Evening star., 1928-11-26
REDUCED CAR FARE
is POSSIBLE UNDER
NEW MERGER PLAN
Efficiency Bureau to Submit
Program Embodying Rate
Cut to Capper.
CHANGE IN VALUATION
ACCOUNTING EMPLOYED
I. G. c. System Is Used in Fixing
Worth of Companies in
Latest Proposal.


is not definitely promised in the merger
plan of the transit companies, is held
to be a possibility under the scheme
of the Federal Bureau of Efficiency to
be submitted today to Senator Capper
of Kansas, chairman of the Senate
District committee.
The bureau, it is understood, points
out in its merger report that a modi-
f1cation in the basic principles of de-
termining the fair value of Washing
tons transportation utilities as now
prescribed in the existing public util-
tiles act would set up a lower initial
rate base than the $4,000, 900 proposed
in the pending unification agreement
and thereby pave the way for a de-
creased fare.
/. C. C. System Is Used.
A system of accounting such as is
used by the Interstate Commerce Com
mission In valuation proceedings. is
SAID 10 be the basis of the procedure
referred to In the bureaus report. In
cldentally. the valuation of the transit
companies, used in the bureau report.
was determined by the valuation and
accounting engineers of the commerce
commission, who arrived at their figure
after a study of the original cost of the
transit properties and the cost of re-
producing them by the I. G. c. theory.
The merger agreement rate base is
based on the Court of Appeals valuation
of the Capital Traction Co. and the
Public Utilities Commissions old valua-
ton of the Washington Railway & Elec-
trio Co.. which was brought up to date
Dy applying the principles laid down by
the court In the Capital Traction case.
The report, it was said, does not
specifically recommend change in the
public utilities act, but merely shows
the difference in the methods used by
the Public Utilities Commission and the
Interstate Commerce Commission in ar
irving at a valuation and how a lower
rate base could be arrived at for the
merged company under the latter's sys-
TEN. The most salient difference in the
two plans Is that the Interstate Com
merce Commission makes no allowance
for intangibles which include such
| theoretical values as depreciation and
going concern value.
Other Cities Are Cited.
The rate of fare under a merged on
Grafton and the necessity of keeping it
down, is said to take up a large sec
ton OF the bureaus comprehensive re-
port. Transportation conditions in
other cities are cited to show that In
several instances an increase in Car fare
resulted in a decided falling of in
passenger revenues and a consequent
reduction in the railway company's re-
turn.
While the economies that can be
brought about under a unification in
Washington will aid materially in keep
ing the rate of fare down, the report.
it was said, will show that the $5O,O00,-
900 rate base called for in the merger
agreement, which would increase as
betterments and capital additions are
made, would likely result in higher fares
in the. future.
The rate base arrived at by the In
terState Commerce Commission experts
was not disclosed, but it is reported
to be under the $50,000,000 figure, on
which the merged company, according
to the terms of the agreement, would be
entitled to earn" a fair rate of return.
No Recommendation Made.
The bureaus report, it was explained,
does not contain any definite recon-
mendations. but presents all of the facts
with respect to the merger situation so
that Senator Capper and members of
his committee can draw their own con-
clusions.
Herbert D. Brown. chief of the Eff
cheney Bureau, is expected to present
the report to Senator Capper this after
noon. Brown was in Seclusion this
morning reading the final draft of the
report preparatory to turning it over TO
Senator Capper.
AS has already been pointed out, the
report is based on the result of the
bureaus most exhaustive investigation
of any matter of local importance. aside,
perhaps, from the fiscal relations. be-
tween the Federal and District Gov
ernmentS. Much of the data for the
merger report was gathered by the
bureau investigators while in other
cities collecting information for the
fiscal relations report which Is now
nearing completion.
The Senate District committee will 60
thoroughly into all phases of the street
railway merger proposal before acting
on 1t, Chairman Capper declared today
as he returned to his Office and began
to go over the status of local problems
in preparation for the opening Of the
short session next week. 80
VIII Seek Full Data.
Senator Capper said he is in favor Of
a merger of the car lines provided the
terms of consolidation are fair and
satisfactory and that the aim of his
committee will be to gather together al
the data that are needed to pass upon
the pending plan. N-ses ~.
"The Senate" said Senator Capper
will want to be fully advised as to tn
effects of the merger agreement wher
the measure is reported"
The chairman said 1t was for tha
reason that the subcommittee Is havin'
the problem studied both by its ow
expert, DR.. Milo r. Maltbie, and by tn
Bureau of Efficiency.
Since the session Of Congress wi
begin week from today, Senator Car
per indicated this morning that Il
subcommittee in direct charge Of u
merger probably will not meet in
vance OF the opening Of Congress.
Voices Hope for Airport.
Senator Capper also expressed her
today that this session of Congres
would give serious attention to the es
adjustment of an airport for the Ma
,ional Capital A city of this size, h.
said, should have facilities to keep pace
with the development of aviation, anC
recalled that ne introduced a bill on
the subject shortly before Congress adj
journed in May.
The chairman also referred TO the
to give the Federal Govern
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