Evening star., 1928-12-05

have 1t completed at the expiration Of
the 10-year period. Therefore, If at
some future time the United States Su-
preme Court approves the method used
by the Interstate Commerce Commis-
sion. the local transportation properties
may properly be revalued by the Public
Utilities Commission in accordance with
the decision Of the court. The 10-year
limitation on the rate base also safe
guards the public interest against future
decline in prices and a consequent de-
crease in the value Of the street rail-
ways from reproduction standpoint.
Suggests Depreciation Rule.
The report states that the substitu-
ton OF the valuation of $4,000, 900 In
lieu OF the original cost of the properties
as basis for depreciation charges would
result in an increased annual charge for
depreciation OF approximately $5OO,000.
Ihis could be avoided by including in
the legislation authorizing the unifica-
ton provision requiring a continuity
OF accounting for depreciation on the
present basis of the money cost Of the
property to the existing companies and
the transfer to the new transit company
or their accumulated depreciation re-
serves. On this basis the new transit
company will probably be able to earn a
reasonable return on the $4,000 900
valuation without an increase in fares.
With reference to the power clause of
the unification agreement, the Bureau
OF Efficiency believes it Is so general and
vague in its terms that it may fail in
Its purpose because no unit of measure
ment Is provided by which variations of
the amount OF power consumed or in
the production cost may be determined.
1t is therefore suggested that the inter
ested parties agree in advance that the
power contract between the new tram
sit company and the Potomac Electric
Power Co. provide that certain units of
measurement be used in computing the
cost OF power to the new company and
that the new company be granted its
just proportion of future decreases in
power production costs.
A final suggestion for modifying the
agreement relates to the capitalization
OF the new transit company. It is
pointed out that on the basis of the
Capital Traction Co.'S balance sheet of
June 80, 1928, its net current assets had
increased nearly 100000 over the orig
maj estimate on which the agreement
was based. Additional capital stock will
nave TO be issued to the Washington
Railway & Electric Co. for these cur-
rent assets, thus destroying the parity
Of stock ownership between the two
companies. To prevent this It Is sup-
geSted that the excess amount Of cur
rent assets contributed by the two COM
pan1eS be set up by the new company
as a funded reserve without issuing any
stock against it.
Bus Inclusion Favored.
In the opinion Of the Bureau Of Eff
f1ciency, unified transportation sys-
tenn should include both street cars
and busses so co-ordinated as to render
the particular service for which each
Is best adapted. The acquisition of
the bus company Is therefore essential
for the purposes Of the proposed uni
f1cation, and it Is not a matter of great
moment whether that end be accom-
plished by absolute merger or stock
ownership.
The section Of the report entitled
Economies of Unified Operation con-
tains an analysis Of 10 reports prepared
by s engineering organizations at vari-
Gus times during the last three years.
Reduced to comparable bases the esti-
mates OF these engineers indicate that
the eventual savings from uniflcation
should, In their opinion, approximate
$l,OO0,000 per annun. All the en-
gineerS are agreed that the largest
economies will result from the more
efncient routing Of cars on a unified
system. In addition, the engineering
reports list certain indirect savings, In
cluding the consolidation of barns and
shops, the reassignment of cars to barns
and the reduction in general overhead.
For the purpose Of aScertaining the
relative efficiency Of the street rail-
ways Of Washington and other cities
the investigators Of the Bureau of Eff
ficiency made a number of comparisons
of operating results on various unit
bases. These comparisons are favora-
bic to Washington in view Of the sepa-
rate operation of the two companies
and the underground conduit system
used by them. There is little doubt