Evening star., 1928-04-30
ADMITS RATE BASE !
SET BY COMPANIES
Ladue Says $5O,OO0,0 600
Was Asked by Traction
Groups as Valuation.

Pressed to tell the House District
committee why the traction merger
agreement Is committed to a $50,000,00
rate-making base. Col. William B.
Ladue, District Engineer Commissioner.
declared today 1t was because the
street railway companies wanted 1t.
1.-The Public Utilities Commission is
perfectly willing to leave out the rate
making base" Col. Ladue replied in
response to a query from Representa-
tive Gilbert Of Kentucky. who doubted
the wisdom of the committee commit
ting itself to such a figure when he
claimed the investment value of the
companies could not be more than
$50, 100000
Col. Ladue, who testified for the first
time at the merger hearing engaged in
a lengthy discussion with Mr.. Gilbert
over the rate base when the Kentuckian
asked II there was a necessity for any
valuation at all being estimated in the
merger agreement.
THE necessity arises from the REQUIRE
ments OF stockholders to know where
they stand If they are to exchange
their present stock for stock in a new
company" Col. Ladue responded. He
added that the rate base was not so i'm
portant from the viewpoint of the Pub
lie Utilities Commission.
AS a member of the commission
which approved the agreement, Col
Ladue testified that the advantages
to the public from merger would Off
set. in his belief. any disadvantage
that might be derived from an increase
in car fares. which he believed newt
able. Particularly with the respect to
the development of the triangle south
OF Pennsylvania avenue. he said the
necessary rerouting of cars could be
done more easily and advantageously
under a merger than under present
conditions.
Rate Increase Probable.
Col. Ladue said the probability of an
increase in fares would be less under
the merger than under competitive
companies. and he added that he could
see no avoidance Of an increase in fares
under the proposed rate base a year
from now without decided increase
in patronage.
IT think the merger is so important
to Washington that its approval would
be great advantage to the CITY," Col.
Ladue declared
He believed the rate of fare was not
likely to be increased very high, because
the merger would result not only in
certain direct economies, but more par
ticularly in increased efficiency OF serv-
ice by the use of the combined facilities
of the companies.
In plans for the development of the
triangle south of Pennsylvania avenue
and the general plans Of the National
Park and Planning Commission" he
said. "a material rerouting of the COM
pany lines viii be necessary. That can
be effected much more economically and
easier In a merged company than under
present competitive conditions"
More Important Than Fare.
The radical rerouting and scientific
use OF rolling stock and other equip
ment as contemplated by the merger
was declared by him as one OF the more
important advantages which he believed
was more important TO the public in
terest than the question OF fares.
Mr. Gilbert inquired exhaustively into
valuation matters and declared that In
view of the present earnings Of the two
companies. divorcing the Potomac Elec
trio Power Co. from consideration. an
oustide investor would hardly pay more
than $4,000 900 for the properties OF
the public utility investment.
Col Ladue explained the proposals
relieving the companies from three
fourthS of the maintenance cost OF
street paving and an opinion from the
director of the budget was read. in
which 1t was held the policy did not
conflict with the financial policy of the
Government.
I'm other words" said Representative
Gibson of Vermont. ''the Budget Bureau
passed the buck back 10 Congress as 1t
did not fully indorse the relief of the
railroads"
Burden on Taxpayers.
Col Ladue defended the item. though
he admitted 1t would saddle the burden
on the taxpayers. but expressed the
opinion the public would benefit through
the increased revenues to the companies,
Without this saving in paving cost,
crossing policemen and relief from
bridge repairs, he believed the neceS-
sity for an increase in fares would be
imperative
The committee in an executive ses-
sion following the hearing voted to
exclude the minority report on the
merger agreement submitted by William
A. Roberts at a meeting of the citizens
Advisory Council. The committee de-
cided to keep 1t out of its own record
because OF certain statements IL con-
tained rejecting on George r. Wales
and Charles l. Stengle, members OF the
council.
It was felt that Roberts testimony
at the present hearing would be sum-
cient TO cover his views in opposition
TO the merger agreement.
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EuV an NEMTc uIHuEp