Evening star., 1927-11-01
Early Reaction Indicates vii.
son Plan viii Have Rouqh
Road to Travel.
C0ST-PlUS ELEMENT
SEEN AS UNFEASIBLE
Brand and Fleharty Indicate They
Are Not in Favor of Guar
anteed Return.

BUS systems of the Distric thas a rough
and dubious path to negotiate before
IT. progresses very far in the Public
Utilities Commission. judging from the
early reaction which set in today at
the District Building,
Officials of the commission and
others conversant with the Districts
transportation problems have only had
time to make a cursory examination
OF the general outline of the plan as
submitted officially to the commission
yesterday by its author, and for this
reason they were inclined to discuss
it with caution and some reluctance.
The consensus seems to be at this
time, however. that certain of its
major and fundamental features are
Objectionable.
"COst-Plus' Hit.
The principal criticism was leveled
at the so-called service at cost or cost
plus element of the plan--its very
foundation-which would guarantee
the merged company a return of per
cent annually on the proposed capital.
ization Of $50 700 ,00O On this basis.
the owners would be assured an in
come of $3,689.000 a year.
Maj. William E. r. Covell, senior
Assistant Engineer Commissioner and
executive officer of the former Utili-
ties Commission. who framed the bill
designed to force a consolidation of
the car companies which failed to pass
IN the last session of Congress. point
ec out that the executives of the rail-
way compa mics have invariably esti-
mated that it would be practically inn
possible to bring the net income up
to that amount. even considering the
economies in operation that might be
sHected through rearrangemtnt of
tracks and having the public revenues
pay the expense of crossing policemen
and certain paving charges now borne
by the traction companies.
Moreover. Maj. Covell is doubtful
that the savings through a unification
would amount to 81 900 900 year, az
estimated by Mr.. Wilson, He explain.
ed that the heads of the car corn.
panies had testified at merger. hear
ing conducted by the old commission
that economies in operation through
a consolidation probably would not
exceed 100000. A 100000 estimate,
he believes. would be liberal.
Skeptical on Guarantee.
! Col. Harrison Brand, jr., vice chair
man of the commission. and Ralph B.
F'leharty. the peoples counsel. also
indicated that they were not any too
sympathetic with the principle Of
| guaranteeing the consolidated COM
pany predetermined and definite re.
turn. This feature alone, it was
pointed out, probably would bring
about an increased fare. as the com.
bined earnings of the companies in 1
recent years. did not exceed So, SOC, ,0OG 7
i a Tf he eyiu hos - 30,
failed to yield the $3,6S9,0O0 guaran.
teed return. the fare adjustment funt
of S1.000.000 proposed by Mr.. Wilson
would have to be drawn upon, 1t wa.
said, and the deficit would subse
| quently have to be made up by ir9l
creasing fares, issuing new capitas
or by loans from the District revenues,
| Another feature which did not meet
the approval of Maj. Covell is the one
which provides that the Potomac Elec.
trio Power Co be required to contract /
to furnish electrical power to the con-
solidated company at a rate lower
| than 1t now charges. In effect, Maj.
Covell said. this would require the
power company to sell the current
under the production cost and force
| electric current consumers to subsidies
the difference.
Trustee Clause Hit.
| The creation of a board of three
trustees, appointed by the District !
| Commissioners. which would have
the power to determine conditions on
which the consolidated properties
should be operated and the proposal
that the merged company be allowed
to add to it's valuation by additions
to the $l.000.000 fare adjustment cash
| fund-tWo other major items in the
! nl1n-alSn AT1i lsss
| objection.
These trustees, in Mai. Covell's
| opinion. should have no more author.
| ity than the existing Public Utilities
Commission. whereas, they would !
| compose under Mr. Wilson's scheme, +
sort of super commission. On the
| other hand. Maj Covell believes that
| the present commission has the time
and the authority to manage the
| consolidated company. and the pro,
posed board of trustees would be a
more or less superfluous agency.
Commissioner Brand and Peoples
Counsel F'leharty. likewise share this
view substantially. The former fndi-
| Gated that he probably would not
| oppose the creation of the board OF
trustees should it be given merely
supervisory powers and the members
assumed at least some of the work
of the company executives. Mr..
Fleharty however. said that Congress
most likely would not even approve
the proposition.
Urges Careful Study.
The proposal under which the con-
solldated company would be permitted
to add to its valuation by increments &
to the fare adjustment fund, without
providing for reduction in its vaIu-
alton by deductions from the fund.
Maj. .Covell said. should be studied
carefully.
No comment was forthcoming today
on Mr.. Wilson's plan from the execu-
tives Of the traction companies. John
H. Hanna, president of the Capital
Traction Co.. admitted that ne had
conferred with Mr.. Wilson about the
plan, but that he is not prepared 10 ]
agree or disagree with any of the pro.
visions or to discuss them for pubIica.
ton. William F. Ham, president az 1
the Washington Railway & Electric
Co.. was reported out of the city.
Although the plan is now officiallv
before the commission. public hear.
ings are not likely to be started unit,
Mr. Wilson submits supplemsrf =
which he promised to do. containinp
certain features and other detaiIs
which have not been completed. MIR
Wilson, however. has not indica. Al
when this addifi0nal <y,to .....-sssss~A y