The Washington herald., 1921-06-27
A Bad Merger BILL


ostcnsibIy designed to promote merger
of the two street railways systems of this
District that known as Senate Bill No. OBS is least
desirable In fact regards any protection OF the
interests OF the people of the District who pay the
bills, ii could be worse So far as it is con-
ccrped they figure only as the mlch COW capable
OF increased production into the w. R & E. pail
II provides for the complete absorption of the
Potomac Electric Power Company by the W. R. &
T. and the taking of four suburban lines which
the W. R & T. claim of loss in
epuc- The electric company stock is to be
nulled. The company would disappear. 1t would
become but an integral part of the railway COM
pany As one, the combined companies revenue
wotld 90 into pot Their earnings would not
abc separated. Their valuation would be
property. Their regulation distinct services
wosld be impossible.
This is the intent and purpose OF this bill and
the object is to wiring from the people of this Dis
trict sufficient pay dividends what
has not. and had any substantial value. 1t is
inconceivsble that Congress OF this day will in
dorse any such measure. Absurdy enough the bill
requires that 'the owners of record OF at least Is
per centum of the capital stock of the power COM
pany" shall consent to this absorption; the w. R.
& E. corporation, all this stock and so
is the only Owners"
Tor TIE benefit OF the S. 500 900 preferred stock
9r! the g $4,000 d common water OF the w. R.
< 2. the S6!oooOoo Of power company stock would
b. sa7uiled" The dis dends nominally earned by
tl's stock have al to the railway company.
These dividends measured fair for $4,000, 900,
have been stretched far as possible to cover
SI5,oooooo. But if the companies become one, as
this bill proposes it is the contention of the W. R.
& E.. given in testimony that it must be per-
mitted rates which will return dividends the
of rate for electri
service be raised to do this the revenues from
the two services being indistingushable.
The stock of the electric company, just as
stock. is of consequence to the w. R. & E. as its
earnings merely turned by bookkeeping to
the railway stockholders. Its interest is in the
railway stock prices the market. If the two
properties one, the earnings of the electric
'psny longer be held to the measure of So
$4,000 in stock but it is believed be stretched
by increased rates, to fit ST 100000 This bill
would do all that is possible to permit this and
for that reason this merger has, for years. met the
consistent unwavering opposition of Commissioner
Kutz.
Besides its SIs,oooooo of stocks, the w. R. &
E. has outstanding SI7,5ooooo of bonds to this
would be added the SII.3soooo Of the electric COM
pany bonds; a total of $43,S5oooo. On top OF this
total, President Ham, of the w. r. & E., says $Io-
100000 more must be added for the OF the rail-
way. II must De remembered that the w. X. & T..
asa railway, has earned dollar that it was
rightly free to use as dividends on its stock. If il
could not above its operating more than
enough to keep it in running condition-and pay in
terest on its $I7,5ooooo bonds, it should be ev
dent that it could not pay the interest ST.
100000 without taking it out OF the users o
electricity.
- Today it cannot increase the bonded debt Of the
electric company and this increase on the street
railway properties. But this is exactly what this bill
proposes to make possible. Moreover, if the w. R
& E. had not paid S3,5ooooo dividends on its COM
mon stock but had used it for maintenance during
the years prior to Io2o-when the electric
service rates were reduced-this far greater loar
might none OF it have been necessary. 1t is no
proposed to use this $Io,oooooo for any purpose
so lar as known, repairs and rebuilding L
would be practically loan for depreciation.
AS such it would bring little or no return il
increase of 1t would affect earning powe
only as il decreased the cost of operation.
looks very much Ike captalizng the sins of the pas
at the expense Of the people of the present and
the future. Il rift in the Clouds that this bill
still has to run the gantle, of the Senate. Blu
there is satisfaction in the fact that the Hous
committee has refused to indorse it and will prop
ably report out a very different measure, one il
(which the people of the District will be given SOM
recognition