The Washington times., 1910-09-30

Rights of Franchises.
The franchises granted the various
companies and held by complainant
consisted in the right TO open the streets
Of the city and lay down mains and
use them TO supply gas. subject 10 The
legislative right TO so regulate the price
for the gas as to permit not more than
a fair return (regaTd JeIng had 10 the
risk of the business uJ,-- the reason
able value OF the PrOCs'-,y at the time
II is being used for the public
The evidence shows that from thelr
creation down 10 the consolidation III
1854. these companies had been free
from legislative regulation upon inc
amount OF the rates to be charged for
gas They had been most prosperous,
and had divided very large earnings u
the shape Of dividends to their stock
hOldeTS-divideuds which arr CnaracteT-
lied 10y the senate committee, appointed
in 49, 70 investigate the fact surround
Ing the consolidation, as enormous
The report Of that committee shows
thar several OF the companies mad aver
aged, from their creation dividends
over Is per cent. ard the six con-
panies II the year 1854 paid dividend
upon capital which had been increased
by- earnings, as in the case Of the Man
haitian anC the New York. Of IS per
cent. and, had IL been upon the money
actually paid in, II would have been
nearly > per cent.
Earning Enormous Dividends.
The committee also said in the same
report that these franchises were in
force November 10, 1854. the time Of
the consolidation, and the money in
vested in them was earning the same
enormous dividends So far as the evi-
dence shows, there was nothing in the
condition Of affairs on the 10Th or No
veulber TO indicate that these franchises
lrel Ina hi no
twenty years. as they had been in the
past There were gas companies enough
in the city with 2 capacity capable Of
supplying the demands for the next
twenty years
a law was on our statute books that
virtually prohibited the laying OF aI.y
more gas pipes in the streets The EgS
companies had an agreement among
themselves fixing the price OF gas at
a figure that paid these dividends The
people were paying this price as they
had in the past. without objection or
protest This price may have been too
high, and the dividends were excessive
but they were not Illegal, and the Valua-
ton Of the franchises computed upon
these dividends. and that state OF facts
can not be called q violation Of a law
thar expressly authorized il TO be done,
unless such valuation was too high-'
The committee. upon these facts were
for the franchises was not more than
their fair aggregate value
Not Regarded As Overvalued.
Assuming. as the committee did, that
the company would be permitted 10
charge tie same prices in the future
which in the past had resulted in these
enormous OF excessive dividends. it
need not be matter Of surprise that a
franchise by means Of which such divi-
dends had Eeen possible was not re-
i,arded as overvaIUed at the sum stated
IN 1884
We think that. under the above facts,
the courts ought 10 accept the valuation
of the franchises 7Xed and agreed upon
under the act q 1854 as conclusive at
that time. The valuation was provided
for in the act. which was followed by
the comps nies and the agreement re-
ZardinE II has teen always recognized
as vC'il and the stock has been large
" dealt In for more than twenty years
Tsst on the hasis Of the validity OF the
valuation and Of the stock issued by the
company
But, although the state ought, for
these reasons. to be bound tc recognize
the vaIue agreed upon in 1884 as part Of
the property upon which a reasonable
return can be deTnaur I'd we 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 in
creased TO the extent stated and the
other tarZible property or the CORPORA
tiOns has increased so largely in value,
Is not, IS & seems 10 us any reason for
4ttrIbutfuE a proportional Increase In the
value Of the fTauCh Sc
It's past value was founded uDon the
opportunity OF obtaining these GLORIOUS
and excessive returns upon the prop
erty OF the company, without leF-isia-
tive interference with the price for the
supply Of gas. but hat immunity !or
the future was, Of course. uncertain:
and the moment il ceased, and the leg
islaIiOn reduced the earnings TO a -ee-
sonable SUN, the great value o. the
franchise would be at once and uufa-
voTably affected, but how much so - IS
not possible for Us now to see The
value would most certainly not increase
Regulation Of Rates.
The question Of the regulation Of rateS
did, from time 10 time thereafter. SCise
in the legislature. and finally cUlni-
mated in these acts, which were il *
istence when the court below found ti7.s
increased value Of the franchises We
cannot. in any view of the case, concur
in that finding.
This increase in value did, howevs
form part of the sum upon which tn
court below held the complainant was
the value of the tangible assets ac-
tUally employed at the time Of the
conrnerceme ent Of this suit in the
business of supplying gas by the com
pIainant to be S47 S31 ,435, to which it
added the 1900, BOO as the value OF
the franchises as found by it. making
the total of S5s,s31,435, upon which 1t
held that the company was entitled 81
a return Of 6 ct cent, being $3.50
SS6.10.
Il also found It's total net r. e
for the year 1905 amounted to sS.SSI l.
1926, almost 10 per cent upon the
sum above named.
Altering the finding Of the court so
far only as to place the value Of the
franchises at the time agreed upon IN
1884, S7,7Sl,O 900. the total value upon
that basis Of tiIs property employed
by the company E-ould be S55,612,43
upon which per cent would be
S3-3S6, 146-1G, while the sum estimated
as the return on S6-cent gas would
have been S3,024,592.14, which is nearly
81 per cent on the above total of