Evening star., 1928-12-30
5OOOOOOO TRACTION VALUATION
DEFENDED AS FAIR COMPROMISE
Continued From First Page.)

| "The new company is TO nave TaCe
base for the property as Is, the letter
| of the companies stated on this point.
IF depreciation reserves are taken over
by the new company, it would simply
mean that the cost Of the property as
recorded by the books of the new COM
pany would be increased by the amount
of the depreciation reserve. This also Is
a matter to be properly passed upon by
[ the Public Utilities Commission"
| One section of the merger plan lists
various general powers to be possessed
by the new company, and concludes
with the clause, "all subject to the ap-
| proval of the Public Utilities Commits
sion of the District of Columbia
After pointing out that Dr. Maltbie OBJ
| iected to this provision as being TOO
| broad, the companies suggest that the
objects sought by the Utilities CommlS-
sion and DR.. Maltbie might be met by
substituting the following clause:
.'Subiect to regulation by the Public
| Utilities Commission as provided by
| law"
After outlining these specific modif1-
cations the companies say that certain
matters commented upon by DR..
Maltbie and the Efficiency Bureau are
questions to be passed upon by the
| Utilities Commission.
Review Steps in Movement.
In beginning their letter to Senator
Capper the companies observed:
f'Your own statement and those of
other members of the subcommittee OF
the Senate District committee at the
conference with representatives OF the
transportation agencies of the District
of Columbia that a merger should be
effected because it holds great posi-
bility of advantage to both public and
utilities, apparently finds favor every
where and should suggest to all minds
that If the fundamentals of the present
merger effort are correct, all features
collateral thereto should be viewed
broadly and in the light of equal re-
spect for property rights and public
obligations"
The companies recited the various
steps that led up to submission of the
pending merger plan TO Congress, and
then turned their attention to The
specific request of the subcommittee for
Bureau reports.
I'VE assume that the subcommittee
desires some helpful suggestions from lis
and not merely reiteration of the
terms and provisions of the unification
agreement and the reasons in support
thereof" the companies continued. I'VE
consequently are led to remark that
with one exception the summary OF
recommendations of DR.. Maltbie deals
with either legislation or matters of
regulation, or accounting practices which
are now or which should be delegated to
the Public Utilities Commission"
Turning attention first to the QueS-
ton of valuation, the companies stated
1.-THE issues on this item appear to be:
(a) Whether there shall be no specific
rate base included IN the unification
agreement; (b) whether the $50 200, 900
rate base is fair and reasonable, and (c)
if such a rate base is to be included,
whether it Is to be continued for 10
years as provided in the unification
agreement, or for some other specified
time.
Maltbie Differences Cited.
'Dr. Maltbie's difficulty appears to
be one of reconciling his mind to
valuation for rate-making purposes as
set forth in the unification agreement
and approved both by the Public Utili-
ties Commission and the Bureau OF Eff
cheney. The structure of his argument
on the proposed $4,000, 900 rate base
is founded primarily upon his differ
trict of Columbia Supreme Court and
the Court of Appeals, rendered as re-
Gently as February /, 1927, and liking
the valuation for rate-making purposes
of the property of the Capital Traction
Co, within the District of Columbia as
of January /, 1925, at $25, Use, $50. We
see nothing to be gained in burdening
the committee with review OF the facts
and figures involved in this court de-
ciSion.
"This report before the committee
specifically criticiZes the courts for not
rendering the valuation base back to
the public Utilities Commission for
final determination, but this criticism,
If sound, should in reality have been
directed against the Congress rather
than at the court, for the Congress IN
enacting the District Of Columbia public
utilities law laid down a very Speclflc
procedure in public utility valuation
matters. The Capital Traction valua-
ton case was not appealed to the
United States Supreme Court. because
under exactly similar circumstances, the
Supreme Court, in the Potomac Electric
Power valuation case, refused 10 TAKE
jurisdiction of an appeal from decision
of the Court of Appeals, and In the
opinion Chief Justice Taft said:
OnQOT bIlG law, tAAC PAoS~~~A~AA0 -
the District Supreme Court Is OF
very special character. The court may
be called in to advise the commission
as to the elements of value to be con-
sidered by it, at any stage OF the near
ing before the commission. To moolIy
or amend q valuation, or a rate. or
regulation of the commission as made
ouate. as the court Is authorized 70 40,
seems to us necessarily to impart the
power to increase the valuation, or rate,
or to make a regulation more compre-
hensive and to consider the evidence
before it for this purpose. The IAN
guage of the act under discussion Is
much wider than that OF the inter.
state commerce act or the Federal
Trade Commission provisions. 1t brings
the court much more intimately into
the legislative machinery Tor nxng
rates than does the interstate COM
merce act. We cannot escape the con-
clusion that Congress intended that
the court shall revise the legislative
discretion of the commission by con-
sidering the evidence and tul RECORD
of the case and entering the order It
deems the commission ought to make.
Calculations Are Outlined.
s"The various rate-base calculations
| which have been made in the course OF
the merger proceedings are as follows
| bureau of Efficiency report):
"Undepreciated value adopting the
principles of the Court Of Appeals de-
cision in the Capital Traction case,
| $62, ,123,447.
Deprecated value 05 per cent de-
| preciation) as calculated by Col. Brand,
vice chairman of Utilities Commission,
$50, ,258, ,795.
Deprecated value 13 per cent de-
| preciation) as calculated by the Bureau
| of Efficiency, $54, ,051 TAG.
| Public Utilities Commission valua-
tions brought up to date, plus allow
ances for Maryland properties and bus
company, 1880, $780,"
The letter of the companies explains
that Col. Brand added in order to