Evening star., 1926-12-04
COUNCIL DOUBTS
| MERGER VALIDITY
Advisory Body Received Re.
| port on Legislation, But
f.. Fails to Act on 1t.

ernment to arbitrarily increase the
taxation on public utility corporations
TOR the purpose of forcing them to
merge. the Citizens Advisory Council
last night failed to adopt report
rrgng the enactment OF Legislation 10
compel the Washington street car
companies to consolidate.
The report. submitted by a special
kommittee headed by w. l. Swantoh'
recommended legislation to induce the
companies to unite similar 10 Iila'
proposed by the Public Ctlllties Coi.,
mission. While the commission Dill
Cro,.ides an increase of so per cent
An the gross revenues Of the COM
ranies. which would be repealed II a
Sonsolidation is consummated ny Jul!
1925 Mr.. Swanton's report dld not
Stimulate anv amount for the ad-
nitional tax burden nor Old II set
definite time limitation FOR puttins II
fnto effect. In this connection the re
mort merely stated that "considefatioii
10 riven to the undoubted power Ol
che Government by taxation to bring
ehout and compel the much desired
consolidation. 20
The question as to the ValldltS oi
klch weapon to compel ihel sel
E.as raised bv Harry y. Stull. VINO
.,;d that there is considerable doubt
as 10 the committees statement con.
cerning the "undoubted power OF
congress to raise the taxes on certain
r,,blic utility corporations ana uls-
rriminata against others. nave
1alked with several lawyers about TINS
FEATURE OF the utility COMMISSION
bill " he said, "and they do not DeileNe
that it will stand up in the courts.
To Study Merger Bills.
Asa result Of Mr.. Stulls argument
che council voted TO file the report
FOR it's future use in considering any
merger legislation that may be re-
ferred to it later. The special com
nittee was continued. however, TO
consider and report on any Dllls de-
Aligned to force consolidation Whlch
are introf,ced at the coming session
of Congress
."'The time has come in the CROWN
NJ The National Capital when a merger
or consolida ton Of the street railway
companies operating in the Dstrict
nf Columbia is imperative in the III
kereSt Of both the public and the COM
NAMES themselves" said the COM
mittee's report.
"The merger is needed DE the pupii
IN the interest of efficient. economical
and unified service, which would re-
ault in a saving in the operation ana
overhead expenses, and thus tend to
reduce fares. This is the only city
In the country. so far as is known
with the possible exception OF San
Francisco, where there are two com
panies-the Capital Traction Co. and
fhe washington Railway & Electric
Co-farming out, so TO speak. the re-
epective parts OF the city between
them, resulting in restricted develop
ment and lack OF unified service to the
travelling public.
referring to the question of Valu-
alton raised by the companies, the
report declared that this lis an Oh
stacle which it seems impossible TO
overcome, as the several parties in
interest cannot seem to agree upon
valuations for the purpose of a merger
proposition by voluntary means. In
many cases." il added, valuations
have been built up by reinvestments
OF earnings beyond those needed for
the payment of dividends, and it is
desired by the companies to pay dfvi-
dends on these reinvested earnings.
IN other words. the public, which has
furnished the capital is now asked to
pay dividends to others on money
Furnished by itself.
Cost Plan Unreasonable"
The companies, the report explain
I'd, suggested the service e-at-coSt
plan" as n partial solution Of the
situation caused by the loss in pas
eengerS. Figures We're cited showing
ehal tie Capital Traction Co. has been
kcsin4 about . 100000 passengers
Tea!' and the Washington Railway
an E'e.tri~ % Approximately 1900.
GJa. ''TGa ~orVice-at-c0SE plan," how
evcr Jba report commented. lis not
only U9fai: 70 The public, but, when
EUNN considered. i ia believed that it
%ii' hs admitted 10 lie unreasonable. I"
Ih.' companies 80 il continued. pro
po=n that The Government guarantee
rHe:r Income, ANA Ut the same time
a'CH ,lem an unlimited expense ac-
Co1Nt }r other words, the COM
EatL propose that they have all Of
tlc b"ncnts Of Government owner
ship, tho car ,!ing public to provide
I'll Of the cost OF operation. and the
company 10 have no responsibility
except to observe such rules and regu-
tations as may be laid down by the
Utilities Commission. This arrange
snent would shift the burden entirely
from the companies to the public, and
would destroy the incentive for suffi-
cient and economical operation"
Tho report declared further that
she present method of providing So
called adequate return to the com
panieS is unfair to the public and
Encourages the operators to reduce
service and at the same time en-
toaNor to maintain a constant rate
Of return.
In support of this" it said. 1T is
cited that the number of passengers
has decreased about 100000 in five
years. AS carried 10y one Of the COM
panieS while at the same time the
companies expect the Public Utilities
Commission to provide a rate Of fare
which will make the return reason
ably constant"
The council considered the status of
xhe building projects on the schedule
Of Municipal Architect Albert l.. Har-
rs. and voted to meet again next
FRIDAY evening at 1880 O'Clock.