Evening star., 1922-03-21
MERGER MEASURE
WILL BE REPORTED
Continued from First Page.)

much higher tax than at present. and
this would relieve the Washington
Railway and Electric Company from
paying part of the tax it now pays.
Mr.. Hanna said that. as matter Of
fact, the Capital Traction Company
merger" He said his company had
gone long way in offers it had
made to aid in bringing about
merger. Yet. he said. the company
is the sole target in this effort to
force a merger.
the Senate District committee tomor-
row afternoon at o'clock, it was an
nounced today. This meeting was
not called in connection with the
merger bill. it was stated.
Col. Keller Defends Plan.
Col. Keller. the Engineer Commits
sioner. a member of the Public Utili-
ties Commission. which has put for
ward the plan for tax on operating
that it was not intended as a punitive
measure. but that it was designed to
take from the Capital Traction Com
pnay excessive profits paid to that
company by the public. to which the
company had no right. since by the
peculiar situation here the Capital
Traction Company was enabled to
make from IL to L. per cent on its
fair valuation.
There was some discussion as to
Electric Power Company, owned by
the Washington Railway and Elec-
trio Company, should not be used to
help swell the profits of the latter
company in the event Of a merger,
and some of the witness gave it as
their opinion that this should be per-
mitted.
Mr.. Hamilton described the organi-
zation of the Capital Traction Com
pany in 1895. He said that the COM
pany had gone through lean years in
the past. that the losses sustained af-
company. and there had been no way
of replacing these losses until the
profits made in the years 1919-20 had
enabled the company to return the
$S00.000 SO lost. The dividends of The
company. he said. had ranged from
$1.50 to $500, and had averaged about
Sc Through the years.
Valuation Criticised.
The witness criticised the public
Capital Traction Company That val
uation, he said, was begun in 1914,
and the report was made in 1913.
The valuation, he said, was given as
of 1914, when it should have been
given as of 1919. He said that the
commission also had refused to al
low the company to include in its
fair valuation the stock and bonds
of the old Georgetown and Washing
ton company amounting to So.0OO.0O0
these two points been granted, said
Mr.. Hamilton. "the fair valuation
of the company would have been
such as to entitle US to q larger
return than we now make"
In his discussion of the probable
effects of a merger Mr.. Hamilton
said there would be little saving in
overhead expenses. that the reduction
in personnel would be small, and
that the rerouting of cars would
result in little saving. He referred
to recent heoring before the Public
Utilities Commission, when it was
shown that the return of the Capital
Traction Company on the fair valua-
ton now fixed was 1926 per cent
and Of the Washington Railway and
Electric Company, 4.37. Added to-
gether, he said, the earnings would
average only TIT per cent, which
of fares If the two companies were
merged and operated together.
Mr.. Hamilton said he thought that
the street railways were entitled to
an per cent return on their valua-
ton.
Merger Declared Public Demand.
Chairman Ball of the District COM
mittee told Mr.. Hamilton that the
merger was a public demand, that
the Capital Traction Company had
it's valuation, and such money was
taken unfairly from the people and
should be given back.
Mr.. Hamilton retorted that it was
not fair to single out the Capital
Traction Company and tax its profits
while the other company was per-
mitted to go practically. untaxed in
was not legal to compel a merger,
and he predicted the 1900 stockhold-
ers of the Capital Traction Company
would resent such an effort to force
merger. He said he believed a
merger would result much more
He said that three major companies
were involved in the proposed mer-
ger plan, the Capital Traction. the
Washington Railway and Electric
and the Potomac Electric power
companies. Under the tax plan ad-
vanced only one, the Capital Traction,
Mr. Hanna pointed out that the
question as to the fair valuation fixed
by tie Public Utilities Commission for
the street car companies and the
power company was not IN the
courts; that the Court OF Appears ha0
held in a divided opinion that the val
uation should have been as Of 1913
instead of 1914 in the case of the
power company, overruling TIE Dis.
trict Supreme Court The. case Will
come before the Supreme Court OF
the United States eventually, he said.
If the court should finally decide that
the valuation should be made In ac-
cordance with the contention OF the
company, Mr. Hanna said the pro-
posed excess profits tax would not be
"a serious thing" for his company:
He said that he saw nothing In the