Evening star., 1913-11-13

day wear and tear on the property. II
a street car company buys new car
for which II pays, say $10.o0o ana puts
that car to work, 1t Is entitled 10 earn
+ ON the operation Of its plant fair In
terest on the $4,000 invested in that car.
At the end OF one year or two years or
three years or at the end OF any otner
year that car is bound to have depre-
ciated in value. I don't know the life
of the average modern street car. but.
suppose for sake OF argument. ,t we
fifteen years and that at the END or mr.
teen years the car would be nt Tor notn-
ing but scrap or junk. The street rali-
way company ought to make provision
out of its earnings and is entitled to make
provision out of its earnings not only for
a fair interest on the Sl0OOO Wnicn tne
car cost. but a sum sufficient to replace
that ca: when 1t has worn out That
sum Is known as a depreciation fund and
in all honestly and economically conduct
ed street railway companies II Is set
aside out of the companies earnings Tor
the very purpose of offsettings the nat
ural Inevitable depreciation of the car
value.
Sound as a New Dollar.
This principle is applied to all of the
property of a properly conducted street
railway company 1t is sound as a
brand-new dollar and its relation to
you is nothing more nor less than good
street car service. Unless an adequate
depreciation account is maintained it
means that you must ride in antiQuated
cars over bumpy tracks-that your life
and limb will be endangered just to the
extent that the equipment of the street
railway property is defective.
This interest of yours In the proper
maintenance of the Washington Rail
way and Electric Company was the
uppermost thought In my mind when
int h he q
in writing the letter to the company, OF
which / have told you. i Will not per-
NIT If | have any power to prevent
it, the use of the earnings OF any
ment of dividends until after your In
terest is conserved by the establish
ment and maintenance of an adequate
depreciation fund. No street railway
company has any moral right to use
the money which ii collects from you
and which it ought to expend as / have
indicated, for the payment OF divide nds
of stockholders. and this particular
company has no legal right to do SO.
Your interest in the main tenance OF
sinking fund is quite similar to your In
terest in a depreciation fund. The Wash
ington Railway and Electric Company
has some fifteen mi lion dollars or bonds
outstanding. That means that the cem-
pany owes somebody-the holders OF these
bonds-fifteen million dollars. and that
some day it has got to produce hfteen
million dollars in cash to pay that dent.
That debt is just like mortgage on a
house, unless you keep chewing away at
IT, biting off q little each year and finally
getting il ali paid off, some day the fell
low who holds the mortgage is going
10 foreciose on you and take your house
away from you. There can be no CUES
ton in the mind of the average citizen
of Washington that if he has got mort
gage on house that 1t is good business
policy for him to get that mortgage paid
off as soon as he can. He takes pride
in paying it off. and, incidentally, when
he gets it paid off he thereby stops the
interest which. as q friend OF mine said,
is an 'eatin' sore.
Demand for Privacy.
Now, / must get back to the reply
which the street car company sent to US.
When we received 1t we put our statis-
tician to work in earnest. and a few days
ago he made another and more exhaus-
tive report. in which he drew the same
conclusions that he had drawn in his
first report and ampified them with more
detail ed information. He stated that a
more extensive examination of the COM
pany'S reports and books forced him 10
conclude that the company does not
maintain either depreciation account or
a sinking fund. When we received that
report we wrote another letter to the
Washington Railway and Electric Com
pany requesting that its officers appear
before us at 10 o'clock this morning and
furnish US with whatever information as
to their financial affairs We needed, In
order that we might learn whether the
extra dividend that l told you about was
proper in view of the question whether
they maintained an adequate deprecla-
ton account and sinking fund.
You probably observed from the after