Evening star., 1923-02-01
Public Utilities Commission
Does Not Believe Merger
Is Cure for Traction Woes.
SENDS LETTER TO PHIPPS
Maintenance of Pavements and
Traffic Policemen Unfair, Board
Tells Senator.

might not of itself result in re-
Gluction in fare the Public Utilities
Commission believes.
The commission voiced this belief
10 voluminous letter mailed last
night to Senator Phipps Of Colorado.
In which the Commissioners replied
in detail to attacks made upon them
recently on the floor of the Senate
for the rates they have fixed for
utilities.
Even without A merger Congress
could bring about a reduction in car
fare, the letter declared by changing
the method of taxing the car lines.
which legislation has been advocated
by the commission for several years.
The commission told Senator Phipps
that with coal going up and no lndi-
cation of A break in other operating
expenses, there is little hope for cut
in fares without the long pending leg
islation to change the form of tax
alton and to relieve the companies
from paying the salaries of crossing
policemen and paving track spaces.
Replying directly to one OF The
criticisms voiced in the Senate a few
days ago. the commission wrote:
Replies to Criticisms.
i"It is true. as stated by the sena-
tor from Tennessee on January 25.
1928, that the Washington Railway
and Electric Company claims assets
OF at least sS0.000.000. but the rates
of fare established by the Public
Utilities Commission are not based
on any such eXorbitant or fictitious
claims. or upon the outstanding stocks
and bonds OF that company. Those
rates are based upon the fair value
Of the property OF the company de-
voted to street railway. purposes in
tyin nf ToI. ~ h
fshed by the commission, this fair
value amounting to $17,i4o.150 on
December 81. 1922 Similarly. in the
case of the Capital Traction Com
S2I,GQ0.000 as the value of its prop
erty. while the commission has estab-
lished $15,S749S0 as the value (De
rember 81, 1927 and has based the
street car fares on that figure.
Part of Commissions Letter.
The commissions letter acom-
panying the data to Senator Phipps
read. in part as follows:
I'm view of the law and OF the
facts. the commission feels that it is
should be beclouded by discussions of
public utility problems based on
erroneous statements as to the law
and to the theory Of regulation. AS
tion depends exclusively upon the
value of the property used in the
public service. and it is beside the
mark to discuss capitalization.
watered or otherwise, and dividends.
large or small. 1t should also be
noted that while. at the height OF
the increase in costs of all kinds,
brought upon the public as well as
the public utility. companies by the
conditions following the war. rates
in accordance with the requirements
of the law we're regulated upward,
since that time declining costs have
permitted some regulation downward.
so that. just as the price of ordinary
commodities has decreased somewhat
since attaining the peak. rates for
carfare, electric light, and gas have
also declined.
Must Reduce Operating Costs.
1T seems also pertinent to say that
the only chance for further reduc- |
tion in public utility rates will come
from a reduction in the operating !
costs OF these various companies. |
which means that the prices which |
they are forced TO pay for the ma
terials they consume and the labor
they employ must be reduced before
their cost Of doing business is low |
rates charged the public. 1t is, how |
ever, well known that the cost of |
coal, one Of the most important ma
terials used by all public utilities, =;
past six months. The price of labor !,
is. so far as can be noted. not de-
cining; and on the whole, except |
SIS Increased volume of business not !
now in sight affords an increased |
margin OF profit. the future prospect |
does not seem encouraging to those (
who feel, and in this the public util- |
dties themselves join, that the pres
ent rates should be reduced at the !
earliest moment that the underlying
conditions warrant.
Discusses Proposed Merger.
During the recent discussions in !
the Senate, some reference was made
TO the possibility that merger be-
tween the two street railway COM
panies would result in reduction Of !
fare. In view of the theory upon |
which the Public Utilities Commission
Drescribes the rate of fare, namely, |
combing the valuations of the two |
companies. treating them as one, and |
allowing merely reasonable return !
upon this combined valuation, the |,
only advantages that a merger would |
confer would be some reduction of |
overhead expense, some simpIification |
and economy of routing, and possibly |
the creation of system of free uni
Nersal transfers. The latter advan- |
tage would result in an increase in /!
operating expenses. probably neutra-
advantages; SO that. on the whole, |
merger alone might NOT afford the |
basis for a reduction in street car |
fares in any significant amount j
Suggests New Method.
Even without merger. however a !
method exists today for reducing street |,
car fares, one that has hitherto on sew
eral occasions been brought to the at !
rention Of Congress. and this lies in a |
revision of the system of taxation ap-
piled to the street railway compa MES /,
this system being a survival of the days
when a hve-cent rate of fare was be-
]ieved to afford so large an opportunity |
for profit as to justify rather heavy
sxaotions on the part Of the chartering /
body. At that time. regulation was not |
in effect, and emphasis was not laid |
Upon the obvious fact that all taxes :
levied upon street railway companies
and other public utilities must in the |
first instance be accumulated from pay
,nents made by the matrons of these
companies. Accordingly when the street
railway companies are forced to pay a /,
Der cent tax upon their gross receipts, ;
Iersections, and the cost Of paving ap- |
proXimately twenty feet of the width of |
the roadway in which their rails are
laid, this means that the car rider. who, |
because he rides in the cars and not in /
automobiles, is obviously least qualified !
financially to assume any superfiuous
burden, is forced to pay a sensibly in |
creased rate Of fare in order that the !!
company that carries him may be able
TO defray these charges.
Motors Necessftate Policemen.
Traffic policemen are rendered |
necessary more by the growth of mo-
tor vehicles than by the existence Of |
street cars, and paving between and |
near the rails benefits the users of !
motor vehicles without conferring
other than financial injury upon the !
street car rider. Obviously, these two
charges are without much equitable !,
basis Taxation upon gross receipts |