The Washington herald., 1921-07-05
MIXED COMPANY
NEAR BANKRUPTCY
Excess Liabilities Ought
Not Be Protected"
He Says.

anu SACSNAA AZ NoA@b~As
the street-car business within the
District is worthy of a moments
consideration. according to Samuel
Russell. western utilities expert,
who made this statement yesterday
This has special application to
certain official bills now pending in
Congress" Mr.. Russell continued.
Apparently it is proposed to merge
and perpetuate the stocks. bonds
and securities of the Washington
Railway and Electric Company In a
stock merger with the Potomac
Electric Power Company. This propo-
sition," Mr.. Russell charged. is ut
terly vicious and indefensible. 1t
merely means the attachment of a
broken-down railway. with tracks
and equipment out of condition and
requiring great sums for their re-
habilitation. to the power company
which has the electric lighting fran
chise of the District
Railway Already Bankrupt.
This would tend to weigh down
the electric power company with
the capital obligations of an already
bankrupt railway. Even where
street-car systems and electric
power systems are owned by the
same interests. as in many cities Of
the country, the street-car system
Is invariably operated by a separate
corporation as a railroad property
distinct and apart from the power
company.
-The proposed merger of the
Potomac Electric Power Company
with the Washington Railway and
Electric Company would only COM
piicatss the street railway problem
already aggravated by stock jobbine
transactions of the past" Mr.. Russell
declared. This proposal is not in
the interest Of unincation Of the
street-car service but solely for the
purpose of fastening upon the
merged property s10,o00.000 more OF
blood-sucking securities. The merged
concern is to be loaded down with
over S3S,0o0.000 of bonds. This
scheme ought to be thwarted, for
the plain reason that it will pre-
vent and not promote a consolida-
ton of the street-car services.
Tracks Chief Assets.
The Capital Traction COMPANY
could not come to voluntary terms
of merger with any such concern
The Capital Traction Company needs
only the tracks, or such of them as
1t may select, of the other company,
and must have these tracks at what
they are really worth from an op-
Grating and investment standpoint,
or at such a price as a prudent pur-
chaser would pay, and they must be
taken free from stocks. bonds and
other membranes. The capital in
cumbrances OF the Washington Rail-
way and Electric Company must be
destroyed. not perpetuated in stock
merger. Any proposal emanating
from the Washington Railway and
Electric Is to be viewed with sus-
ricion, although a critical examina-
ton has not been necessary to re-
veal the ulterior and sinister. pur-
pose OF the plan which this outfit
mas sc far proposed.
Public Ownership Fatuous.
Equally fatuous are the schemes
and bills for public ownership, !"
Russell insisted. The plain fact is
that no management which is not
charged with the duty of raising
the revenues of a business, is COM
petent to expend the funds of the
businesses. The only man who can
prudently lay out a dollar of corpo-
rate funds is the man who sees the
way to get this dollar back in the
revenues of the corporation, This
lack of responsibility for revenue
py the managers, is the reason why
publicly owned and operated pro-
1ects are driven inevitably to def
cits, which must be made good out
OF public taxes.
In a private corporation the
trend towards bankruptcy would re-
qulre the removal of such manage
ment. The only effect Of the propa-
ganda for public ownership is to
confuse counsel on the street car
problem, provoke futile controversy
and permit the W. r. & z. Co. to
further stall on the inevitable, as it
has been doing for the last twenty
years. The street railwy problem in
washington is not settled by such
emotional catchwords as merger
and public ownership" and people
VINO are earnest in this business
should summarily dismiss such
pfans from discussion, much less Sc
rious consideration.
: w. r.. & e. Claims Fictitious.
The public has been regaled with
statements as to the unfavorable
location of the w. r. & E. lines"
declared Russell. "The fact is, how
ever, that car for car there is not
a great disparity in the earnings of
the two companies. The slight Diff
ference may well be ascribed to the
difference in the average capacity
OF the cars of the two companies. 1t
would be Interesting to know the
respective operating ratios Of the
companies; also the earnings or
pronts per passenger and the cost Of
operations per passenger. It Is alto
gether probable that the ascertain
ment of these facts would indicate
that the claims as to the unfortun-
ate situation Of the w. r. & z. are
unfounded or might properly be as
cribed to other reasons.
TT is really because of the in
cubus Of bankers control that the
w. r. & i. Co. Is unable, to navi-
gate" Russell stated. This fact
should be sternly faced and the
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