Evening star., 1920-01-17
SERVCE-AT-COST
BASIS FOR MERGER
Of LINES URGED
President Ham of w. R. & E.
Company Advocates Plan
in Annual Report.
BELIEVES PUBLIC SEES
COMPANY'S DIFFICULTY
Reference Made to Different Condi-
tions Confronting Two Street Car
Systems of the District

ny otCAlS VI LllC
Merger of the two street railway
companies of the District on a serv-
ice -at-cost basis was advocated by
William F. Ham, president of the
Washington Railway and Electric
Company, in his annual report to the
stockholders of the companySat their
meeting today.
Mr.. Hams Report.
on the subject of merger Mr..
Hams report reads:
1t seems reasonable that a merger
of the railroad properties of this
company and its subsidiary companies
with those of the Capital Traction
Company should be brought about
with advantage to the public and
fairness to security holders
Such merger, however. in the judg-
ment of your president, should incluue
the railroad lines of our companies and
the Capital Traction Company, located
within the state of Maryland as well
as within the District of Columbia, and
| should be combined with plan for
service at cost guaranteeing "A reason
able return upon the investment and
at the same time insuring the car rider
service at actual cost
In" company has continued the
policy of fullest publicity recommended
last year by the presidnet and approved
pS liie DcdTu Ol ulreCtOrS, and the
agement believes that constructive prog
ress has been made in convincing the
pubic that the above policy of publicity
is actual and not idle talk This was
| well illustrated by the action of your
president IN voluntarily appearing he
lore gathering of citizens associa-
tons to answer any and all questions
That might be propounded
Believes Public Gnderstands.
III ftIr
been compelled to repeatedly aupeuI
to the commission and the public fof
increased rates. but we believe there
has been growing realization on the
part OF the public of the necessity of
SucE increases. We believe also that
the public now realizes that the diff
hculties confronting this company are
| mostly due to it's large suburban
mileage. which is operated at heavy
financial loss to the company, but
| with lnestimabie advantage to the
| community.
The commission itself has stated
that the great disparity in earning
power between our company and the
Capital Traction Company is due al
most wholly to difference in location.
as the cost of operation of the two
| systems per car mile is almost the
same. Besides sustaining losses on
suburban lines actually owned. the
Washington Railway and Electric
\
charge to profit and loss the sum Of
s19S.79S.26. representing the deficit III
the operation of its five subsidiary
railway companies during the past
year.
Return Necessary.
while the present financial con-
dition of the company is critical and
its revenues entirely inadequate 10
yield a fair return upon the invest
ment we hope security holders Will
not be entirely discouraged As al
ready stated, we believe the commits
mission must necessarily grant us
revenues which will provide at least
| a s per cent return upon the value
| of our property as they have them
| selves fixed it, which we think is en-
tirely too low and from which we
have entered appeal as provided IA,
the public utilities law. We hope that
the future will demonstrate that
more liberal policy toward pubic
utilities is desirable in the public in
terest. Such companies cannot stand
still: they must go forward or there
is deteriora ton and stagnation- The
money to provide for their expansion
must be provided from some source.
If not from public funds, then from
private investors. who VIII only make
Investments where security of prin-
cipal and reasonable rate OF interest
are assured
We believe we have passed through
the most critical stage of our oper-
ating troubles. Since the besinniaG
of the war neither money nor eHoft
has been spared TO operate as sue
cessfully as possible. Within the last
few months the results OF this IN
penditure of money ana elfort are
manifest to all. Equipment is in
much better condition. we are oper-
ating with fewer detentions and ac-
cidents are getting and holding Il
better class of employees and are re-
ceiving we believe, a degree of CO.
operation from the public which has
not obtained for some time past
Reports Danger of Deterioration.
Warning that the company will be
facing deterioration of equipment and
service if it's application for straight
.-cent fare is not soon granted IS
given in the report.
The report shows that. while the
Public Utilities Commission allows q
per cent as a fair return to investors
above operating expenses. the com
pany fell s17O.S94.39 short Of earning
sufficient to pay , per cent on pre-
ferred stock and Il. per cent on COM
mon stock in 1919
Mr.. Ham states in the report that
dividends on common stock had TO be
stopped in March. Dividends on pre-
ferred stock, although not fully
earned, were continued throughout
the year the president states. in the
expectation thtt adequate feItf "Oub
be granted by the utilities commits
sion. They also were continued for
the rea son. the report states. that fail
ure to pay them would further dam
age the companys credit.
Mr.. Ham Discusses Situation.
THE directors felt particularly
justified in this course" Mr.. Ham told
the stockholders. considering that
out of 1,S42 preferred stockholders
1.119 are women, trustees and char
liable. memorial and beneficial or
ganizations.
Since September. 1918, the report
shows. the company has been giving
service below cost and has failed by
Il 900 900 to earn per cent return
on the value fixed by the commission.
After making this showing Mr.. Hams
report continues:
..That such a condition cannot con-
tinue is obvious. Unless further re-
lief can be obtained with reasonable
promptness the integrity of our prop
ertv is seriously threatened with
deterioration of service and equip
ment which will be most unfortunate
not only to the company, but to the
riding public as well. 1t is felt that
the commission cannot consistently
fail to give us the amount which they
have set as the least that we are en-
titled to receive, and will, therefore,
act with reasonable promptness upon
a petition now pending for straight
7-cent fare with a charge of cents
60 o.