Evening star., 1925-06-09
CAPITAL TRACTION
FARE WILL STAND
Hanna Says S10,500,O 900
Valuation Increase Will
Not Mean Boost.

that the Capital Traction Co. is en-
titled to add approximately $10,500,0OO
to the valuation placed on its property
by the Public Utilities Commission
While the court does not give the hg-
ures, it holds that the company is en-
titled TO have the cost of labor and
material as of 1919, in addition to S5,-
900 omitted by the commission
from the actual cost of the purchase
of the Washington and Georgetown
Railroad Co and s3,062.0os, represent
ing additions to capital from July 1,
1914, to December 81, 1924. This, the
court says, would bring the valuation
practically up to date.
Car fare will not be affected by the
decision, John H. Hanna, vice presi-
dent and general manager of the COM
pany, stated today.
Mr.. Hanna said that while increas-
ing the value of the property will tend
to make the company's rate of return
much lower at the present fare, the
company has no plans for seeking
change.
Two Factors Enter.
The value of the Capital Traction
property as figured by the Utilities
Commission, prior to this decision, was
approximately S17,000,0OO. There are
two elements entering into the in
crease in this value under the new de-
cision, namely, allowance OF the COM
pany's claim of the S5,150,000 for fran
chise and other intangible rights and
an increase in the value of the physi-
cal property that must be made to
take care of increased price levels.
1t was explained today that the
court, in its decision, has laid down
the principles to be followed in ap-
plying this upward adjustment in
price levels to the old valuation. but
that some mathematical calculating
is still necessary before the final total
Of the new valuation will be known.
Those familiar with the case said to-
day that the final figure will be some
where between $2S,000.0o0 and $780,
600 900
The court directs counsel on both
sides TO prepare schedules in accord
ance with the principles laid down in
the opinion and to prepare a decree
which he will sign.
Court Reviews Dispute.
In an opinion of IA typewriter
pages the court reviews the questions
in dispute between the company and
the Public Utilities Commission and
narrows them down to two points.
One that the commission instead of
fixing a valuation as of July /, 1918,
fixed it's valuation as of July l, 1914.
To that the commission failed properly
to consider. as an element of the fair
value of the property, the purchase
price paid by the Rock Creek Railway
Co. now the Capital Traction Coz, for
the franchises and other intangible
property of the w. G. r. r. Co.,
as a going concern, the purchase
having been made under express
authority of Congress.
Following the opinion of the Court
of Appeals in the Potomac Electric
Power Co. case, the court held that
the valuation must be made as OF
the time of making and not at prlor
date. 1.-The uncontradicted evidence
in the case" says Justice Hoehling,
mot only discloses, but it is matter
of universal knowledge, that during
the five wears from 1914 to 1919 there
had been a sharp rise in prices and
values: and 1t is an equally we'll
known and recognized fact that, IN
large part at least. the rise in prices
is permanent in character. so lar at
least as concerns the matter of any
reasonable probability of return to
pre-war prices.
Based on Actual Prices.
Continuing, the court says: In fix
ing the fair value of the physical
properties of the plaintiffs as of July
H. 1919, the plaintiff is entitled to
the then fair and reasonable value OF
its property, based upon the then
present current prices of material and
labor; excluding from the computa-
ton. as basis for the valuation,
either the index figures of the De-
partment of Labor, showing increase
in commodities generally over pre-
war costs, or the prudent investment
theory as contended for by counsel
for the commission. In other words,
the actual prices current in 1913
should be used in computing the re-
production values of 1919"
The court then takes up the his
tory of the purchase of the Wash
ineton and Georgetown Railroad Co.
INV the Capital Traction Co., for which
siO .750 900 was paid, of which the
Public Utilities Commission in its val
uation had disallowed $780, 900 in its
determination of the historical value
Of the property of the company. Jus
tice Hoehling points out that Con
eress had directed the purchase and
that the commission, while not ques
tioning the integrity of the transac
ton. saw fit to exclude $50 900 from
its valuation The court finds that
no good reason appears why part
of the purchase price should be ar
bitrarily rejected as an element and
item of valuation.
No Fight on Transaction.
Referring to the purchase, Justice
Hoehling says: LAS matter of fact
Congress expressly granted authority
and permission for the transaction
and it safeguarded the interests of the
stockholders by requiring the written
consent of <two-thirds thereof, and II
safeguarded the interest of the public
| by requiring the written consent OF
the commissioners of the District o1
Columbia. 1t is hardly conceivable
therefore, that transaction thus
safeguarded could have been effected
unless entirely legal and proper
Furthermore, the street railway cor
poration thus newly organized ther
was, and ever since has been subject
to the supervisory control of Congress
and IL the transaction was properly
subject to criticism or attack upon the
ground that an unfair or excessive
price had been paid in the purchase
that matter doubtless long since
would have been investigated and, il
| justified, corrected. On the contrary
however, no suggestion of improperly
! illegality or criticism of the amount
paid has been made. nor Is It ever
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