Evening star., 1926-06-15
FORC|BLE TRACTION
MERGER ASKED Of
CONCRESSBY BELL
Report Recommends Action
Be Taken to Force Two
Companies to Unite.
LITTLE PROGRESS MADE
BY INTERESTS INVOLVED
Statements of Ham and Hanna to
Utilities Commission For.
warded to Capitol,

With statements from the WaSnlnS'
ton Railway and Electric and Capital
Traction companies showing that they
have made little definite progress to-
ward a voluntary merger. Engineer
Commissioner j. Franklin Bell. chair
man Of the Public Utilities Commits
sion, sent to Congress this afternoon
q report recommending that legisla-
tive action he taken to force con
s'olida tion of the two companies.
The statements were sent by VIII
liam F.. Ham, president of the Wash
ington Railway and Electric Co., and
John II. Hanna president of the Cap.
ital Traction Co., in reply to a re.
quest of the commission last week
for Information as to what steps had
been taken toward a merger. The
answers pointed out that the disposi-
ton of Congress to create new and
separate Public Utilities Commission,
coupled with the lack of assurance
from the commission that 1t would
approve service-at.cost plan. tenta-
lively suggested as a basis for anal.
gamation, had caused them to defer
any definite negotiations.
Commissioner Bells report, which
was sent to Chairman Capper of the
Senate District committee and Chair
man Zihlman of the House District
committee, inclosed the copies of the
letters sent to the street railway com.
panies and their replies.
Commissioner Belts Letter.
The letter of Commissioner Bell fol.
The Public Utilities Commission
has made continued efforts during the
past year to bring about g. voluntary
merger of the street railway com.
panies, in accorda nee with the act Of
Congress authorizing the same. Some
conferences and conversations have
been held with representatives of the
companies and the commission has
been ready and willing at all times
to confer with their representatives.
The commission has been willing to
recommend to Congress a merger
based on guaranteed net income for
the continuance of the present rates
of fare over g. period Of years while
the merger arrangements could be
perfected, and has been willing to
consider the initiation Of a service.at.
cost plan based on a cost approximat-
ing the investments which have been
made in developing the properties.
recommend any merger plan based on
a consent valuation far in excess Of
the investments which have been
made or In excess of the valuations
contended for by the commission in
the cases before the courts.
There IS no apparent reason why
valuation of the merged company
must be included in a merger plan.
Valuation either Of merged or sep
arate property should be determined
from time to time by the commission.
based on inventories and appraisals
of property, giving them weight to
courts may decide to be required
under the law.
Wanted Voluntary Merger.
The commission has been hopeful
that a merger under the voluntary au.
thority granted by Congress could be
accomplished, but is now Of the opinion
that the next session of Congress
should give consideration to law
which will serve to effect merger or
a merged operation Of the street rail.
way systems. The commission pre-.
sented such a proposed law to Con-
rress a few years ago, and expects to
make further study of the problems in
volved with a view to having re-
vised merger bill for consideration
when Congress convenes in Decem-
ber'
The letter Of the Capital Traction
Co.. outlining its position on the
merger question. follows in part;
THE subcommittee of the District
committee of the House OF Repre-
seritatives was informed that repre-.
sentatives of the Capital Traction Co.
and Of the North American Co. had
been in conference for some months
with a view of bringing about salts.
factory arrangement whereby a
merger of the street railway COM
panies Of the District might be
effected.
These conferences were continued
and resulted in tentative agreement
on a plan Of merger. which vas sub
mitted by the North American Co.
to representatives of the Washington
Railway and Electric CO. having the
matter in charge. This tentative plan
was based on the establishment of a
service.at-cost plan which would pro.
vide for automatic regulation OF fares
based on a reasonable return on the
fair value Of the properties of the
companies concerned as those values
might be determined by existing law.
Got No Assurance.
We are informed that representa-
tives of the Washington Railway and
Electric Co. consulted with the Public
Utilities Commission and were given
no assurance that the commission
would be willing to approve any such
plan as above outlined.
Because the newly merged com
pany could not be expected to waive
it's constitutional rights of a fair3 re-
turn on it's property, and because of
the apparent probability of Congress
passing legislation entirely reorganiz
ing the existing commission, it was
considered by all parties concerned ad
visable to defer attempts at a merger
pending further action of Congress"