Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-01-21
TRACTION Merger
T0P|CAT CITY CLUB
Engineer Commissioner Kutz
Explains Proposed Plan
at Luncheon.

way and Electric Company :" S " 81
much as the Capital Traction COM
pany is due to n difference in the
privileges The TWO roads enjoy. I'm
siueer Commissioner Charles W. kutz
asserted addressing luncheon OF the
city Club today.
Commissioner kutz. as chairman OF
the Public Utilities Commission. was
invited to explain TO the ciuD mem
bers the bill which the commission
has asked Congress to pass. authortH-
ing a merger and changing the method
of taxing the railways so as to equal
ize their earning power. Before GO
ing into the proposed legislation. the
Comm Ssioner outlined the conditions
under which the. two roads operate
and how these conditions affect their
earning power. He said, in part:
Mr. kutz's Explanation.
THE valuations of the street railway
companies in the District of Columbia
were concluded in September, 1919. and
almost Immediately thereafter the ques-
ton was taken up of adjusting rates of
fare to conform to the valuations. The
rates ut that time were five cents with
two-ceut charge for transfers. In
der these rates the Capital Traction
Company was doing we'll and was not
Il party TO the application for an in
crease but the Washington Railway and
Electric Company and its two subsi
diaries the City and Suburban railway
and the Georgetown and Tennailytown
railway. urged their need for additional
revenues to be obtained either through
an increase in fiat rates or by the eStab-
lishment of a system of zone fares. The
question of the great inequality in the
earning power of the two systems was
thus brought forcibly to the attention
of the Public Utilities Commission. and
the conditions were studied with great
care.
W. IL. and Els Mileage Greatest.
But when one stops to think that
the Washington Railway and Electric
system has nearly twice the mileage
OF the Capital Traction system. with
correSpondingly increased annual eX-
penditures for maintenance of track:
than does the Capital Traction Com
ployS more mOtormen and conductors
than does the Capital Traction COM
pany. while the number of pay pas
sengers on the two systems is ap-
proSimateiy equal. it does not re-
uuire the special ability of an engi-
neer or AN. accountant to show that
the net earning power of the two
systems is bound to be different. Not
only are the operating expenses
greater. but the investment is great
err, the fair value of the WaShington
Railway and Electric system being
slightly in excess of sixteen millions
of dollars. while that of the Capital
Traction system is slightly more than
fourteen millions.
Refers to Privileges.
The question will naturally be ask
ed whether this difference in earning
power is due wholly to the larger In
vestment and larger operating ex-
penses ol. whether " 10 not in part
due to ffiefiieient management. sThis'1
question can best be answered by
f1,4 nf
ating one car one mile on each of the
two systems. Such comparison has
been made, and, with the same ele-
ments considered in both cases. the
cost per car mile is found to be prac-
tically the same, so that this differ
ence in earning power is due wholly
to Il difference in the. value OF the
privileges which these two systems
enjoy in the streets of Washington.
Now the theory which underlies the ,
public utilities law contemplates that
each public utility shall charge such
rates as will enable it to earn a rea-
sonable return upon the fair value of
its property, used and useful in the in
terest of the public. If this theory had
been applied strictly to the street rail-
way systems, rates of fare would have
been advanced on the Washington
Railway and Electric system alone.
leaving the rates on the Capital
Traction system unchanged"
Discusses Probable Effect.
But what would have been the effect
of such action?
at is true that many of the suburban
lines of the two systems are not in
with each other. but prac-
ticalIy all of the city lines are close
competitors, and the establishment
of different rates of fare on the two
systems would have caused such a
transfer of patronage, particularly
the short-haul patronage, as, in the
opinion of the commission, would
have reduced rather than increased
the revenues of the Washington Rail-
way and Electric system. while the
congestion on the cars of the other
system would have been SO great as
to make conditions intolerable. both
for the old as well as the new pa
irons.
The commission considered this
matter fully. for other things being
equal it would have preferred to
stick rgidly to the theory and letter
of the law, but considering the inter
ests of the community as a whole. It
decided that any increase in rates
granted to the Washington Railway
and Electric Company would also have
to be granted to the Capital Traction
system"