The Washington herald., 1921-06-23
Not the Best Way.

I missioners of the District prefer their own
street railway merger bill to any other.
1t has good features and others which The Her
aid considers fundamentally wrong This is, Of
course, but difference in judgment No one has
any reasons whatever to doubt the entire sincerity
OF the commissioners their desire to reach a
wholly fair and just conclusion.
The bill is based upon primary grant Of con-
ditions, which it is expected will lead to volun-
tary merger. This in itself is putting the cart
before the horse The street railway companies
are those at interest who should propose the con-
dltions OF the merger, and this will only come
when, they have the alternative. This, as we see
il, is Representative Hammers object He has
apparently adopted Theodore Roosevelts policy
to speak softly and carry big stick. He says
to the companies submit a plan of voluntary
mergsr; if you do not, will repeal the public
utilities law which will automatically make the
farc 57cents six for IS cents.
The commissioners bill offers system of re-
duced taxation and relief from street paving
costs 1t also makes the commission the authority
to pass upon any submitted merger plan, and
grants the Potomac Electric Power Company the
privilege to consolidate with the merged railway
companies This in practical effect would place
with the commissioners the authority to pass
upon and approve terms of merger which in effect
would be franchise. 1t would leave them
sole judges to capitalization. 1t would empower
them to virtually legisate to an essential grant
OF powers to the important public utility
in the District
Neither company needs any legislation nor per-
mission 10 merely merge Both have the power
OF purchase in their charter, and any merger will
be in fact purchase. Either can buy the other,
or either sell to the other. Such a sale and
PURCHASE would be under existing charter If
after agreement for consolidation, the companies
desire any concessions charter changes to COM
plete the agreement, these should be granted by
Congress, il at all These grants should come
after agreement on terms, between the companies
and not before. In this way Congress and not the
utilities commissioners would pass upon the terms
Of agreement constituting in effect a renewal of
or changed franchise.
The commissioner bill makes advance grants
which would warrant overcapitalization. Having
refuse to grant such capitalization If their dec-
sion as to this, also, did not suit the companies,
they could refuse to merge go to the courts.
IT, however, it did not suit the people of the
District, but was satisfactory to the companies,
the PEOPLE would have recourse.
The best regulator of capitalization is the pro-
vision in the Capital Traction Company's charter,
that its bonds shall not exceed one-half of its
capital stock. This of itself will do more than
any Other limitation 10 prevent oVcrcaptallzaton.
II should be preserved in any merger franchise.
The proposed provision, however, for both tax on
net income and split after per cent earn
ing on fair valuation, is a double inducement to
extravagant operation. 1t certainly should have a
further check Of some nature in the charter and
resting definitely in authority The other objec-
tionable feature OF the bill is the continuance of
the ownership of the electric utility by the street
railway utility To permit this, Congress must
ignore its antimerger law. There is no
honest argument for such ownership, and none
has ever been attempted The only real reason
or excuse given is that the electric utility
is profitable, and by its profits carries the gross
overcapitalization of the w. R. & E. and would
continue to do under merger. 1t is a. direct
permission of an overcapitalization so extreme
as to be perpetual scandal
In aching upon any merger bill, Congress must
realize that at ever step in this controversy the
one and deciding factor has been this excessive
capital The w. R. & E. has consistently main
tanned that decreased fares must not enter into
the plan and must not be considered. 1t holds
that merger reduce fares, and it takes this
position, beyond question, in recognition OF the
fact that reduction Of fares possibly return
a profit its S32,5ooooo of capital for property
fairly valued for rate making at SI6,25oooo.
Il. a.. Iii, < LII