The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1909-01-05

That there are at least two points in
the decision OF the United States Supreme
Court. dissolving the injunction against
the enforcement Of the So-cent gas law IN
New York. that are analogous to the
question involved in the cases IN the Wash
ing,on and Georgetown Gas companies.
now pending in the same court. is the
opinion OF a number OF interested Con-
gressmen and Incorporation counsel Of
the District OF Columbia
II IS declared that although there IS a
great difference IN essentials. there are
points in each case Of vital Importance
which may serve 10 draw a parallel
News Not Welcomed.
News Of the decision adverse 10 the gas
companies Of New York was hardly vel
come TO the coterie Of fnanciers and
brokers' who hold shares Of the local gas
company. and who are looking 10 the
court here 10 sustain the Washington Gas
Company IN its purpose 10 increase its
capital stock
The immediate effect Of the news in
Washington was 20 cause Washington
gas TO slump about three points on the
local exchange.
The decision handed down yesterday
upholds the So-cent gas law passed by the
legislature Of New York in 1895. The
Consolidated Gas Company Of New York
City has fought the law since its en-
actment- Injunctions were obtained re
straining the State and city officials
from enforcing It.
The court holds that With gas at a
price Of 50 cents. and making allowances
Tor the value OF the company's fran
chise, the returns TO the company should
amount 70, but not exceed. 6 per cent
Decision a Victory.
Those who have been fighting the arbi-
trary prices Of gas fixed by the gas cum
panies consider the decision a great VIC
tory
The most suggestive point. IL is main
tainsd. IN tho whole decision. is the ac-
ceptance OF the franchise as basis for
the issuance Of stock / is an asset
against which increased capitalization can
be made. provided that it IS authorized by
state law.
Il is a moral certainty. 1t IS claimed.
that when the franchise element in the
local gas question comes before the
Supreme Court, the Washington Gas
Company viii be given power TO issue
stock against its franchise, under section
8 Of the law OF 1896 The decision en-
phasizes the fact that the repeal Of the
act Of 1885 by Congress IS essential
The other point, which bears a clearer
analogy 10 the local gas cases, is the
question Of good wiIT' as a corporation
asset. On this point, the decision is be
Heved 10 Be ciean-cut and decisive. The
auditor OF the Georgetown Gas Company.
Il VIII be remembered. included good
VIII as q part OF the plant in fixing the
value OF the company's property.
This IS not a case for the valuation
Of good viii the decision reads. "'The
complainant has, IN fact. a substantial
monopoly Of the gas supply in the city Of
New York. and those who wish TO. use gas
must take It from the complainant. In
this case, as there IS no possibility Of COM
petition. there should be no allowance for
good WILL
Value of Franchise.
From the decision. it appears that AZ
the time Of the consolidation OF the
constituent companies OF the Consolidated
Gas Company Of New York the value Of
the franchise was fixed at S7,7N.000 and
capital stock was issued against this
amount. The validity and fairness OF this
action the State Of New York has ever
questioned
The stock, since the consolidation has
been dealt in to the present time as valid
stock Of the consolidated cor-Pany. issued
pursuant 70 the statutes Of New York
at not more than a faic aggregate value
OF the property. franchises. and rights
Of the constituent companies. which can
not now be questioned by the State NJ
New York
In the case pending IN the Sup-ens
Court, appealed from tre Court of An
peals Of the District OF Columbia II ts
sought to include for purposes Of capj-
talizatiOn the franchise. rights. and goof
win Of the Washington Gas Company
under section ; Of the act Of 1896 and Il
STOCK
IS issued accordingly. in pursuance OF tbs
act Of Congress, the Washington Gas
Company viii be entitled 10 charge sucl
a price for gas as viii be a reasonable
return upon the stock so issued. cover.
ing the value Of said franchise. rights
and good VIII. for which the Washing
ton Gas Company has paid nothing, and
in which Il has no vested right.
Subject TO Alteration.
This is held TO be the case, because
the charter OF the Washington Gasligh
Company IS subject 70 alteration. amend
ment, OF Teresl at any time And. II {.
further believed, II the bill now pending
before tbs Senate TO repeal section ;, o
the act Of 1885, is not passed and tn,
United States Supreme Court reverse.
the Court Of Appeals Of the District o.
Columbia and the Washington Gas Com
pany issues capital stock covering tn
value Of the franchise. rights, and goo,
Continued on Page 2. Column 3.
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