The Washington herald., 1910-05-03

d
compensation was "a fair return upon
reasonable value Of the property at the
time It is being used for the public
Again, in Southern Pacific vs. Railway
Commissioners. IS Federal Reports, pages
236-262:
1T is now well settled that legislation
prescribing, traffic rates, gas charges and
water rates must be reasonable as re
CARDS both the company and the public;
and whether the legislation is reason
able or not is eminently question for
/ judicial investigation"
/ Again. in Louisville. etc, VS.. Brown.
1873 Federal Reports. It was held:
That a railroad company is entitled
20 earn at least the legal rate Of interest
upon the actual value Of its property
And finally. as TO this point:
IF it be not true that actual value
! (the value Of the property and not nom
inal value Cthe face value Of the stock
IS the thing-the true measure Of rea-
sonableness-why did the legislature Of
/ Maryland, a few weeks ago. pass an act
/ providing for such valuations in every
| such case? And coming nearer home
| why did the House Of Representatives, Oh
( Friday last, by a two thirds vote, pass
an amendment requiring the Interstate
! Commerce Commission 10 make exhaIs-
( tive appraisements Of the property Of
every railroad doing interstate business
II the par value Of the stock is not the
true measure in over-capitalized cases,
how can Il honestly be said 20 be so in
apitalized cases? Is not sauce
for the goose stil sauce for the gander?
II you cannot go behind the returns, so
I 10 speak-to show real value in one
case-how can you do so 20 show want
Of value in the other2
In Regan VS.. Farmers Loan & Trust
Company, ia L. S. it was held that:
THE rate 10 be obnoxious 20 the Con-
stitution must permit a reasonable
profit on the cOmpany's property
. All public service corporations have
a right 70 make and distribute earnings
upon the actual value oc the property
employed in the conduct OF their bus!-
ness. irrespective OF its Ownership-and
Of course. irrespective Of the face value
OF par value OF the securities outstand-
ing against tor Of their ownership.
It IS a welI-known fact that q great
number. approximaung ar least one
hundred gas companies throughout the
country. are operated under lease by
either the United Gas Improvement Com
pany OF Pennsylvania or by some Of the
several other companies doing a similar
business.
Q. The Company's franchises are prop
erty, and as such are assets upon which
IL is entitled TO predicate earnings
The third proposition is sustained by a
long line Of unanimous decisions a num-
beI Of which have already been cited. end
Ing in the last case in the Supreme Court.
delivered by the late Justice Peckham,
speaking for unanimous Court IN the
New York Consolidated Gas Case. in
which he says. without qualification: 1T
cannot be disputed that franchises OF
this nature are property and can not
be taken or used by others without COM
pensation."
In support Of this declaration he cites
the leading case Of the Mouongahela VS..
United States, las L. s. Reports, page
3l2, People VS.. O'Brien. III New York.
and other cases. In the Monongahela
case. relied upon by Justice Peckham.
Judge Brewer delivering the unanimous
opinion Of the Court. held that even in
a case in which Congress had actually
forbade the valuation Of a franchise
STILL THAT WAS AN ESSENTIAL
PART OF THE PROPERTY OF the COM
pany Of which it could not be constitu-
} tionally deprived either by act Of Con
gress or otherwise" The other case re-
} lied upon. the very celebrated case OF
People VS. O'Brien, by a unanimous
, Court, has long stood pre-eminent on
, account Of the signal ability Of Chief
Justice Ruger, who delivered the opinion
and the eminence Of counsel who ap-
J peared in g., conspicuous among whom
being Mr Elihu Root the junior Senator
p from New York. The opinion is exhaus-
r tive Of the law on the subject UP 10 the
date Of its rendition. Among the signih.
cant declarations in it are the follow
ing.
1T has been earnestly contended foI
the State. that such a franchise is q
mere license and privilege and enjoyable
} during the life Of the grantee only and
; revokable at the will OF the State We
} believe this proposition to be not only
repugnant 10 justice and reason. bu
contrary 20 the uniform course OF author
ity in this country"
) The whole decision in this case rest.
. broadly on the proposition that fran
chises are property and can not be re
b pealed by the State without Just com
: pensation; and that any other doctrin,
e would be destructive of an incalculabl,
, amount OF property and Of corporate Hf,
, and business generally in this country.
t. That public utilities do not have L
= be Incorporated. Their rights relative {,
r those OF the public as 20 rates beins
= mutual, one and inseparabIe and WHOLLY
independent Of paper capitalization.
The charter OF this Company is sufn
! Client proof OF the fact that incorporation
is unnecessary. Every amendment tha-
3 Congress has made thereto during tn,
r last 50 years has specifically provided tha
= it shall apply equally 20 every person
co-partnership, association or corpora
= ton IN the District of Columbia makirl
! and selling gas. Obviously the rat,
2 would be the same If the business wer,
Q carried on by a natural person instead
. Of an artificial person "a corporation il
this case), or by co-partnership or as
Y sociatiOn Of natural persons without an
D paper capitalization whatever.
! 3. That public utilities. If capitalized a
1 ali, should without exception be ideally
capitalized; that is to say that ther,
s should be a true coincidence and core
spondence between the actual capitaliza
e tion inherent In the value of the invest
ment and the par or face value Of tn,
} securities issued against it. 70 the en-,