The Washington herald., 1921-05-09
If thou shouldst lay up even a little
upon q little. and shouldst thou do this
often, soon would even this become great.
-Hesiod
The Washington Railways.
XII. THE PRELIMINARY MERGER,

THE w. R. & E. is capitalized. bonds and
stocks, at $32 100000. This is just twice the
fair value fixed by the utilities commission
The Potomac Electric Power Compny is capital
lied at SI7,35oooo. The w. R. & E. in 1910. after
paying $4,000 interest 90 its bonds-sIz, 10000
had a balance of S4o8,5oo to in paying divi-
dends. Included in its net income was $4,000 paid
to it as dividends earnings by the Potomac Elec-
trio Power Company.
This dividend of the P. E. P. Co. was Q per
er7re-and was based an Scent rate fixed by the
commission. The old rate was 10 cents and this is
still charged, but the difference is impounded and
wSl be held awaiting the courts decision affirming
the reduction or permitting the higher rate At the
higher rate, the $4,000 turned over to the W. R.
+. would have been very much more and it is
this very much more the company wants that it may
be paid to its stockholders
1t must be remembered also that in 1910 the
street car fare was cents four tokens for IS
cents. The commission has increased this to 8
cents or four tokens for 30 cents With this fare If
the electric, company allowed to charge 10
cents thI w. R. & E. would be able to pay its full
per cent on S8.5ooooo of preferred stock and have
NICE balance left to apply as a dividend on the
So.5oo,ooo of common stock AS it is the S468 zoo
Famed in 1919 was enough to pay the S per cent
dividend on preferred stock with $4,000 balance
zs Keeping this in mind, it is easier to appreciate
why the managers of both railway properties insist
that the w. r. & E. and the electric company
should be allowed to merge before any street rail-
Nay merger is undertaken. This is made palmer
by the testimony on behalf of the w. R. & E. at
the 1920 hearing rates Its representatives held
that ii merged as one company, the electric rate
could be made 10 cents and that the utilities COM
mission would be powerless prevent this
.'- Congress having given this right to merge the
commission would lose its right regulate electric
rates, Neither the commission a user of cleo
tricy would have the right to interfere. "No user
OF electric light would have any ground for action
was the direct statement. 1t contended that
even I2-cent would not be excessive nor
liable to interference 1t held that only the
c9mbined income as related to the combined capi-
talization, would determine rates as merger would
completely wipe out any distinction between the
tvo companies to earnings, revenues, profits and
capitalization
The combined capitalization would be S4o8so-
900, But by the time the merger completed
the bonds and stocks readjusted or exchanged for
those OF holding company, the Lord only knows
what it would be. The history of the W. R. & E
shows what it might be. But the present object is
to show why the two companies and especially the
w. R. & E. are intent this preliminary mer-
ger. 1t is to show the people of the District from
what the utilities commission have saved them BY
refusing permit this merger of the railway and
electric company.
There is another little side light on the electric
phase of the question. The w. R. & f bought GER
tain rights in the Great Falls water power for S4so
ooo.. 1t sold these to another company owned by
itself for 100000. The improvement of the Great
Falls power is being seriously considered 1t
vii probably come within the next few years and
Washington will need to watch that franchise
closely when it is granted
that power is developed, the power plant
OF the Capital Traction Company will still have to
be-naintained but only auxiliary plant in case
yf-emergency Or that company will have to de-
pend in emergency on the Potomac Electric Power
plant This latter plant will, certainly have to be
continued. But it, too, will be as an auxiliary 1t
will be needed for emergency to the street rail-
ways 1t will be needed in cases Of low water, as
thc'Potomac flow has wide variants. But its value
will not be its present earnings but solely on its
then replacement cost.