Evening star., 1921-03-01
CAPITAL TRACTION
OFFICIAL OUTLINES
BAS|SFOR MERGER
Hamilton Says Plan Should
Take in Holdings. Both In
and Out of District.
WOULD ALSO INCLUDE
POTOMAC POWER PLANT
Bitterly Against Consolidation by
Force-Favors Service
at-CoSt.

'ltei uoe as favorable to a merger of
the street car interests of the District.
the Capital Traction Company TODAY
outlined the basis on which il believes
a consolidation should be effected
Ihe company's position is set forth
In letter from George f.. Ha -.ylton.
president, to Representative frederick
n. Zihlman of Maryland member of
| the House District committee, in reply
to letter from Mr. Zihlman request
ing specific information
| In his inquiry addressed to the trac-
ton official Mr.. Zihlman had stated
that beca use the Capital Traction
Company had not found ii necessary
to ask for an increased rate of fare
| and because of conditions on the lines
OF the competing company-the Wash
ington Railway and Electric Company
an impression apparently had de-
veloped that the CapitaI Traction
Company was opposed to a merger
Mr. Zihlman asked to be advised as
| TO whether, in the event a merger was
4. favored by the Capital Traction Com
pany, 1t was Mr.. Hamilton's opinion
| that it should include the entire prop
| critics of both companies including the
u,
and also the Potomac Electric Power
! Company. Also. information was re-
| quested as to whether. the stockholders
1 and officials would favor a Service-at-
cost plan of operation.
Service at Cost Favored.
In his answer to these specific ques-
tions. Mr.. Hamilton states:
That any plan for merger should
! include all holdings of both traction
( companies and the Potomac Electric
! Power Company, both within and with
out the District.
! That the company favors a service
! at-cost plan, in the management of
which the public would have a repre-
! sentative.
! That the basis of merger should be
| the relative earning or exchange value
/ of the companies.
| The company, according to Mr. Ham
| llton, does not favor merger by
force, either directly or indirectly. He
denies that Congress has the right,
! though it may have the power. by ex-
cessive taxation and other means, to
destroy the properties. If Congress
J would remove the present legal pro-
| hibitlon against merger, il is Mr..
Hamilton's belief the traction inter-
ests could be brought together
through their voluntary action. His
letter in full follows:
Merger by Agreement Urged.
Yours of February %. subjec,
merger of street car companies in
the District of Columbia received.
NO plan of merger has ever been
submitted to the stockholders of the
Capital Traction Company, and the
company. through its stockholders has
never taken position on the ques-
tion. and has never been called upon
to do so. and, as you know. volun-
tary merger can only be concluded by
the stockholders. The managers of the
company its officers and directors,
however. have for several years held
and publicly expressed. the view
contained in your letter-that a con-
solidation should be worked out on a
basis fair to the public as well as to
the security holders of the company.
This view was given definite ex-
preston by me in a letter to William
Nick Clayton, chairman of the utili-
ties committee of the Federation OF
Citizens Associations of Washington.
of date January "a, 1920. wherein I
stated:
The management of the Capital
Traction Company has never opposed,
but on the contrary is on record in
the expression of view favorable
to merger by agreement, fair and
protective to its security holders and
to the public. and providing a sound
and safe direction
I'm this letter L referred to the tif-
ficulties confronting any effort to ef-
fect consolidation and said:
These, however in my opinion.
are difficulties that may be overcome.
and overcome more certainly and
more usefully by the stockholders
through the application of sound
Judgment and business sense than
rnrough compulsion in the direction
OF public ownership. or through fax
provisions. which apparently sound
in principle. are sought to be enacted
20 penailze one company for the bene-
f1t of another
Facts to BE Considered.
The board of directors approved
the position taken in this letter and
in recording its approval stated AZ
among the elements that shouId he
taken into account in the workinS az
of a fair merger agreement. the fol-
lowing:
"(a) A merger should include the
property OF both companies. the lines
within and without the District OF
Columbia, and the Potomac Electric
Power Company
OBJ The basis of merger should
be the relative earning or exchange
value of the companies
"(c) A provision for service at
cost, in order that the rate of fare
might be automatically adjusted to
"(0 A management that would
command the confidence Of the public
and the security holders. and in this
management, as well as in the neRo-
tiations for merger. the public should
have representation.
"(e) plan of merger so worked
out and approved by the Commission
ers should be submitted to the stock
holders of the respective companies
for their consideration, and il an
proved by them reported back to the
Commissioners.
Former Views Unchanged.
"Tbe letter above recited and the
action of our board Of directors will
be found fully set out and discussed
by Vice President John H Hanna in
his testimony before the House COM
mittee at it's hearing in February,
1920. on H. r. 11753. entitled a bill
to further regulate public utilities in
the District of Columbia. etc. in part
4, page 1927. ct seq, of the printed re-
port of said hearings.
''ThiS view and position as to merger
so often repeated in the past, is still
the view and position of our manage
ment, and has not been in any wise
changed by recent increase in receipts
due to increases in fares not asked for
cess and stabilization of the industry.
which would, in my opinion, follow q
which, to quote your
letter, will be fair to the public, rs
well as to the stockholders Of the