Evening star., 1921-05-24
Levy on Net Earnings, Not 4
Per Cent Gross. Would
Aid in Merger. Says Kutz.
OPERATING COST CUT
NEEDED TO GO LOWER
Several Members of House D. C.
Committee Strongly Urge Five
Cent Rate for Local Lines.

cent to a tax on net earnings. Engineer
commissioner kutZ. chairman OF the
Public Utilities Commission. today told
members of the House District COM
mittee. A further decrease below .
cents will result only from reduction
e. operating cost. he said.
Several members of the committee
expressed their desire that the street
car fares should he reduced to . cents.
Representative kunZ of Illinois insist
I'd that the Public Utilities Comr1is-
son now has authority to regulate fares
and should place them at > cents Rep-
resentative Hammer of North Carolina
also insisted that five-cent fares should
obtain in the National Capital.
Although the meeting today was
that OF special subcommittee headed
10y Representative Zihlman of Mary
land to hear the report from the Dis
trict Commissioners on the failure to
bring about a voluntary merger be-
recent conferences. members of the
committee generally We're present.
Those who attended the meeting in
ciuded Representatives Zihlman.
Maryland: Focht, Pennsylvania; Lam
pert. Wisconsin: kunz. Illinois; Kel-
Millspaugh. Missouri: Sproul. Illinois: ::
Woods. Virginia: Hammer. North
Carolina; Brown. Tennessee: Blanton,
Texas. and Gilbert. Kentucky.
Merger Report Submitted.
The District Commissioners. who act
as the Public Utilities Commission,
were present today with their records
and laid before the committee re-
port published Friday in The Even
ing Star on the proposed terms which
the street railway companies declined
to accept as basis for voluntary
merger.
At the opening of the hearing Rep
resentative kunz emphasized that at
the last meeting the District commit
tee was given to understand that the
street railway companies were about
to merge. 1t was at this time. he in
sisted. that the Public Utilities Com
mission should ffx the fare at 5 cents
and thus force merger.
Commissioner kutz said that this
could not be done because it was in
conflict with the public utilities law
which directed that the rate Of fare
should be at a reasonable return on a
fair valuation of the street railway
property Commissioner kutz said
that. in principle. the Commissioners
agree with the bill before the commit
tee. fathered by Representative Woods
of Virginia. The Commissioners, how
ever. proposed to abolish the 4 per
cent gross tax, but in the event Of a
merger. restore it. In lieu of this
they propose an excess profits tax of
so per cent on the net earnings above
s per cent Mr.. Woods bill would
reduce the gross tax from to per
cent.
Representative Hammer argued that
the Washington Railway and Electric
Company is bankrupt corporation
and ought not to be carried at public
expense. Representative Hammer. in
his argument. analyzed the history of
the street railways in the District, and
showed that he is intensely interested
to have the fares reduced
Representative Lampert put the
committee on record that it's purpose
Is to evolve some plan to improve the
quality of service and decrease the
fares. Representative Focht inject ed
the remark that the three companies
collectively, the Capital Traction Com
pany. the Washington Railway ana
Electric Company and the Pottomat
merger would be paying business al
reduced rates
Representative Blanton of Texas. ar.
gued with Commissioner kutZ regard.
ing coming system. The Engineer
commissioner said that theoretically
the proposition of coming is an idea
system for relief. but that there was
unanimous opposition to it in Wash
ington.
brought a statement from Commits
siouer kutZ that the anti-merge:
clause in the organic act of the
Washington Railway and Electri,
Company makes express sanction by
Congress necessary to allow the street
car companies to merge.
Representative Hammer questioned
Commissioner Kutz closely rega riding
the rights of the Washington hallway
and Electric Company acquired AT
Great Falls and subsequently sold at
about double the price to the Potomac
Electric Power Company, according
TO the testimony which Commissioner
kutz put into the record.
Chief Obstacle to Merger.
Representative King asked if there
ia anything in the public u.il-
tiles act which would provide for ar
expert making a thorough investiga,
tion of the present situation.
Commissioner kutz said that no such
investigation is needed. because boil.
cd down. the chief obstacle in the
opinion as 10 the value of the common
stock Of the Washington Railway anc
Electric Company. the funds now
amounting to $500 600. impoundec
uEdsr the 10-cent rate charged or
electric current which is awaiting q
court decision. and the wide difference
In financial structure Of the two com.
pan!"s.
Commissioner kutz was PARTICULAR,
emphatic that the present tax of
per cent On STCSS earnings IS mt s.
ineIultabie and unjust" He said thai
both companies are charged the sam.
TAX for use of Streets when the riRh,
Of way is not comparable in value
lie insisted that not one OF the exist
ing lines can be abandoned withou
jaJury to large groups Of citizens. n.
insisted that the tax must be on tn,
net income
commissioner kutZ said that III,
Public Utilities Commission has ;
Ft., ng feeling that this change in ia,
VII bring about equalization of tn.
earning powers Of the two companIc,
:u,i thar this, considered in comm.
ton With authority granted b. CON
ire = g" mcr-c. would show the tvr
companies III" Wisdom Of fOrmin.
= Cuu-"iidal ION. He said that Con
F:cs' can force - merger only b,
right al eminent domain
Commissioner Kutz argued Will
H. representative Woods in opposition
10 Increasing tho electric ligh
.harges as a moro equitable mciho,
~ relieving thc Washington Railwa,
>:Iud Electric Company. which is sol,
own'r "f the Potomac Electric Powe
company. Commissioner kutz quotct
court decisions TO show that caci
lass of service should stand by it
ELI. He said that the change iY
trx would reduce the fares without
substituting one injustice. for anothes