The Washington times., 1928-12-05
(0NCEM Ed
PROFITS
Barred

Although the traction merger
report submitted to the Senate
District Committee by the
Bureau Of Efficiency yesterday
found several objections to the
unification plan to prevent its
acceptance as now written, the
report was being interpreted
today as d sweeping victory
for the traction companies.
The Bureaus unqualified accept
ance OF the fundamentals of the
merger agreement, including the de-
mand Of the companies for $780,
100000 valuation. could be looked
( at In no other way than as q Vic-
tory Tor the utilities.
Concealed Profits
Perhaps the most sensational fea-
ture Of the bureaus report was the
disclosure thar during the last five
years the Washington Railway and
Electric Company has concealed
more than 81 900 900 i'm profits.
This manipulation Of accounts
was charged by the Interstate Com,
1nerce Commission i'm i report IN
the accounting systems of the two
street car cOmpanies which was
included in the efficiency bureaus
report.
The Efficiency Bureau not only
approved this rate base, which has
been the target for opponents of
the plan. but it also agreed that 1t
would not be dangerous to let this
rate base stand for 10 years.
Monopoly Approved
1t also approved the inclusion Of
the Washington Rapid Transit Com.
pany in the merger, thus giving
the merged company a monopoly.
on local transportation. and found
no objection In the control OF the
local utilities by the North Ameri-l
can Company; a giant holding con.
Germ of New York
IT was, admitted by the, bureau
experts that there .is nothing to-
prevent the North American Com
pany from escaping local regulation
by charging its local holdings. an
annual service fee" similar to the
fee charged the Chesapeake and
Potomac Telephone Company by
the American Telephone and TeIe-
graph Company. But the efficiency
experts passed up this objection
without making any recOmnlenda-
tiOns for its elimination.
Many Interesting Conclusions
The Washington Times today made
an exclusive examination OF the
text of the bureaus report and
found many important statements
and conclusions which were not in
clilded in the summary of the report
handed to the press yesterday. These
included:
That the valuation of the two1
companies on the basis of the court
valuation of the Capital Traction
Company is $62 900. 900, as con.
tended by Harley p Wilson. origina-
tor OF the plan.
That there is little chance of the
value OF the companies declining be-
low $4,000. 900. during the 10 years
it would be the rate base.
That attempts to compare the
valuation here with the valua ton
in other cities is futiIe-but that ad.
mittedly the valuation Of the trac-
tion companies in many other citiesa
Ja lower than it would be here un.
der $50, 100000.
That s50.o00,00o is probably the
lowest figure that the companies
will accept voluntarily at the pres.
ent time as the basis for a merger,
and in view of the court decisions
there is good reason to doubt that
a court valuation at this time would
result in lower figure. And fur.
thermore that valuations are ex.
pensive and they take time. This
would require at least five years.
Ten Years Allowed
That the most reasonable course
Ii to let the companies merge and
value them after q sufficient time
has elapsed to coordinate bus and
railway transportation and to effect
the economies Of unified operation.
That ten years does not seem too
long for such an enterprise.
That it is clear from the testi. |
mony OF the ear company officials
IN the merger hea cings that they in.
tend TO start the new company
without any depdeciation reserve.
Continued on Page 35.l
RTFW RR