New-York tribune., 1920-08-05
U. S. Judge Hand Asserts
8O-Cent Rate Is Con-
fscatory; 8 p. C. Profit
Is Assured to Company
New Charge i'm
Effect at Once
Consumers to Lose Right
to Rebate Unless State
Acts by March /, 1921

One dollar and twenty cent gas was
authorized in Manhattan by decree
filed yesterday in the United States
District Court by Judge Learned Hand.
Judge Hand confirmed the report and
recommendation Of Special Master A.
S. Gilbert, appointed by Federal Judge
Julius S. Mayer in May, 1918, to take
testimony and submit findings in the
injunction suit of the Consolidated
Gas Company of New York against
Charles d. Newton. as Attorney Cen
eral Of the State of New York; Edward
Swami, District Attorney of New York
County; Lewis S. Nixon and the Pub
lie Service Commission of this dis
trict.
The decree declares the present so
cent gas rate under Chapter 1925 of the
laws Of 1906 to be conhscatory and un-
constitutional. The new rate goes
into effect at once under these condi-
tions:
l. An injunction against the de-
PENDANTS is granted to restrain them
for period of five years from suing
on any penalty or forfeiture under
the statute of 1906
Trustee Named
2 Richard yelling is appointed
as trustee for all the moneys COL
lected as the difference between the
old and the new rate. with directions
to impound the additional 40 cents
for each 1000 cubic feet and to hold
the same until some competent "rate-
making authority" shall prescribe
new rate and the rate making
authority, presumably the Legis-
l&ture, is given until March !, 1921,
IN which to enact new rate-making
regulations
3. If the decree is reversed by
the United States Supreme Court, or
If competent authority" promul-
gates new gas rate prior to March
/, l921, the additional 40 cents for
each 1000 cubic feet, is to be re-
funded to consumers provided a re-
ductlon Is authorized in the S1.20
rate to tac extent of that reduction.
a. If a "competent rate-makinp"
power fails to prescribe a new rate
between now and March /, 1921. the
consolidated shall keep all of the
lmpounded moneys.
The defendants. it was announced
yesterday, will take immediate stems
TO prosecute an appeal from the decree
Valued at S77,OOO,Ooo
Reviewing the ligitation between the
Consolidated and the state and county
authorities. including the Public Serv
ice Commission, since tho first iniunc-
tlon proceedings were instituted sew
eral years ago to declare the law of
1906 unconstitutional and void, judge
i1and says that the present suit was
lnaugurated by the Consolidated after
the United States Supreme Court dis
missed decree of the United States
Circuit Court of Appeals in favor of
the Consolidated and the case went
back for retrial
Mr.. Gilbert's finding that the valua-
tlon OF the Consolidated property, in
cludlng its franchises, is 1000 900
and that it distributes 10000 900 900
cubic feet of gas to its consumers
during year is accepted by the court.
and the Sl.2O rate is authorized in the
decree because this increase over the
present rate will enable the company
to receive return of per cent on its
valuation.
The income for the current year.
which the court finds to be 5000 600, is
return of but 1.2 per cent on the
company's valuation, and the present
net cost of delivering gas is found to
be 1918 cents for 900 feet, based con
a full years operation in 1918 and the
first eight months of 1919" The court
holds that prices for labor and mate
rial had become higher in 1919 than
during twenty previous months"
1--WE, in this cOuntrV" the decree ro-
cites. are rot only influenced by con-
ditions in Europe, but we arc subject
to our own local imitation and dsor-
ganization of industry, from which no
one can know when we shall recover
THE plaintiff is faced with a condi-
tlon which permits it to receive much
LCnntini.cd -