The Washington herald., 1921-05-19
Ignorance of ones nisfortunes is clear gain.
-Emipides.
Washington Street Railways.
XXI. cats AND DOGS"


X estimates of the properties gathered in by
the Washington Traction and Electric Com
pany promoters, and later taken over by the Wash
ington Railway and Electric Compny, found
terials, equipment, and property of all Kinds that
had been sold, scrapped abandoned. There is
also found what is called "unesrned return" which
is losses from operation All of these included
in valuation capital, which it is claimed profits
should be earned perpetually
The commission in making its fair valuation
a basis for rates. excluded these, most Of them.
1t did allow, however, certain large amounts a
proper development charge to capital, when con-
structon expenditures, made in good faith and
sound judgment, had to be abandoned before they
had had period of usefulness which could have
reasonably been expected, sufficient to ac-
cumulate depreciation refund to cover
them.
The single item of "unesrned return" which
the corporation claims the right to earn dividends
forever, amounts to S2,Ie6,775 According to the
commissions report this is based the assump
ton that it entitled have earned per cent
on the average investment from the beginning of
its operations, because the Anacostia and Potomac
Park franchise required that company to reduce its
ton that it entitled to have earned per cent
cent of the actual of the construction, equip
ment and maintenance thereof" Needless to say
this was not allowed but it shows what extent
the corporation would mulct the public and the de-
gree of careful analysis its statements demand.
1t is interesting to examine the status of
sample OF the "cats and dogs included in the CON-
bination. The City and Suburban included the Eek
ington and Soldiers Home, the Maryland and
Washington and Columbia and Maryland The
commission and the corporation accountants agreed
quite exactly on the book of this combination.
But the corporation accountant added S2,o4oooo
"unearned return" in the District, well as over
100000 OF like items AS fact the lexington and
Soldiers Home road had been in receivers hands
and the receivers valued it $500 1913, in 1896.
Was than this, or less than this paid for it?
But the commission allowed the original cost. 1t
was after being released from receVership that it
bought the NJ & w. The c. & NJ, also absorbed,
was entirely outside the District The entire combi
nation was evidently far from a profitable invest
ment 1t was probably taken such.
In the case OF the Georgetown and Tennally
town the corporation included in capital cost, the
"unearned return" which the commission report
amounts to nearly two and one-half times the
tire recorded cost OF the property" The report
further says:
With the exception of the above named
United States Electric Lighting Company, not
one of the other railway properties was at the
time Of purchase meeting its operating expenses
and fixed charges much less paying return of
any kind upon the money invested in it. Several
OF them had proved Improbable that receiv-
ershp had been necessary, and their subsequent
history does not demonstrate earning capacity
which at any time would have made their cap-
tai stock wofth anything like par.
Yet this capital stock at par, well as many
other items was all included in the bond and stock
issues of the combination under the Washington
Traction and Electric Company, the Washing
ton Railway and Electric. 1t is not reasonable to
suppose that shrewd business paid anything
like par for such stocks. 1t is not supposable that
Il. G., Il A..
w T. & E. represented actual cash paid for these
properties Such consultations were not made in
that way.
Yet the face value of all the stocks, bonds and
securities OF these various corporations both good
and bad, was but $8.377ooo. Their highest market
value was So747yooo, and if in payment the
corporation to which these turned over issued
s2zoooooo in its securities and Washington has
been required to make good the difference.