Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-01-27
HOLDS CONGRESS
MAY COMPEL D. c.
TRACTION MERGER
MIR. MapeS States Belief at
Hearing on Bill, of Which
He Is Author.
REQUESTS COMMISSION
CONSIDER THIS PHASE
Col. Kutz Reviews Conditions.
District Officials and Utilities
Representatives Present.

AotAANt OluCldlS dUU
Representatives Present.
Congress may compel by law
merger OF the street railway com
panies in the District of Columbia.
rather than permit them to merge n.
provided in the Mapes bill. as a re-
suit of hearings on that measure.
recomme nded by the District Corn
/ mlsssioners, which started today be
1 lore the House District committee
! Chairman Napes intimated this in
a series of questions asked of Engin-
eer Commissioner Kutz. while he wass
| testifying in support of the bill.
commissioner Brownlow so inter
preted the questions, and when asked
! later II this was a fair interpret.t-
! ton Chairman Mapes said that il
was. Re asked the Public Utilities
Commission through Commissions
the right and advisability of Con-
gress forcing the merger of th"
street railway systems.
Conversant With Subject.
Chairman Mapes had in evidence ~
the hearing books from the Congres-
sional Library covering the history OF
the charter and operation of these
street railway systems. showing that
he is studying the subject thoroughlx.
He asked Engineer Commissioner
kutz. who was the first witness, il.
since Congress had long ago granted
these franchises, he thought Congress
was bound for all time to suffer the
, two street railway systems to be oper-
| ated independently when such an i'm
/ possible traffic situation as concerns
the public interest now existing Ia:
/ resulted.
! He asked the Engineer CommSs-
sioner if he did not believe Congress
could compel the merger of these
| companies and their operation as :
unified system. Commissioner kut.
replied that he believed there are
many things which Congress can 10
which will make it advantageous To-
both companies to agree to Il merger
Chairman Mapes asked him to Civ
earnest consideration to this suggcs-
ton.
Hearing Largely Attended.
There was a large gathering of Dis
trict officials, representatives OF Tho
Capital Traction and Washington
Railway and Electric companies and
, of representatives from various citi-
zens' associations present at the hear
/ ing.
| Lieut. Col Kutz reviewed the state
ment that he made at the preliminary
: hearing last week to what had
caused the difference in earning pow
erS OF the two systems. He SAID that
the difference is due solely to their
operation per town mile is practically
the same. He called attention to the
fact that the Capital Traction Com
pany has the greater conduit system
and owns its own power plant.
Difference of *:.OOO.OOa.
Although the Washington Ran
way and Electric Company has about
twice the trackage that the Capitar
Traction has. the fair valuation. as OF
July !, 1919, shows only u difference
of about $2,00o,o o0. the Capital Trac-
ton being S14.250.00o, while that of
the Washington Railway and Electric
is s16,250.000. This represents the ac-
tual value of property useful for
street railway operations in the Dis
trict of Columbia and does not include
the turnover into Maryland territory
While the earnings OF the Capital
Traction are greatly in excess of the
earnings of the Washington Railway
and Electric Company, they are being
taxed practically the same, Commits
sioner KutZ said, because the tax is
levied on the gross income. He said
that the Public Utilities Commission
is impressed that this is grossly in
equitable, since the cost per car mile
being the same, indicates that both
companies have equally efficient man
agement. The great difference i'll
value is due, he said to the location
allowed each company. Col. kutz en-
pha sized that the comm iSSlon is not
proposing to tax efficiency by propos-
ing a plan by which the tax burden
shall largely be shifted from the
Washington Railway and Electric t.
the Capital Traction. He said he did
not want to give the impress OF
penaliZing the Capital Traction. He
said this solution. however. is the
only one that can be found, unless il
is wished to turn to some form OF
measured service. which under pres
ent conditions seems impracticable-
Did Not Directly Urge Merger.
Col. Kutz laid stress on the fact that
the commission in the present bill has
rot directly urged "A merger. as has gen
orally been understood, but that its
principal suggestion is to modify the
present inequitable tax. and in lieu of
the tax on gross receipts put a gradual
ed tax oh operating income. allowing
per cent or the fair valuation de
termined by the Commissioners as a
fair minimum profit.
In reply TO questions by Representa-
tive Lanham of Texas. Commissioner
Kutz said that per cent represents
the average that public utilities COM
missions throughout the country con
slider fair rate. and that the Dis
trict commission had no desire To
limit the earning power of the street
railway systems to or even per
cent He said that under the pro-
p,esed bill the Capital Traction Com
and pay into the Treasury about
$3.50, 900 in taxes
If il were possible. he said. to bring
about voluntary merger or accom-
plish this through congressional ac-
ton there would be only one street
railway system in the District. and
he thought that the Public Utilities
Commission then might well recon-
mend abolition of the proposed grad
uated tax on operating income and
=, aInnfiDn of SerNfCe-at- COSt Dak
as is done in Cleveland and other
large cities.
Points to Variance in Earnings.
1t was brought out, in response 10
questions by Representative Drane of
Florida. that the Capital Traction
Company is now earning per cent
on it's Iair valuation as determined
py the Public Utilities Commission
fabout 9 per cent on its capitaliZa
tion). whereas the Washington Rail
way and Electric Company, in asking
for another increase in fares. has
that il is now earning
only about "a per cent.
Commissioner kutz. in reply to Ques-
lions by Representative Lanham of
Texas, showed that il would be inn
to grant an increased rate
TO one company without at the same
time giving il to the other company.
even though the Capital Tract has
not been a party to the requests Tor
increases in rates.
He said it would be particularly disas-