Evening star., 1926-11-04
PLANS TO FORCE
CAR LINE MERGER
Bell Announces Proposed
Legislation to Reward or
Punish Companies.

Preparation of proposed legislation
to force the street car companies of
Washington to enter into a voluntary
merger will be started very soon," it
was. announced today by Engineer
Commissioner j. Franklin Bell, chair.
man of the public utilities commits
sion.
The announcement came as a sequel
to a lengthy informal public hearing
yesterday at which the commission
learned that the people of Washington
still anXiously desire a merger, but
that the traction companies are not
prone to proceed with such negotia-
tions unless the plan of consolidation
embodies a fixed valuation and service
at cost as the cardinal features.
The merger bill. Commissioner Bell
indicated. will contain both punitive
measures and rewards, based upon
suggestions made to the commission
as possible ways Of bringing about
a unified operation.
Suggestions in Two Groups.
These suggestions, as revealed at
the hearing, are divided into two dis
tinct groups. as follows:
If the companies do merge by a
given date, reward them by repeating
the crossing police tax, repeating or
reducing the paving tax, guarantee
them against bus competition. modify
the present taxation and either re-
peal or modify the bridge repair tax.
For failure to merge by a certain
given date, the suggestions proposed
such punishment as revoking char
ters, increasing the gross revenue tax,
imposing a franchise tax, allowing
unlimited bus competition and order
ing the operation Of the cars of both
companies Unfortunately over the
tracks Of other companies. The latter
plan would, in effect, be a merged op-
Grafton.
Which of these punitive measures
and rewards will be selected for in
clusion in the merger legislation have
not been definitely determined. This
question will be given most serious
study before the merger bill takes
definite form.
Asks for Proposals.
Commissioner Bell has asked the
heads of the car companies to assist
the commission in the preparation of
the legislation by furnishing their
own merger proposals. These will be
included in the merger bill, he said,
as alternative paragraphs to the COM
missions propositions or else submit
measure. If the commission decides
on the latter procedure. it was indi
Gated that the proposals of the trac-
ton companies would have to stand
on their own merits.
While the Commission is not ad.
verse to the general principles of.
the service at cost plan, Chairman n
Bell does not believe that it should
be used as a basis for merger, coupled
with a valuation which represents
much more than the money invested
in the street car properties. What
the Commission wants is for the COM
panies to agree among themselves on
a ratio for division Of net earnings,
merge with valuations and car fares
unchanged for the present, and enter
into a new valuation proceeding after
the merger has been accomplished.
Seek Investment as Basis.
It is the opinion Of the Commission
that If the service at cost principle
is to be adopted, the return on actual
investment instead of valuation should
be used in arriving at the cost of
operation.
The difference between these two
items was illustrated by Commissioner
Bell by citing the case of the Capital
Traction Co., which Is capitalized at
sents stock and the remainder bonds.
The commissions valuation Of the
property Is about the same amount,
but the District Supreme Court has
increased the valuation to more than
$50, 900 900. from which decision the
commission appealed to the Court of
Appeals.