The Washington herald., 1914-02-07
POWER CONCERN
H|DbIG EARNINGS
Potomac's Bookkeeping Sys-
TEN Is Unusual. It Is
Declared.
UTILITIES BODY FINDING
Methods Of Washington Rail
way Also Are Severely
Criticised.
REMEDIES TO BE PROPOSED
REMEDIES TO BE PROPOSED
Reduction of Company's Capital by
$1,000. 900 Through Cancellation of
Unified Contract Demanded.
BY JOSEPH p. ANNIN.

That the Washington Railway and
Electric Company and its subsidiaries.
including the Potomac Electric Power
Company, have been organized, financed
and conducted in a way hard to recon-
cile with a desire to render efficient pub
lie service at a reasonable rate is the
essence of the findings of the Public Util-
tiles Commission following its investiga-
ton Of the railway company.
That the big earnings of the Potomac
Electric Power Company have been
hidden from the public by unusual book
keeping and turned over to the WASH
ington Railway and Electric Company TO
value Of which the commission cannot
2 determine, is the one clear inference
writ over the pages of theSreport.
The findings of the commission, made
public yesterday in report to Congress,
followed an extended investigation con-
Quoted by Col. Harding, engineer COM
missioner and president Of the utilities
commission.
in a letter transmitting the report to
Congress- Col. Harding concludes:
THE commission has under consid-
Grafton recommendations of proper leg
islation to correct conditions deemed to
be adverse to the public interests, and
these recommendations will be forward
ed at later date to the proper COM
fnittees OF congress
to Make Recommendation.
The report suggests that the investi-
gatson just closed is but a forerunner
of a program which the commission
hopes to be able TO carry through,
partly by virtue of authority now vested
in it and partly through legislation to
be recommended to Congress
The commission hopes to bring about
s..If
vidual companies, including a breaking
UP of the interlocking control, ma
terial reduction of capitalization. and
a reduction in the cost OF service to the
public.
An immediate reduction of the capital
ization of the Potomac Electric Power
Company by sl,0o0,0o0. through the can
collation. of an untitled contract to pur-
chase for 1000 shares of stock from
the Washington Railway and Electric
Company control of a Great Falls power
property for which the railway company
paid S425 900 is demanded by the commits
sion. The report also recommends leg
islation requiring the divorcing of the
Washington Railway and Electric Com
pany from the Potomac Electric Power
Company.
The commission admits II has been un-
able to get the bottom of the organiza-
part of its program is dependent upon
a physical valuation of the properties
OF the Washington Railway and Electric
Company. These properties. the comRis-
sion finds, were purchased by the WASH
ington Railway and Electric Company
for So 49,. $50 in stocks and bonds after
they had been purchased at a foreclosure
sale for S,ooo.c0o cash.
The commission finds:
That the Potomac Electric Power Com
pany stock is owned entirely by the
Washington Railway and Electric Com
pany.
That the boards of directors of the two
corporations are identical. and that an
absolute control over subsidiary street
railway companies is maintained by the
Washington Railway Company through
interlocking directorates.
That the same directors who sell power
to the Washington Railway from the
Potomac Electric Power Company, buy
that power for the Washington Railway
and Electric Company. being both pur-
chasers and sellers. That the same direc-
tors who buy this power for the Wash
ington Railway Company sell it to SUBJ
sidiary concerns under their absolute
control
That two-thirds of the dividends of the
Washington Railway and Electric Com
pany are paid from the dividends on the