The Washington herald., 1921-10-11
Street Railway Merger.

The first of these is that the Washington Railway
and Electric Company, street railway utility, IS
the sole owner of the Potomac Electric Power
Company an electric power and lighting utility. 1t
holds all the stock of this electric utility in bulk,
but in trust of course, for its stockholders. But
this stock is also partial security it is understood
for all or part OF the street railway bonds.
The sole effort OF the w. R. & E. in all the
merger bills any time before the House has been
to permit that railway utility to completely absorb
the electric utility retiring stock and having but
the one railway-electric corporation. This would
make the services indstinguishable, with single
Capitalization one set OF books and accounts, and
the fixing OF rates OF either one based upon its own
earning valuation and earnings, impossible. This
was the purpose of the Focht bill and of the original
Woods bill
, This minority of the House committee led by
Representatives Lambert, Hammer, Kunz and Kel-
cr, have persistently opposed. They defeated it in
committee but it is again found in the modified
Woods bill as reported to the House. None of
these bills has been merger bill in fact. None OF
them has been aimed to effect a merger. They
we're all in behalf of this purpose of the w. r.
& E. and even when defeated in committee, it now
reappears in the reported BILL necesstating amend
ments None Of them was expected to effect
Street railway merger, nor is the bill now under
consideration expected to do this.
1t is far better than any other ever submitted
or introduced for the sole reason that it would be
comparatively harmless, if amended that the tax
provisions should take effect until after merger
4 something which would never occur But these
same tax provisions travestes anything in
the nature. of scientific honest taxation. They
are calculated to mulct the Capital Traction Com
pany and to admit Of overcapitalzation of the w.
r & E in case merger should occur. Simply
this and nothing else.
, According to the committee report, these tax
provisions would relieve the w. R. & E. of $I75,5oo
earning tax $4,000 traffic police tax and an estl-
mated So4 800 in paving assessments, or total OF
S3z7ooo without providing for any reduction what
ever in fares. On the other hand, it would increase
the Capital Traction Company's taxes about
srI64oo without any resulting benefit to its patrons
or to any one but the w. R. & E. There is no in
duceuent in this to economy of management and
oDcration but quite the contrary So far the c. T.
Company is concerned the inducement would be to
higher costs
Two things as to public utilities automatic.
First no two utilities providing distinct kinds OF
service should ever be owned controlled managed
and operated by the same corporation, let alone
merged into one They Should be separate and dis
tinrt in every way to AVOID Shufilng OF earnings,
preference and favors by the weaker to the
stronger Second, any favors in taxation or public
burdens extended any public utility should have
the sole purpose and result OF lowering the cost OF
the service to the users Such favor should not go
70 reduce general taxation by being credited to the
general tax fund.
The best result for city. ior all its people, Tor
its property owners and all interests comes through
,L. lowest possible service rates This is especially
true of TRANSPORTATION, as cheap transportation
within the CITY is its very life blood, necessary to
;,s uniform growth, to home owning, health, the
even flow of labor and trade, the evening OF real
estate values and all that is wholesome and good in
Urban life Nothing else is harmful to city as
high transportation fares and this has been and IS,
,b. sole interest of The Herald in street merger
Unless il should result in lower fares, it would be
worse than useless.
Many ways have been suggested to force
merger. Those from the companies have not had
reduced fares in view. The w. R. & E. has frankly
said that this was dream and impossible of reali
ration From It's point of interest, this is true. If
it is to make ends meet street railway, it could
M, reduce fares 1t must not be forgotten that the
w R. & f has never paid dividend with other
than p E p Co. earnings, except in the few years
of stock exploitation when 1t sacrificed everything
10 put fictitious value into its common stock. 1t
/ bonded at SI7,5ooyooo which is $I,25o,ooo above
,he value fixed by the Utilities Commission as that
On which it can earn dividends. Its bonds and
stock just double that earning value.
There is however, way to force merger that
is simple direct and effective. 1t is the only way
which is sure to bring the result and be fair to all
interests This is for Congress to direct the Pub
lie Utilities Commission TO condemn both street
railway corporations and take them over, holding
them until corporation was privately organized to
relieve the District the actual cost the capitaza-
ton representing that actual cost on ratio OF stock
equal to double the bonds is the fact as to the
present Capital Traction Company This condem-
nation action should not include the P. E p Co..
wbfeh should be left with the w. R. & E. stock
hosaers. Or, if it is included, it should afterward
be turned over to separate corporation.
1t has been suggested that the Congress should