The Washington herald., 1921-07-18
Samuel Russell Says That
Higher Rate Is IL
legal.
ERROR IN FIXING
COMPANY'S VALUE
Maintains That Officials
Overlook Annual Depre-
ciation of Property.

ter. morally or legally, should street
car fares in the District of Colum-
bia be Increased beyond the rate
of four tickets for 25 cents"
This statement was made yester-
day by Samuel Russell. Western law
yer and utilities expert, who fur
ther declared that there is no JUS
tification for any other action by
the Public Utilities Commission.
Say, Value Deprecintes.
"It is frequently said the the Pub
lie Utilities Commission has fixed the
so-called fair value of the Wash
ington Railway and Electric prop
critics at s16.5OO,oOo. 1t is asserted
that the Washington Railway and
Electric is entitled to a per cent in
terest on this valuation. The railroad
officials who make this assertion seem
to be utterly unmindful of the fact
that since this value was hxed some
years ago it has been depreciatins
at the probable rate of sl,OOo.ooo
a year and does not now represent
the value of the Washington Rail-
way and Electric properties. These
officials seem to think that this value
has all the stability of government
bond and that the public ought to
be bound in perpetuity to pay in
terest on this sum.
'Only the other day II was re-
ported that the president of this
company announced that it would
require SIC. .0O0. 900 to put the Wash
ington Railway and Electric prop
critics in effective condition. Ano
of course he would want earnings
also upon this new outlay, although
il would not add materially to the
earning power of the company.
should Fix Value Annually.
"The purpose of the law in pro-
yiding for valuation was obviously
To get a standard, not for the maxi
ing of rates, but rather for the de-
termination of depreciation" Russell
insisted, "and OF the amount which
should annually be set aside in or
der to maintain the vafue fixed by
the commission. Fares have presu-
mablv been fixed for this purpose.
derived from these fares have not
been reserved to cover depreciation,
as clearly contemplated by the law.
There is no warrant in the law or
otherwise, to contend or to assume
that the Washington Railway ana
Electric Company Is entitled TO any
certain return reasonable or oth-
arwise, on this value. The company
is only entitled to what 1t can earn
at a reasonable rate or fare.
The actual situation, in both It's
legal and moral aspects" declared
Russell, ''is that reasonable rate
or fare, measured by the perform
ance of the Capital Traction Com
pany. is a fare OF not to exceeo
IS cents for four tickets.
The excess beyong a reasonaole
rate belongs to the people and IS an
illegal exaction. The Capltal Irac-
ton Company is not entitled %
greater fare than four uckets LOT
25 cents. and the Washington Rail-
way and Electric Compan! Is not
entitled to any greater fare than 10
the Capital Traction Company.
wants Uniform Fare.
The public is entitled TO uni
form reasonable fare, and that rare
is a maximum of 81 cents for all
lines in the District of Columbia
1t is utterly absurd that one COM
panv for the Same service can &C,
or exact more than the other COM
pany. The people won't pay 1t and
there is no law to compel them to
pay it. And what difference does
il make-if the earnings of the
Washington Railway and Electric
Company above operation costs are
reduced to s5O.000 per month, or to
$500. 900 a year? No company Is
-oing to cease operations that is
earning any such sum. 1t is a prof.
table business" Russell claimed.
"and as the railroad capital cannot
be converted into money, or iu.
vaated in any other enterprise, any
substantial return will warrant the
operation of the property.
"All this talk that the company
can't operate on reasonable fare
ia Just pure can't 1t will operate
under any circumstances. 1t ought
to have sense enough to take care
of its road. to take care of it's
and to taAe care of its
patrons, even for 100000 a year.
How Rates Are Fixed.
Railroad rates never have been
made in this country upon the basis
of railroad valuation. 1t is rev.
enues that make valuation. and not
valuation that make revenues. The
Pennsylvania Railroad, the Baltic
more and Ohio Railroad and the
Chesapeake and Ohio Railroad all
passenger service from
to Chicago. One road
cannot get more than another for
this service, although the Pennsyl-
vania is capitalized for $27s.62e per
mile, the Baltimore and Ohio for
Sl42.623 per mile, and the Chesa-
peake and Ohio for s95,619 per mile.
No responsible person will contend
that there is any relation between
the capitalization of these railroads
and the passenger rates between
Washington and Chicago. Rates
never have been made that way and
never will be made that way. The
absolute failure of the Cummins-
Esch act in attempting to base
freight rates upon valuations is a
demonstration OF this
fact.
The best road" Russell pointed
out. will make the rate. And the
roads will meet these
rates as they can not get business
at higher rate. This is a rule
which must be applied in flying