The Washington times., 1921-06-29
NEWMAN URGES
/ CITY OWNERSHIP
Of CAR SYSTEMS
(cont,nued fron first P.ss.) )

CONTINUED from First Plge.)
in the financial and operating policies
which have governed the two roads
N tho past. The Capital Traction
Company has always been . local
company. whose stock was locally
owned. While. in Its carly develop
ment. It was not by any means free
Ing" it's record In this respect 10
comparatively clean. a. these things
70 throughout the country generally.
The washington Railway and Nlsc-
tric, on the other hand, was, for
many svears. conducted policy Of
fiagrant exploitation. Millions OF wa
tered capital was issued. and the
operating policy was such that the
building UP, maintenance and ply
steal operation OF the system were
subordinated and neglected to the
determination to pay dividends and
innate with fictitious value the wa
tered securities
RESULT OF WATERING.
'"The resuIt--which is the condition
with which you gentlemen have to
deal today--is the existence in the
District of one well built. economi-
caliy managed. exceedingly valuable
street railway--the Capital Traction
and one less well built, less val
liable. with . long past history
of uneconomical management - the
Washington Railway and Electric.
And on top OF those conditions. fatA
has given the well-built and we'll
managed system a naturally profit-
able territory through which to run,
and the less well-built. more over
capitalized system a relatively un-
profitable territory through which to
run.
'The statements make as to the
of these companies are not
mere opinions They are facts. easily
obtainable from the records Of the
companies themselves, and not today
denied By any fair-minded. unpreju-
diced persons.
Before considering my suggestion
for public ownership. ask you 10
consider for q moment the Districts
street railways A. whole. II oil
These lines were messed into one sys-
tenn, the highly profitable lines of the
Capital Traction could carry the un-
Railway and Electric At. believe. q
reduced fare throughout the whole
area.
But the Capital Traction IL . pri-
vate corporation, and IL cannot be
to turn over part of ats
profits to the Washington Railway
and Electric, to make up Losses on
the Washington Railway and Electric
system.
"One naturally. at this point says.
They ought to merge. There shou'd
be only one system hereg Then cvery-
thing would be all right
THAT IL true. II they would merg ,,
the desired result could be obtained.
The single company could then, uoe
the profits from Its good lines--for-
merry the lines OF the Capital Trac-
tion---to offset tn. losses from It's bad
some OF the lines of
'he Washington Railway and Eisc-
trio.
"But there IL no way to force
them to merge. No legislation that
Congress passed could compel them
to get together, for they are cor
porate entities. existing here by au-
thority OF Congress, with vested
property rights which the court
would not permit any law to inter
ferc with. The only way q merger
Cdn DC 10 ps tHc NOloH-
tary consent of the two companies
Congress. But while Congress thus
has the veto on any merger. II has
no power of initiative.
why don't they merge voluntarily ?
Because of two very important.
very vital and>very Significant con-
ditions. First. The reluctance of
the Capital Traction. because It has
nothing to gain. Second: The ap-
parent determination of the Wash
ington Railway and Electric TO re-
ceive, In the merger price, consider
alton for some of its old. .watercd
stock.
The situation Is exactly the same
as ie-would be IL owned an office
building at Fifteenth and New York
avenue, on which l was earning a
return. and you owned one
sitting all by itself over on one of
the Virginia hills. in which you had
no tenants, and you should propose
that we join as partners on an ap-
proximate equality, you to own half
Of my building and get half of it's
rentals and ] to own half OF yours
and receive nothing. because II ls
vacant. wouldn't care to 20 part
ners with YOU on that basis,
~sEEs MERGER UNLIKELY.
Il have become convinced. there
fore. that mercer Of tho two COM
panies by their two private owners
is extremely unlikely. think, Inn
possible. I am equally. firmly con-
vinced that the only solution to the
present situation 10 TO utilize the
pronts, of the Capital Traction lines
to offset the losses OF the Walking
ton Railway and Electric. This.
however. cannot be done while the
lines remain in private ownership,
which brinas me to tho practical con-
i mentioned at the begin
ming: That the only solution is for
the Government to take over both
properties and merge them as one
system under Government ownership,
after which they could be operated
by the Government or leased to a
81 ta ~