The Washington herald., 1920-01-23
.5OP.C. TAXFOR
CAPITALLINE
Kutz Suggests Levy on Op-
. Grating Income to Equal
ize Revenues.
PLAN ASMERCER LEVER
Believe Company Would
Consolidate With
W. R. and E.
PLAN ASMERCER LEVER


Choice between another increase
In street car fare and q practical
merger of the two traction compa-
nies confronts Washington. The
latter expedient involves the boil
stering UP OF the Washington Rail-
way and Electric Company. the
weak sister" of. the two organiza-
tions. by the strong Capital Trac-
tion Company.
Despite the fare raise granted last
fall. effective until March 1 next.
the Washington Railway and Elec-
trio Company is earning but a frac-
tion over per cent. Engineer Com
missioner Kutz informed tie House
District Committee yesterday.
In contrast, the Capital Traction
Company. which did not request .
fare increase. is making between
10 and IL per cent. compared to
q to per cent earned under the
straight scent fare.
80 Per Cent Tax Proposed.
To eaualize conditions. the Pub
lie Utilities Commission is urging
the passage of a bill repeating the
law requiring the street railway
companies to pay per cent on
Replacing this provision. the COM
mission plans to require the Capt.
tai Traction Company to pay a
so per cent tax on its operating in
come. this additional revenue to be
used for tns relief of the Wash
ington Railway and Electric. Com
pany.
Both companies now pay the
same amount of taxes into the
District Treasury. each hauling ap-
proaimately 90.00O.00O passengers q
year. Under the proposed plan,
the Washington Railway and Elec-
trio Company would pay nothing
and the Capital Traction would
be shaken down" for APPROXIMATE
ly. 100000.
Members of the committee asked IL
the passage of this bill would not
compel the merger of the two traction
systems.
The bill does not in itself force
a merger. but opens the door to it,"
said Col. Kutz. "A merger is the
goal to which we are working"
Congressman Benson asked Col.
Kutz IL the Capital Traction Com
pany could carry on it's formal i'm
provements and extensions under such
a tax.
We have gone into that Also" re-
piled Col. Kutz. They can finance
all improvements and still earn their
6 per cent"
Millions I'm watered stock.
In reply to questions, COMMISSIONS
Kutz admitted that there was con-
siderable water in the securities
Of both companies. He estimated that
Capital Traction stock held from
100000 to 100000 OF water, while
Washington Railway securities held
between 100000 and 100000 of the
aqua pura stun.
Representative Drane asked whether
the people of the District pay inter-
est on this water?"
NO" answered Col. Kutz, they
pay interest only on the fair valuation
fixed by the Utilities Commission. This
valuation. however. is being attacked
in the courts now by both companies" {"
When questioned about the charge
of inefficient management that has
been made against the Washington
Railway and Electric, Col. Kutz stated
that the charge was untrue, and that
both companies have been found to
operate at virtually the same cost per
mile.
Representative Lanham asked what
the commission thought of the zone
system of fares. Col. Kutz said that
the plan met with such strong oppo-
sition both by downtown residents and
suburbanites that the commission had
abandoned il.
Calls 2 Per Cent Fair Return.
Colonel Kutz indicated that he was
in favor OF allowing the companies to
earn per cent on the fair valuation
of their property. At present the
Capital Traction Company is paying
6 per cent on its stock and the WASH
ington Railway and Electric Company
is paying 5 per cent on preferred
stock but has defaulted on its COM
mon stock within the last year.
Hearings on the proposed merger
bill will start next Tuesday and
Commissioner Brownlow and En-
gineer. Commissioner Kutz will be
the first witnesses. Representa-
tives of the street railway conf
panies and representatives \ of the
communities served by these lines
will be invited to attend the
hearings and testify later. Chairman
Mapes plans to conduct the hearings
carefully and leisurely. allowing ample
time for thorough consideration Of
the subject. II time presses. he in
tends to ask the permission of the
House for the committee to conduct
all-day hearings while the House is
in session.
Committee members concur unani-
mously with Congressman Benson.s
statement that this street railwak
s1 ah fhn III,