The Washington herald., 1921-05-13
He that plants thorns must never ex-
pect to gather roses.-Pilpay.
Washington Street Railways.

fair and state only facts. We have nothing on
which to base any statement except the testimony
found in Congressional hearings the official state
ments OF the street railway companies and like
official documents. If, therefore, there is a mis-
statement it is the result of misleading and far
from Intentional
The purpose is to present facts they may be
known. Naturally the point of view of The Herald
may not be that of the utilities companies. They,
quite rightly, think first of themselves. Their
effort is to get the limit of financial return for their
properties. The Herald is looking just the other
way. Without being unfair to the companies the
result sought is what will be best for this District
and its people. There is the conviction that low
street car fares are essential to cys prosper
ity and welfare and to get this we believe city
should make every possible concession demanding
IN return concessions to reduced capitalization
where capital does not represent cash investment.
The contention OF the companies is fully appre-
oiated. The Herald has been accused of misrcpre-
sentation. 1t is claimed that the w. r. & E. and
none OF its constituent companies in Iooo had any
interest in any land promotion schemes. The Her
aid has never said that it any of its family had
such an interest then, or at any time We merely
said that most of the companies gathered under
the w. R. & E wing, had their origin in land pro-
motion schemes. The land promoters built or had
them built, and unloaded them.
II IS Tor the w. X. q 4. that Its prop
critics in the District and Maryland, amount to ap-
proximately S4o,oooooo; that it has broad policy
and has made liberal extensions to meet the de-
mands of the public" "that it has assumed the bur-
den OF serving the public in the outlying districts
all these years, without adequate return but with
hope that this would be taken into consideration in
allowing sufficient upon its properties as
a whole" and that it showed at the hearing in 1920
that it had failed to earn a per cent return on
the commissions valuation from September, IoIS to
and including December, 1920" 1t is also COM
planned that to state that the bonds OF the company
exceeded the fair valuation is unfair is the state
ment that the companys capitalization is $625oooo
more than the fixed fair value just over 100 per
cent, and that it does of itself enough to
pay cent of dividends
If The Herald has been unfair official findings
have been so. So far the records show
the w. R. & E. has never made liberal extensions
of its lines. Its suburban, and far-reaching sys-
TEN, built long years before it ever saw the
light of day. Its broad policy" has such evil
dence. But it has evidence, in its hanging on to
these outlying lines which arc constant drain and
in a business management OF the immediate years.
which is most commendablc. 1t is trying as best
it to make the most of mighty bad bargain.
In estimating its property value the w. R. & E.
always includes the Potomac Electric Power Com
pany. The Herald does not That company is not
a railroad. 1t is owned by the w. R. & E but
clearly cannot be included in valuation of property
used for railway and not included If
the w. R. & E. chose to sell that property and
merely contract its power from the owners it
could do and distribute the price as dividend to
its stockholders But if it did so, the purchasers
would be on a valuation fixed by the knowledge
that its rates for power and light would also be
based upon its fair valuation for rate making as
fixed by the utilities commission.
Moreover, it is the dividend received from this
corporation which in 1910 furnished all the dividends
paid by the w. r. & E. This dividend was $780,
and the net earnings including this $4,000 of
the w. R & E. available for dividends but
S468,ooo In other words it did not of itself earn
dollar with which to pay dividend" Moreover,
according to its own testimony, its only hope of in
creasing its earnings is based upon increasing the
charge for power and light by the P. E. P. Co., or
its street fares.
AS to overcapitalization of the railroad prop
erty The Herald of course has no personal knowl-
edge. But in the report of the utilities commission
of the fair valuation made OF these properties, it is
disclosed that the immediate predecessor of the
W. R. & E. was the Washington Traction and Elec-
trio Company. OF this company, the report says:
1t will thus be seen that S22 900 600 of new
securities issued for certain stocks bonds,
notes, and cash, the face value of which aggre-
gated $83775oo. Taking the bonds and notes
at par and assigning the stock reasonable
market value, using the highest market quota
tions prior to January 1, ISoo this $8377,soo be-
comes $o8264sI.2s. Therefore, it appears to be
conservative to say that $o8264sI.25 was fair
and reasonable estimate OF the then exchange
value of the assets acquired by the Washington
Traction and Electric Company upon which it
- aoated S2zooo,ooo of its own securities.
This company failed and was sold at fore
closure 1t was taken over by the newly organized
w. X & E. and to again quote: at thus appears
that the Washington Railway and Electric Com
pany issued its securities at par value of $4,000
600 and received therefor property which by the
most liberal estimate did not have market value
exceeding SIs s62 282 az