Evening star., 1924-01-21

, monty reported that the population
or Washington had practically dou-
bled during the war period.
Senator McKellar recounted the
history of the organization Of the
Washington Railway and Electric
company, growing out of the con-
solidation of many other street rail-
way companies here. He said that
the report of the commission showed
that the Washington Traction and
Electric Company a predecessor OF
the Washington Railway and Elec-
trio company, had been financed
through the United States Mortgage
and Trust Company, that the con-
solidation bringing about the Wash
ington Traction and Electric Company
had required the use of between $l0,-
! 100000 and $11 100000.
The first thing they did after the
consolidation" said Senator McKeilar,
was to water the stock They Is
sued Sl2,000,000 worth of bonds and
$l0.000.O0O worth of stock. The mort
gage company got $10,000,000 worth
of bonds and S2,500,000 worth of the
stock. This was the first raid on the
public"
Value OF Stock.
At this point Senator Ball inter
rupted Senator McKellar to ask If
the stock so issued had any par value.
and other question.
Senator Mckellar replied that he
and Senator Ball did not agree on
this proposition and that if Senator
Ball wished to make an argument he
would wait until he got through.
Senator Ball said that he thought
the statement OF Senator McKellar
was unfair In that he had said that
Mr.. Ball had taken a position on the
street railway matter. Senator Ball
insisted that he would take no po-
sition until the hearings had been
concluded.
In the meantime. Senator Mcclellan
would not continue unless permitted
to complete his statement without be-
ing interrupted. At the conclusion of
his statement he said he would be
glad to answer any questions
Charges Records Withheld.
Senator Ball said that such a course
was perfectly agreeable to him. After
this little f1are-up Senator Mckellar
resumed the stand.
Continuing his statement, Senator
McKellar declared that during the in
vestigation by the Public Utilities
Commission, as shown by it's report,
the Washington Railway and Electric
Company had withheld valuable rec
ords"
Here's corporation" he said,
which is asking Congress to be al
lowed TO keep its excessive rates,
and it comes in with unclean hands.
1t concealed books and papers during
the public utilities investigation,
which were only discovered by chance
on cross ss-examination, in 1919"
Senator McKellsr told the commit
tee that the commissions report
showed that the so-called historical
value of the company was S10.695,000.
That was the amount, he said, paid
for these companies in the consoli-
dation.
Unfair to People.
Yet the people of Washington are
asked to pay interest on s22.ooo,0 900
| worth of securities he said MY
position is that it is totally unfair to
| the people OF Washington to permit
this to be done"
The reproduction value was put
down at sl0.253.153.GS Senator Nc
X ellar said. He said that the cost of
reproduction, less depreciation, was
put down at $7.s5s.s23, and that the
fair valuation fixed by the commits
sion in which every possible claim Of
the company was included had been
about l6,000.000. Senator McKellar
argued that that was the limit of the
amount on which fair return could
be claimed by the company
And yet the people OF Washington.
according to this company. should pay
return on s32.0o0,o0o," said Senator
McKellar
This is a piece of buccaneering the
, like of which / have never before
the operation Of public utilities" said
Senator Mckellar This company is
asking authority to earn a fair rate
of interest on s16,o00,o00 of watered
that any senator could vote for that?'
Tells of New Issue.
At this point Senator McKellar said
that he had concluded his statement
in regard to the Washington Railway
and Electric Company and invited
questions. Senator Capper of Kansas
asked If the capital stock had re-
SIC, 200, 900. Senator McKellar re-
piled that the Washington Traction
and Electric Company had been trans
ferred to the Washington Railway
and Electric Company, while another
issue of stock, amounting to $15,000,-
600 preferred and common stock was
put out, taking the place OF the ear
lier stock.
Senator Ball suggested that the
Public Utilities Commission takes only
the valuation fixed by it of the COM
pany's property in fixing rates of fare
and pays no attention to the stock
value of the company. This valua-
ton, he said, now amounts to about
SIS 100000.
Testimony by Ham.
William F. Ham. president Of the
Washington Railway and Electric
Company, was called upon to state
what the company was earning today
on its stock. He said that it had out
standing sS,500,000 worth of common
stock and S6.500,000 worth OF pre-
ferred stock, on which 1t was earning
per cent. He insisted, however, that
the company was earning only AL
per cent on the commissions valua-
tion of that part of its property which
is strictly street railway property.
He contended that a misunderstand-
ing had arisen because the Washing
! ton Railway and Electric Company
owns also the stock and bonds of the
Potomac Electric Power Company and
other subsidiary companies.
Senator McKellar denied this. how
ever, and said that he would later
come to a discussion of the Potomac
Electric Power Company. He also
insisted that the company was earn
ing far more than per cent on the
SIS, 100000 valuation fixed by the Pub
lie Utilities Commission.
Double Bond Values.
Turning to the Capital Traction
Company, Senator McKellar said that
that company had not issued SO much
'watered stock" as the Washington
Railway and Electric Company. but
1t has done a most marvellous thing"
he said. ut Is the only company that
I ever heard of whose bonds became
at one time worth two for one"
He explained that at one time the
bonds of the Washington and George
town Company were $4,000,000. This
company, he said, was later purchased
by the Rock Creek Railway Company