Evening star., 1921-06-17
HOUSE COMMITTEE
SPLIT ON MERGER
SEEN|N NEW BILL
Hammer Scent Fare Meas.
ure Regarded as Expression
of Opposing Element.
FATE OF KUTZ FAIR RATE
RETURN STAND DISCUSSED
Commissioner Holds z Cents Is
Minimum Under Present 0per-
ating Costs Of Companies.

atlng Costs OF companies
| Representative Hammers fve-cent
street car fare BILL introduced We'd
! nesday. caused District officials to
speculate as to whether Commissioner
| kutz's statements before the House
District committee, last week, regard
! ing operating costs and the legal risht
of the companies to a fair rate OF re-
turn on the fair value of their property,
Is to be ignored by any considerable
element in the committee proposing
| traction legislation.
1t was pointed out that the Hammer
measure establishes an arbitrary rate
! of fare, without regard to the cost OF
running the car lines or existing law
giving the companies the right to earn
! a fair return on the fair value of their
property as established by the Public
Utilities Commission.
In his testimony before the commit
tee, Commissioner Kutz. who is chair
man of the utilities commission. stated
that had the companies during the year
ended the frs: Of last May been per-
| mitted to charge a straight fare OF
| 8 cents the rate of return on their fair
value. as found by the commission.
| would have been 6.04 per cent.
Seven Cents Held Minimum.
| The Commissioner expressed the view
| that a 7-cent fare is the lowest that
can be expected. under present operat-
ing costs, if the law allowing the COM
panies a fair earning on their invest
ment is to be enforced.
In well-informed circles today the
Hammer bill was regarded as likely to
cause a split in the subcommittee on
merger OF the House District commit
. Of Maryland, Is chairman. This bill Is
accepted as the expression OF the radi-
! cal element in the committee, which
favors revolutionary means OF forcing
merger.
Chairman Ziklman heads the more
conservative group. He is opposed to
| recommending any measure which. IN
! his opinion. would be confiscatory, would
| invite fight in the courts and. in all
| probability, be declared unconstitutional.
! The District Commissioners are hope
! full that the bill which they have recon-
m snded to both the Senate and HoNeS.
/ District committees. but which has NOT
been introduced. will be. adopted as the
chaos out of the utility situation.
This plan was recommended first by
Chairman KutZ and former Commits
sioner Brownlow. and was presented
! to Congress in bill, but was never
acted upon. The cceeding board of
| Commissioners. including Chairman
Kutz, Mr.. Hendrick and Miss Board
man. also approved 1t. and tt was sent
to Congress a second time, with the
same result.
Third Indorsement.
The plan has now received the in
dorsement of third board of Com
missioners. the present board. which.
| in the opinion of Chairman Kutz. en-
titles it to more than usual considera-
tion.
Under the Commissioners bill Con-
gress would authorize merger of the
utilities of the District. to be effected
under conditions to be approved by
the Public Utilities Commission. II
merger of the street car companies
followed the commission would have
authority to permit the consolidated
traction company to combine with the
Potomac Electric Power Company.
The bill would change the present
by abolishing the per cent gross tax
and substituting per cent tax on
! net income. All earnings remaining
after the 6 per cent tax has been paid
would be taxed so per cent.
It Is contended this plan would bring
| the earnings Of the traction corporations
| fairly close together.
II it should provide the stimulus for
a. merger and the companies eventually
should combine under conditions to be
approved by the commission, the net tax
provision would be Cancelled and the
| present per cent gross tax would be
returned automatically, the Commits
sioners' bill provides.
Public Utilities Provisoni.
| Another important provision in the
bill is the authority granted the Public
Utilities Commission to govern all
financing required for extensions and
| betterments. Under existing law the
companies must obtain the commissions
consent before they can dispose Of
bonds, but there is no such obligation
imposed in the matter Of issuing stock.
| The bill also provides the authority
| ton Gas Light Company and the George
town Gas Light Company may be
brought about.
! The Commissioners do not regard their
measure as a revolutionary one, ignoring
! the legal rights Of the companies, but
rather as a practical and effective meth
| cd designed to so eQualize the earnings
| of the companies that a basis would be
| established for a merger.
Must Drop Costs.
Regardless of whether or not a merger
can be effected in the near future, it Is
known the Commissioners see no hope Of
car fares dropping below cents until
! there has been a drop in operating costs
Certain economies in the way Of reduced
| overhead expenses would result from q
combining Of the traction interests. but
these would not be sufficient, it is be-
| 1;a,,od fo make any difference in the rate