Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-09-20

Continued from First Page)
elsewhere from the standpoint of net
revenue produced. Do increased fares
bring increased profits? There are many
other questions the study of which
might profitably occupy the time Of the
commission for many months, pending
opportunity by Congress to pass on the
merger proposal offered by the COM
panies as solution of their problems.
Action Not Necessary.
THE fact that there is no necessity
Tor action at an early date on the petit
ton for increased fares is easily proved.
| Ihe amount of the net earnings of the
| capital Traction Co. for the year 1927.
| aIter deou1tlng amounts for deprecia-
ton reserves and for payment of inter-
| est on its bonds, was approximately
| S7O7,0O0. 1t paid per cent dividend.
amounting to $4,000, on its stock. A 6
| per cent dividend would have required
SI20,00O. or only very slightly more than
| the company earned, net. In addition.
the company earned enough to pay APP
proximately S280,000 interest on its
ponds. 1t had surplus. as of Deem
Der 81, 1927. of 81 ,227 ,304 Very recent
ly its common stock sold at more than
Sl08 per share of $780, It's bonds are
also selling at premium.
The Washington Railway & Electric
Co earned in 1927 (including income
from its subsidiary, the. Potomac Elec-
trio Power Coz net amount of ap-
proximately S1,573,0 00 It required for
| dividend and interest purposes only
$1,561 900. 1t has, in the past year or
two, increased its dividend rate from
per cent to Z per cent. 1t has large
depreciation reserves. In fact, the two
street railway companies have accrued
more than 100000 for depreciation
whicn they DO not propose to turn over
to the new company if the merger of
the properties is made. The Washing
ton Railway & Electric Co. has a sur
plus OF more than $6,000,000. Its COM
mon stock has sold recently as high as
S433. Its per cent preferred stock
has sold for $99.75: other bonds for S103.
1T is very evident, therefore, that
both companies are in a very fine con-
dition financially, and that there is no
need whatever for hasty action on the
fare-rate application before Congress
meets or before Congress adjourns, for
that matter
the commission a most emphatic and
respectful personal protest against an
increase OF street railway fares in the
District of Columbia before Congress
has had ample opportunity to pass on
the pending merger proposal of the
companies. feel certain that this pro-
test would be concurred in by many of
my colleagues were they here and
familiar with the facts and general
situation"
Legislative Service Protests.
In the letter to Chairman Childress
of the commission, the Legislative Serv-
ice, through Its director, Mercer G..
Johnston, registered a strong protest
against favorable action by the COM
mission on the fare petition and de-
clared that this application for a boost
in fares at this time Smacks strongly
OF bad faith and brow-beating on the
part OF the Capital Traction CO."
The matter of the merger has been
formally submitted to Congress-" said
the letter. THE Senate has appointed
special committee to look into it. For
tnat purpose special appropriation of
$4,000 was made. Now, before the
experts employed to make the neces-
sary investigation can complete their
work and report the result of their
findings even to the special committee.
one of the parties to the merger ven-
lures on game of fast and loose with
Congress by seeking to make funda-
mental alterations in the terms of the
merger. The fare question is absolutely
fundamental.
The pretext assigned by the Capt.
tai Traction Co for its application for
hurry order for increased fares is its
urgent needs This Is a fiimsy eX-
cuse to mulct this community an extra
million year for the kind of street
car service it gets"
The public utilities committee of the
Federation of Citizens Associations, took
action at meeting last night to pre-
vent an increase in fares. A brief out
| lining six points on which opposition
VIII be based was prepared for presen-
| tation to the commission when the fare
| hearing is resumed tomorrow.
Gives Six Reasons.
The six reasons which the committee
gives follow:
| /. That two separate inquiries are
now in progress by congressional agen-
cies with respect to the valuation, oper-
ating expenses and other matters vital
ly connected with the present applica-
| IiOl lOT an increase In rates.
2. That an increase in fares at the
! present time would confuse the issues
| involved in the merger application now
pending in Congress.
8. That an increase at this time will
negative the covenant of the companies
made in paragraph II of the unification
| agreement which says that no change
in the rate of fare will be made during
one year after adoption of the agree
ment.
4. That the evidence already of rec
Ord in the present proceedings irdi-
Gates that both of the parties can con-
tinue to pay liberal dividends on their
outstanding stock without an increase
in fare, and the companies have not
shown urgent and immediate need for
the increase.
S. That the committee is convinced
that the increase in fare demanded will
result in decrease in the number OF
passengers carried to such an extent
that the increased burden on the pub
lie will result IN no material financial
benefit to the companies.
! 6. That there has been no satisfac-
! tory inquiry into the operating ex-
penses Of either company, notwith-
standing the provisions of the act Great
ing the commission.
, Instead of an increase, the Federal
! employees organization declared that
fares should be reduced to cents tc
! stimulate street car patronage anC
thereby raise operating income higher
! than would be the case with higher