was more RAPID
in New York than in any other city in the
world New York used more gas than any other
city In the world.
For the Attorney General Senator Page TOOK
the view that the whole question was one for
the LEGISLATURE itself to decide. and not the fed
ersI courts as the contested law concerned regu-
lation rather than confiscation He scored the
company for its methods of boosting its capi-
talization when it was to its advantage to do
SO, and laid particular stress on the fact that
the secretary OF the company had under oath
declared before the Stevens committee that the
entire plant was worth S19,OOO,OO0. The master
allowed valuation On the plant Of S30,OOOooO,
I,,,t Senator PAGE contended that by it's own
testimony given under oath the company was
legally estopped from taking other and differing
valuations.