Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-08-24
SERV|CE-AT-COST
PLAN URGED UPON
STREET RAILWAYS
Credit and Cooperation
Main Needs of fractions,
Commission Reports.

The two outstanding needs of the cleo
trio railway Systems in the country to-
day are credit and cooperation between
the public and the utility, in the opin-
ion of the seven men who composed the
Federal Railways Commission, appoint
ed by President Wilson in 1919. The re-
port Of the commission, prepared after
exhaustive hearings and examinations
OF nearly 100 witnesses, was made pub
lie today
Credit will enable the electric rail-
, ways to rehabilitate themselves, adjust
their capital accounts and meet normal
replacements which are now upon higher
price levels, states the report. Co-opera-
tlon OF labor will enable them to render
continuous and popular service. affect
operating economies and get into their
treasures the full amount of revenue
collected from the riding public
FIrst-class credit and the co-operation
OF their employees, if properly utilized in
rendering adequate public service. the
report promises, would give the electric
railways a a"nearly impregnable position
IN their relations to. the public and tend
to disarm and overcome the prevailing
antagonism against them.
Must Work Together.
Demand for public ownership and
management would shrink into insig-
nif1cance, says the report, if capital
ana labor performed their respective
parts freely and well, thus making re-
strlctive legislation unpopular.
These problems must be solved"
the report states, land if no solution
OF them is practicable under present
ownership and control then the ONLY
course open is the complete transfor-
nation of the electric railway indus
try into a government business. Each
member of the commission believes
that credit can be secured and private
operation maintained under proper
public supervision"
Assurance of an automatic adjust
ment OF fare, to meet changing oper-
ating expenses. will do, more than
anything else to restore the conf
dence of the investor in the electric
railway properties, says the report.
Public confidence would be strength
ened great deal through the vaIua-
ton OF the properties. because the
figure that is established constitutes
the basis of return to the Investor.
and fixes. at least, the minimum price
which the public will be obliged to
pay ii, at some future time, it should
decide to purchase and operate the
property.
when the value is thus fixed" saws
the report. there can be no further
disputes as to the capitalization or ex-
cesslve prohts, because the people will
know just what they are paying for"
A Common-Sense Basis.
This valuation also would remove
to a certain extent. the report be-
lieves. the railways from the idea of
speculative gain and place them upon
common-sense business basis, where
the people pay for the service they
get and where the opportunity for
large profits no longer exists, since
economies and lower operating costs
are reflected in reduced charges for
service.
I'VE strongly recommend the 'serv-
ice-at-cost contracts, not as the only
solution. but as one means of solving
very difficult problem"
Regarding this Service at-cost"
plan. the report .cites the main fea-
lures as follows:
1. Fair valuation of the property.
2. capitalization to conform there
3. Agreed return upon this capital.
4. Public control of capital issues,
and. to certain extent. over expendi-
lures.
5. Public supervision of manage
ment, operating and service.
6. Automatic changes of rate to
meet fiuctuating economic conditions
and to insure proper return on the
value.
7. Private operation, subject to the
right of the municipality to purchase
the property at it's value or upon an
agreed price.
g. Reduction of taxes and assess
nents.
In a summary of it's conclusions and
the commission
said in part:
THE electric railway industry as it
now exists is without financial credit
and is not properly performing its
public functions.
This condition is the result of
early financial mismanagement and
economic causes, accentuated by eX-
listing high price levels of Dor and
materials and the failure of the uni
! form unit fare of cents prescribed
either by statute or by local fran
chise ordinances or contracts to pro-
vide the necessary revenues to pay
operating costs and to maintain the
property on reasonable basis.
Economies Big Need.
This industry can be restored to a
normal basis only by the introduction
of economies In operation, improving
its tracks, equipment and service and
securing a reasonable return upon the
fair value of it's property used in pub
lciently managed.
| Public Ownership Undesirable.
J Public ownership and operation of
ilocal transportation systems whether or
| not it be considered ultimately desir-
able, is now, because of constitutional
and statutory prohibitions, financial and
legal obstacles. the present degree of re-
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