The Washington herald., 1921-05-31
When change itself can give no more
It's easy to be true.-charles Sedley (I63s-
I7oI), Reasons for Constancy."
Washington Street Railways.
XXI. MERGER PLAN.

FVERY serial should end in happy marriage.
= We hope this may. That has been our
object and not that of sentiment, or prejudice.
After fairly complete study OF the street railway
situation, have reached conclusions
which differ in several respects from those of others
we are satisfied that the way to consolidation does
not lie along taking from electric patrons, their
money above the value of the service based upon
fair to the Potomac Electric and giving it to
the w. R &E.
Because the W. R. & E. owns the P. E. P is
no more excuse for this than if it did not own it.
Who would even suggest increasing gas or tele-
phone rates for the purpose? We little
believe money should be taken from the
patrons OF the Capital Traction than it should have
in order that more money can be drained from the
patrons OF the w. R. & E. Neither do we believe
that this having been done, the surplus should in
turn be taken from the Capital Traction as taxes
to reduce its earnings that it will consent to COM
bining with the w. r. & E. at higher value than
the earnings warrant
The utilities commission has fixed the fair value
OF the w. R. & E. for rate making purposes at
about SI6ooo,ooo. In other words this is all the
value upon which it should be allowed to make
what would be reasonable return. This then is
all it is worth as a going railway concern Let the
Capital Traction buy it at around that price which
is just under one-half OF its capitalization
This would leave the w. R. & E.'s stockholders
the owners of the Potomac Electric as a separate
utdity which it should be. Its stock amounts to
SIooooyooo, preferred and common, each earning 8
to 9 per cent with surplus. Taking this in
change for their w. R. & E. holdings, the W. R
& E. stockholders would have very valuable prop
erty with assured dividends and the common stock
holders could exchange basis which would give
it all the cash value it has the market and
than it probably is entitled to have.
This would wipe out the entire stockhoding of
the W. R. & E, which the commissions valuation
indicates is all water but would restore to the stock
holders the electric property which is required
or expected, to make all nearly ALL the dividends
on their W. R. & E. stock. The officers of the
W. R. & E. would remain as officers of the Poto-
mac Electric and not sacrifice their salaries Con-
trolling the distributing system in the city and
interest in the Great Falls power, it would be a
splendid property.
The Capital Traction in taking the w. R.
& T. as a railway property at or near its fair value,
would be able operate it at far less than its pres
ent operating The saving in salaries would be
considerable as it would merely have to expand its
present organization. 1t would save still more in
car routing and schedules 1t would gain valuable
monopoly with assured constantly increasing rev.
enues as a monopoly.
It's new charter should relieve it OF all charges
for traffic police matter, jointly, Of around $780,
ooo 1t should be relieved Of street paving, its por
ton being assessed against a district benefited by
the transportation facility possibly three blocks
either side. II should pay taxes net, not on
gross earnings Our reason for this is that such
change taxation induces to good service, good pay
for operating forces, exceptional maintenance and
abundant equipment with resulting fine service which
means more to Washington than the additional tax
money especially under the $3.50 system.
We believe this is the right solution of this sit
uation which is so important to Washington. We
are confident from our estimates, that the fare
could 60 at once to cents. Such sale could in
clud. contract for power from the Potomac Elec-
trio at the present charges, continue for term
of years and be reduced gradually the Capital
Traction might find it economy to extend its own
power plants.
The Herald is satisfied that this plan is feasible
is right is square and in the public interests. We
have submitted it to no one. 1t is our own and we
satisfied to leave it to the judgment of the
gressional committee for the District of Columbia,
confident it will have fair consideration and be
cepted refused it appeals to their business
sense.
& The people of Washington have been very pa
tient under very trying conditions. Their associa-
tions, with memberships of nearly 10000, have now
urgently asked for relief. If the Capital Traction
will not buy, or the w. R. & E will not SELL then
congress should put on the screws, the first turn
being order the Capital Traction to reduce its
fares. The people demand it and they are right.
They know all know, that all other business has
that railways should not be the sole excep-
ton and that if they are allowed to combine in a
way to preserve the present extreme capitalization
or near it. the result will have to be sharp slash
in wages, and possibly trouble.