The Washington herald., 1921-05-12
Think not that thy word and thine word
alone must be right-Sophocles.
Washington Street Railways.
XV-Mergers and Capitalization.

IT. HE woods of the history of public utilities r.
nance are full of street railway mergers.
There is excellent reason to believe that no
such merger made which did not include
the total capitalization of the merged companies
The basis OF mergers has not been to reduce capi-
talization to point which might assure sufficient
earnings, but to give more warrant for excessive
capital and, by possible economies of operation,
make the waiting shorter.
In short the public and its interests are merely
talking points in making such combinations. Those
who pay, are lead to expect something they seldom
get, and that those on the inside know is not in
tended. In these days of blue-sky laws, many Of
these mergers OF the past would be clearly illegal
as means of stock sale promotion. They do not
wipe out obsolescence, but continue to capitalize
what has been scrapped. They are not based on
actual values nor on earnings, reproduction cost
view to low fares, but the effort is to preserve
and continue a charge on those who pay the
fares, all the mistakes bad investments the specula-
tOns day dreams and even crookedness, of the
past. They continue to capitalize the future
Yet horse sense should show any honest
street management that high fares not only in
ducc walking, but automobile buying. Everyone
wants to car and man figures that at IA
cents rde-as in this District-he can save
money, if he has family by buying "tin Lizzie
even something better. Sixty cents day will
buy good deal OF gasoline Even street car
round trip will buy half gallon. Moreover. it is
the exception when a does not take on
neighbor or two, pick some friend up the way.
Every increase of street carfare cuts down the
number OF riders. 1t changes the short ride habit
the most profitable to the companies.
But there is still another phase OF this, which
is the coming of the bus as street car rival
High fares gives the opportunity for this expert
which is rapidly outliving the experime n tal
stage. 1t gives the chance to develop the motor
bus, to improve it, to reduce its operating charges
and to demonstrate its competitive advantages. 1t
is fact that motor busses have improved far more
rapidly and develop economies far faster than
have street cars. They are more comfortable; they
noseless; man operated; far cheaper in
initial investment; can operate any street and
a delay OF does not hold up a whole system.
1t is foolish person who denies that they can
take the place OF street There is every
to believe that they and that they will
By paying dividends overcapitalization instead Of
developing a surplus to retire capital investment
and by higher fares to encourage motor bus COM
petition, the street companies of this country
digging their graves. They are hurrying
the day when street cars as a OF ntracity
transportation will be but history. And cities in
street paving calculated for the of heavy motor
trucks, are helping in this change.
One marked economy the Washington COM
Panies should adopt is the use of motor busses in
stead OF more and further line congestion, to
care for the overload of peak hours Here too is
place they deserve relief by government action.
There is adequate reason that the hours OF all
the various government departments should not
have a spread. Instead OF opening at o'clock
they could, by mutual agreement, spread this from
$50 to o:3o, has been done to a limited extent
1 Il. Al
terialy reducing operating costs. This would be
but another form of skip-stop.
But the moral OF this article is that in anv
voluntary merger of the two District companies.
for their good, for their own future and to
them fairly of being able to deal wisely with
their stockholders, there must be a radical cut
in capitalization. These stockholders who have
made speculative investments in water NAV as we'll
charge off this loss now, as any other time
Those who hold stocks that have, even on the mar
ket, but value far below par may better charge off
this difference than lose it all in some future
day.
The merged capitalization should not only be
calculated to sharply reduce fares now with a re-
turn within two years to the old rate, but
to permit sinking fund to retire bonds. The mo-
tor bus is looming in the horizon. 1t is within
sight and if the companies play fair just with them
selves, they will merge basis which will pro-
vide for the future and protect their stockholders
through charging off of all speculative values
Ku- -,