Evening star., 1920-02-19
CAPITAL TRACTION
HEAD FOR MERGER
ON BASIS Of VALUE
Mr.. Hamilton Holds Union of
Lines Synonymous
With Sale.
CONGRESS MUST REMOVE
BARRIERS, SAYS HANNA
Presidents Views Stated by Vice
President, Who Testifes
Before Committee.

SAASAt. w Ao ASStlANs
Before Committee.
Terms upon which the management Of
the Capital Traction Company believes a
merger Of the street car companies in
Washington can be brought about by
voluntary agreement better than by COM
pulsion- were laid before the House Dis
trict committee today. by John H. Han
ma. vice president of the Capital Trac-
ton Company, testifying at the hearing
on the Commissioners bill designed to
force merger of the street ra ilway sys-
TENS.
Ihis outline Of procedure was pre-
pared by George E Hamilton. president
OF the Capital Traction Company MI
Hamilton said that the Capital Traction
Company favors a merger on a lust
basis, and believes that a merger is in
tne pubic interest and can be brought
ABOUT II Congress will cooperate
Held same ax Sale.
Agreement upon just valuation
must be the basis for the merger me-
gotiations, he said. He argued that a
merger is synonymous with sale
sbonld nne course bu .o of procedure. he said.
move the legislative barriers which
prohiblt merger. Representatives
appointed by the board of directors of
ooth companies should meet with
of the public probabi
the Public Utilities Commission. to
agree upon valuation of basis for
sale, which would then need the sanc-
ton OF the public and of Congress-
IL would then be necessary for Con-
gress to pass legislation in which this
PROVISIONS made for service at cost
Outlines Merger Terms.
The seven terms upon which merger
negotiations should proceed were giv.r
by Mf. Hanna as follows:
FIRST. merger should include the
entire property of both companies the
lines within and without the District
OF Columbia and the Potomac Electric
Power Company.
Second. the relative earning value
or exchange value of the compa nies
should be the basis of merger
Third. it should include a provision
for service at cost in order that the
justed to conditions.
Fourth, an exemption from all mu-
nicipalr taxes except tax on real
estate and perhaps a part Of the paw
! ing tax.
Fifth, a management that would
command the confidence of the public
anu OF the security holders, in which
management the public should have
representation.
Sixth, in the negotiations for such
merger by the companies the public
Should have representative.
Submitted to stockholders,
Seventh. the plan of merger go
worked out and approved by the
Commissioners of the District of Co.
lumbia should be submitted to the
stockholders of the respective COM
panies, and when passed upon by the
>tr1,~
premises should be reported back to
the Commissioners-Congr to en-
power by act the Commissioners to-
authorize proper merger. and that
act should contain a provision for the
acquisition of the stock of the minor
ity by condemnation and payment of
fair value.
Mr.. Hanna said that it was appar-
emily desired by the committee and
the people of Washington. as il would
undoubtedly be for the general benefit,
to bring about a merger. He wanted
to make the records clear, because
the Capital Traction Company had
been referred to as the principal OBJ
stacle to the merger.
The management of tie Capital
Traction Company does not believe
that imputa ton is fair. Some Of the
stockholders, he said, are naturally
opposed to a merger. but the corpor1-
ton through its management has never
hesitated to make it's position clear.
1t is on record as favoring a merger
on fair terms. He said there is no
controlling interest in the Capital
Traction Company, and tfe question
Of a merger has never been presented
for consideration to the stockholders.
There are 2.046 stockholders, of whom
1,0S4 are women. he said.
Mr. Hanna said that this question
had been formally acted upon by the
board of directors this year. and the
outline as quoted above of the princi-
Piles which should cover any merger
proceedings had been approved by the
directors.
The sooner the BETTER.
Representative Johnson. democrat,
of Kentucky. asked If he had any
suggestions as to how soon this
should be done. Mr.. Hanna said that
the sooner a merger was brought
about the better In reply to further
questions. he said that a conference
between the two companies had been
held about two years ago at the sug-
gestion' of the Washington Railway
and Electric Company looking toward
a merger. No agreement was-reached
because there was 4 legal barrier
wide difference of opinion between
the representatives of the two conn
panies as to the relative values Of
the concerns. That conference also
doubt, because the Public Utilities
Commission had not then made its So
called fair valuation of the property
That fair valuation Is now the sub
ject of litigation, which will take
long time. he said.
In reply to questions from Repre-.
sentative Romjue OF Missouri as to
who should represent the public in
these negotiations. Mr.. Hanna said
that. while it was not for the street
railway companies to decide that mat
ter, he thought it logical that the
Public Utilities Commission which
already had fixed the valuation, IN
which it admits that certain proper
ties which may be properly consid-
cred in a sale valuation are not i'm
might we'll act in negotiations
looking to compromise with the
companies on q valuation for merger.
Embraced in Valuation.
Mr.. Hanna insisted that a valuation
for sale must not only take in the
value of physical properties and OUT
standing securities. but also th0tr
earning values. not merely today but
in the future. as going concerns.
Questioned by Chairman Mapes re-
ga riding whether he thought Congress
could propose legislation which would
provide for a new corporation and
Ok terms so that there would be n
he believed il was entirely possibfe
to. make a settlement that will meet
With the approval of the stockholders.''
, Mr.. Hanna said that while Q merger
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