New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-01-12
GAS DECISION POINTS
V4LUATTON OF FRAN
CHISES DISCUSSED.
Supreme Court Decision Lays Dozen
General Rule for Rate
Firing.

Washington, Jan. 1.-THE full text Of the
opinion of Justice Peckham. of the Supreme
Court Of the United States, in the New York
S0-cent gas case made available to-day.
The opinion does not, OF course, change the con-
cIusions announced last Monday. but some OF
them are elaborated. In the complete paper the
court dwells at greater length on the question
Of the valuation of the franchise than on any
other point Holding in effect that if the rate
fixed were cOnfiscatory the law would be IN
valid, the opinion enters into long argument
to show that the United States Circuit Court
for the Southern District of New York followed
erroneous lines in reaching the conclusion that
the franchises had been enhanced in value from
$7.7S1,OOO in 1884 to s120O0.000 in 1905.
1T is" says the opinion, referring TO the de-
cisiou below mot only too much a matter OF
pure speculation, but think 1t is also opposed
to the principle upon which such valuation
should be made This conclusion is reached
because the corporation is one Of that class
which is subject to regulation by the Legislature
in the matter Of rates. provided they are not
made so low to be cOnfiscatory.
Although the state ought to be bound to
recognize the value agreed upon in 1884 part
of the property upon which a reasonable return
can be demanded" says the ruling. I'VE do not
think an increase in that valuation ought to be
allowed upon the theory suggested by the court
below. Because the amount OF gas supplied has
increased 10 the extent stated and the other
tangible property Of the corporations has in
creased SO largely in value Is not, as it seems
to US, any reason for attributng like proper
tional increase in the value of the franchise
Real estate may have increased In value very
largely. as also the personal property without
any necessary increase in the value Of the
franchise. It's passed value founded upon
the opportunity Of obtaining enormous and ex-
cessive returns upon the property OF the COM
pany without legislative interference with the
price for the supply of gas but that immunity
for the future was OF course, uncertain. and the
moment it ceased and the Legislature reduced
the earnings TO a reasonable sum the great
value Of the franchise would be at once and
favoraby affected"
According 70 the Circuit Courts valuation OF
the franchise the value Of the entire property OF
the gas company was placed at s5s,S3L435 The
Supreme Court reductions on the franchises
brought the figure down 10 s55.612 AS, and upon
these figures the court estimated that at the rate
Of 50 cents a thousand feet the company would
earn "a per cent Justice Peckham conceded
that per cent would be a reasonable rate on
the value of the property devoted to the public
use but he held that a slight reduction in the
estimated value of the companys real estate
plants, etc, might easily give this rate as would
lower rate.
Justice Peckham would not concede any risk
10 the company on account OF competition. be
cause" he said. ii is a proposition almost IN
thnkable that the city of New York would for
purposes Of making competition. permit the
streets Of the city to be again torn up in order
10 allow the mains OF another company 10 be
laid all through them 10 supply gas which the
present company can adequately supply"
Justice Peckham laid down the following gen
eral rule for the determination of the validity
or laws fixing rates on such commodities as gas:
The rates must be plainly unreasonable TO
the extent that their enforcement would be
equivalent TO the taking OF property for public
use without such compensation as under the cir
cumstances is Just both 10 the owner and the
public There must be a fair return upon the
reasonable value OF the property at the time It
is being used for the public The case must be
clear one before the courts ought to be asked
to interfere with state legislation upon the sub
ject Of rates. especially before there has been
any actual experience of the practical result Of