Dakota farmers' leader. (Canton, S.D.) 1890-19??, 1909-02-26
A Great Decision by Our Great
est Court.

WHICH COnR reSSeS, legislatures, exc
cutiveS, armies, and navieS bow In
submission. When it errs, no power
but its own can rectify its error.
When 1T formulates rule of proper
ty that runs into the bases of every
mans affairs, it's deliverance is Of the
utmost Importance. 1t has rendered
several very important decisions,
lately, but most important Of ALL per-
haps is the ruling In the case Of Will
COX VS.. Consolidated Gas Company,
ordinarily known as "the sO-cent Gas
Case"
The ordinary farmer or merchant
who reads this Is not likely to think a
decision by court in Washington.
about the rate to be charged for gas
in New York, of much Importance to
him. But this case Is likely TO affect
the price of corn and wheat and land
and coal in the Mississippi Valley,
and the fare for passengers on street
railways in all cities, as we'll as the
price Of tickets to the next town.
Hence, it is important to you.
1t is important because it lays
down the law as to the right of the
public to regulate the income Of pub
lie utility corporations. 1t deals with
a gas company in New York, but the
same rules must apply to railways,
electric light and power companies,
telephone companies street car and
trolley-line companies, and all public
service corporations everywhere.
Whenever state or city attempts
to lower the rates charged by any of
these companies, they usually hasten
to the courts with the plea that the
rates sought to be established amount
to the contiscation of their property,
and secure an injunction against the
enforcement of the law, the ordi-
nance, or the order. as the case may
be.
The Supreme Court says that the
rates must be sufficient to pay rea-
sonable return on the property de-
voted to the public use.' 1t decides
that a reasonable return in New York
City for gas plant is six per cent.
But" says the public utility cor
poration, ''our property is Of two
kinds at least. There is the roadbed,
the rolling-stock, the gas factory, the
mains, or whatever it may be, and
there is also the franchise, the good
will, and the business we have built
up. These latter things are property,
as we'll as the physical plant, and en-
titled to interest"
But the Supreme Court says that,
while the franchise is property, 1T Is
property the value of which may be
taken away by the public by rate-low-
ering. In other words, the franchise
is valuable because it enables the cor
poration to charge for it's services. If
it is allowed to charge exOrbitantly
its franchise will be very valuable.
A franchise to charge higher rates for
no service at all would be extremely
valuable. If it's rates are cut down
to charge which will yield a reason
able return only on the physical plant,
its franchise will be worth less, or
even become valueless. So that fran
chises cannot be reckoned as property
upon which the public is bound to
pay interest.
AS for goodwill, the Supreme Court
says that the goodwill OF a corpora
tion with a monopoly is Of no value
at all. Goodwill is Of value to mer-
chant, because he has competition,
and his customers are likely to return
to his store rather than go to his RI
val's. But" says the Supreme
Court, discussing the gas case, "He
will resort to the odd stand (for gas)
because he can not get gas anywhere
else." So shippers will resort to Mr..
Morgan's or Mr.. Harriman's railroads,
because in most cases they cannot ship
by any other. Goodwill, therefore,
has no value on which the public can
be forced to pay interest.
To be sure, the court allowed near
ly $S, 100000 for the value Of the fran
ehise of six old gas companies consoli-
dated in 1884; but that was because
the Legislature OF New York had it.
self put that value on them then, and
allowed stock to be issued for them.
Such a condition could scarcely be
found in the ordinary case.
So this decision seems to hold out
hope of relief from the extortions of
railways as we'll as Of gas companies.
If the state or city Of New York can
legally cut down returns on gas con-
Germs to six per cent on the physical
valuation, with nothing in the ordin-
ary case for goodwill and franchises,
there seems to be no reason why the
United States or every state in the
union should not cut down railway
rates to the point where they will
pay only reasonable return on the
physical valuation Of the railways.
The water in the stock is not proper
ty devoted to the public use." Under
this decision, the way seems open for
the people to throw off the unjust
burden which the "frenzied finance"
Of Wall Street has laid upon them
La Follette's Magazine.
Try sack Of my buckwheat -four
it's the talk of the town.
.