Evening star., 1928-03-05
7PER CENT RETURN
IN MERGER RAPED
Public's Spokesman Give No.
tlce of Battle Over Agree
ment Clause.

Warnings we're given BY the public rep
Tcscnta.iVes a. the merger hearing ~
day III a protracted legal battle over the
right Of the traction companies 70 de-
mand a per cent rate Of return on :he
$4,000 900 valuation In the street rail-
way combination agreement.
William +. Ham. president Of the
Washington Railway &; Electric Cc..
prccipitated spirited dispute by intro
ducing into the record q IT. of some Is
public utility cases decidsd BIZ TIE
United States Supreme Court and o,ter
courts in which returns as high as 3
per cent we're granted.
Introduction Of these records br1Iyht
a sharp objection from william Mex.
Clayton. Chairman Of the public u.t!;.,es
committee Of the Federation Of Cit!zers'
Associations, who sought 10 keep tnern
out. Most of The cases quoted. .r.
Ciayton protested, ingolved gas AID
c!cctFlc light Companies and rad 70
bearing on street railway situation -.scl
as involved IN the proposed :-.o.---.r
mere. He insisted that the record show
IN detail the financial construction Q.
Inc various companies cited.
Controversy at Hearing.
A lively controversy ensuea. Pa-7a
b. Fleharty, peoples counsel. declared
ne would not object 70 the irt-oduc.,or1
o. TINS evidence, but warned ina, re
would introduce. az the proper tine. a
.!sI oi court cases involving rates I1Tar
than per cent.
Others joined In the discussion q
X. Bowen, counsel tor The ~. p Z. :
20, emphasizing that the decig.o~s
cNed thaf no rate below per ce-t
could be given "Withou. costing the I.ras
conflScat!on. Bowen added ina. = re
courts have allowed a : per cent ~a-
turn % gas and electric c0nDarie@ ~,
me stronger reason existed for allow
ing a higher return n the case of
street railways.
Representatives OF the ". P. DE Co.
Joined Clayton and Fleha.ty In impress
ing on the Public Utilities Conr!lss.o,
tTal TIE proposed : Per cent -a.e ct
return would DC made the object OF fill
!ega4 arguments later or n The hearing.
Ham Presents Statistics.
Mr. Ham. who vas the only witness
tnis morning. presented a Staggering
mass o. statistics bearing on .t1a aa---
lngs and operations 0: his corrar7
and the growth OF the Potomac Eco
tric Power Co. from 1906. when ire
washington Railway & Electric Co.
guaranteed al bonds issued bY II n
return for power al cost. through 1927.
Ham declared tia. the addition O:
net current assets OF the companies
"4l increase the capitalization. bc:
would not affect the rate base.
With rate OF SO to- electric power,
Mr.. Ham declared that OUT os - Large
cities IN the country washins+or,s =
rate is the lowest OF all but seven.
Earlier II the day NJ. Ham reiterated
his warning that the proposed t-act.c7
merger would be impossible c: success
without inclusion OF the Washington
RAPID Transit Co. a matter wa.c:. the
Public Utilities Commission Sill tas
under adyisement.
AL the traction officials. he declared,
are in accord with the agreement :nar
there should be monopoly OF trans
portat:on in the hands o. this new COM
pany under public regulation"
Earning 2.ell Per Cent.
A. the outset % the hearing. Han,
gave an array Of statistics showing ,hs
income ard operating expenses % he
Washington Railway s. Electric Co. as
OF December 81. 1927.
The company is earning ca.i per
cent on its own valuation q. sS5.70I,-
i5T, the total operating income after
depreciation being sl.oSe6I459
In making these computations ne
pointed cut that there was included
S76,2l6 for crossing po.lcslien ard $50
600 FOR paving relief.
Nj. Ham declared that i, cases
where the District orders he streets
widened, ~ e1ica-SS OF rev paving
programs. the District should 5ea- he
entire coSt o: paving. ard ;ae t-sc:.c1
company De required oGty 20 -. IS
tracks - condition.