Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-03-01
TRANSIT CAPITAL
MAY Be S53,9)O,0(0
Hanna's Estimates at Merger
Hearing Indicate Increase
in Figures.

The capitalization of the proposed
Capital Transit Co. may exceed the
$50, 100000 as set out In the merger
plan Of Harley p. Wilson. 1t developed
today when hearings were resumed be-
fore the Public Utilities Commission on
the transit merger agreement. This was
brought out during the cross-examina-
ton OF John Fl. Hanna, president OF
the Capital Traction Co, by Ralph B.
Fleharty, peoples counsel before the
commission
Mr.. Hanna estimated that the net
cash capital Of his company ranged be-
tween 81 500, 900 and $l.750 900. Under
the merger agreement these assets
would be turned into the consolidated
company and matched dollar for dollar
by the Washington Railway & Electric
Co. Ia provide additional reFenue for
track uiianEcs Arad Ncfiinx capital after
the merger Is ccfissiir1mated,
May Reach 10 $s3,500.00o.
In his printed summary of the uni
fication plan. MIR. Wilson used $500.
900 as the figure representing additional
capital. which added to the initial 500
600 900 rate base gave a capitalization
Of s52, ,400. 900. Based on Mr. Hanna's
calculations. however, the additional
capital will range between $4,000 600
and $500. 900. and bring the total val
uation on which the new company
would be entitled to earn return Of
Z per cent to between 100000 and
$53,500.000.
Mr.. Hanna explained that the pro-
vision requiring the Washington Rail-
way &; Electric Co. to transfer to the
new company net current assets equal
to the current assets transferred to the
new company by the Capital Traction
Co. to provide added capital. was In
serted because OF the belief that 1t
would be more desirable to the public
to obtain the additional capital In this
way than TO borrow II at high rate
OF interest
Queried on Rate Base.
Mr.. Flcharty subsequently subjected
Mr.. Hanna TO a barrage OF questions
concerning chiefly the proposed $780,
900 900 rate base and z per cent re-
turn provision In the merger agreement,
and when he completed william A.
Roberts, vice chairman OF the public
utilities committee OF the Federation of
Citizens Associations, took up the cross
examination.
The peoples counsel endeavored 10
bring out the purpose of the parties to
the merger agreement In insisting on an
agreed valuation and liked tate Of re-
turn OF per cent. Mr.. Hanna stanchly
defended the $50. 900. 900 rate base. re-
iterating that It Is 30 per cent less than
the real value OF the railway proper
ties and that the valuation was scaled
down primarily because the companies
wanted to offer an indicemen. To the
public and Congress to approve the
merger plan.
Mr.. Hanna also defended the provi-
sion which would entitle the companies
To earn q return of per cent This
figure. he pointed out Ii a minimum
rate now allowed by the commission
and probably will never be lowered,
Holds Increase Needed.
Mr.. Hanna completed his direct testi.
mony at the afternoon session OF the
commission yesterday and resumed the
witness stand when the hearing con-
vened this morning 10 undergo cross
examination. Al the very outset he de-
nied reports that he had said In his
testimony yesterday that there would
be an increase In car fares. merger or
no merger.
what did say was that unless there
IL a merger, the Capital Traction Co
would be forced 10 ask for higher fares.
he declared. "and that with merger
the fares would ultimately be lower
than under u separate operation OF the
car companies. The situation In simply
this present rate Of fare Ia too low
for separate operations"
Questioning MIR. Hanna regarding the
$50 ,O0O. 900 valuation, MI Fleharty SAID
why IL the reduced value Included III
the merger agreements"
1T was made primarily because the
companies want to offer IN mduoement
tn the public and Congress- To approve
the merger" Hanna answered, u dunt
OF any other reason"
"fhcn you would be ~ we'll satisfied
without liking value IN the agree"
menta" responded the peoples counsel
u can't answer for all the companies
but only for my own company" Hanna
replied, I'VE would be as we'll satisfied
with a value fixed by the court, The
statement of value " q part OF all herv"
lne-at-eost plans. particularly those y,
Chicago, Cincinnati aud hnatnn "
should he desirable Ia tho public, as II
assumes great reduction III value"
MIR, Fleharty. "noes the tlNed value
become pefmanents"
MT, Hanna, Yes, subject IN add"
ttnns,"
Mr., Fleharty; us the same true 10
the rate ef returnf"
Mf Hanna' Yves. the minimum rate
ilyuntin, an Pare \ ltuhinln a.