Evening star., 1928-04-21
HAMMER ATTACKS
MERGER RATE BASE
Legislators Grill Brand on
Guarantee Contained in
Combine Plan.

Members of the House District COM
mittee today fired another broadside OF
criticism at the $S0.0o0,0o0 rate base
in the proposed traction merger agree
ment, defended by Col. Harrison Brand.
jr.. of the Public Utilities Commission
as good gamble" against higher
valuation in the future, when he was
nut throueh strict examination.
Representative Hammer Of North
Carolina flaycd the policy of guaran-
teeing the rate base for 10 years as
unfair to the public" He protested
that Il gives the car riders only one
year of protection under the present
rate Of fare. while the traction COM
panies on the other hand are granted
nine years in which TO conduct appeals
to the court for an increase in revenues.
Criticism of the manner in which the
public hearings were conducted on the
merger plan was voiced by Representa-
tive Gibson of Vermont. who CHALLENGED
Col Brand to cite single city which
ton companies without making prop
er valuation of properties on which to
fix q rate base.
Ask Enlightenment.
Both Mr.. Hammer and Mr.. Gibson
declared at the outset that members OF
the committee were of "an open mind"
in regard to the modified merger plan,
but that there were certain matters in
connection with methods of arriving at
the rate base upon which the commit
tee needed enlightenment, Mr.. Gibson
expressed doubt that the public inter-
eSt had been fully protected by the Pub
lie Utilities Commission in agreeing to
the $50 ,0o0, 900 rate base.
In reply 10 Mr. Hammers criticism
of guaranteeing the public only one year
cf protection and existing fares. Col,
Brand declared there would be no OBJ
ject in a rate base at all IL fares are
to remain the same
The commission official explained that
the companies had Sougis1 first a per-
manent guarantee OF the seven and "a
half per cent return on the valuation
as agreed upon. He told members of
the committee that the Public Utilities
Commission felt 1t should not fix the
valuation base for a longer period than
10 years. and as further compromise
the companies had agreed to retain the
present fares for one year. during which
time more thorough examination could
be made into the economies expected
under the merger,
DEFENDS Kate base.
Col Brand Stoutly defended the rea-
sons for the commission reaching It's
decision on the $50.000.o00 rate base,
although he admitted that no revalua-
ton Of the company had been made
before the agreement Called to testify
about the controversial clauses in the
merger pact, he defended the rate base
as fair to all concerned.
- EH.a,w xa,a@ -S{ tw.-4
ton when the committee adjourned the
hearing until 10 O'Clock Monday morn
ing
AS an expert of the commission, Col
Brand was called as the first witness
by Chairman Zilhman 10 explain the
valuation feature, reduction in over
head expenses and other economies ex-
pected from a merger. Most Of the
time was spent on the valuation clause,
which Mr.. Brand characterized as the
paramount issue"
Admitting there is no prospect OF
reduced fare rate under a 7i3 per cent
return over period Of 10 years. Brand
qualified his approval of the modified
agreement by the statement that he
was convinced that fares viii be lower
with merger than without one.
Gives -Four Reasons.
Col. Brand had four reasons for max
ing this aSsertion-namely. the $50 O00,-
600 rate base for 10 years. whicli he
claimed was lower than the aetnalvaluea
Of the properties; economies in opera
ton: relief from charges considered
inequitable, and more efficient facilities
for operation, which would result In a
greater volume Of traffic.
IF revaluation is made Of the prop
fnS 1@Ee a1.as.ff ffnsa he sxz
excess Of 10000 ,0O0." Col Brand told
the committee, adding that he re-
garded the rate base as fixed in the bill
for 10 years as "a good gamble"
Explains Valuation Figure.
Explaining how the commission
reached an accord on the rate base. he
said that II valuation Of the Wash
ingtOn Railway e. Electric Co. was made
on the basis Of the Capital Traction
court case, the property would be val
ued al $50 100000. This. added 10 the
$4,000, 600 valuation OF the Capital
Traction Co, would give a total of
s56. 900 900. This total Col. Brand ex-
platned, does not include the valuation
Of the Rapid Transit Co. or the Mary
land property OF all three companies.
He outlined economies expected from
the merger. amounting 10 nearly
81 900 900, as a result OF a reduction OF
about $3.50. 1000 in overhead expenses a
further reduction OF about 500 900 by
repair shop consolidation and an econ
orny OF 100000 track consolidation.
Members Of the committee have asked
Col Brand to explain how he had ar
rived at a $50. 900 900 valuation for the
Washington Railway e. Electric Co,
and he went fully into the various ele-
mentS Of computation.
The total OF these elements, exclusive
Of Maryland property. he declared. would
amount 10 approximately S.037. 600
Taking this as the lowest figure and
$4,000 900 for the Capital Traction Co,
there would be a total Of S54 900 600
without regard 10 properties IN Mary
land" he said
Add 10 this ar allowance OF 81, 500 900
for the Maryland properties. where they
claim $4,000 900, and $500. 900 for the
Rapid Transit Co. which claims an
$500, 600 valuation. and you have a total
0f S57 900 900 as fair low estimate" :"
Col. Brand said he doubted whether the
court would sustain an estimate as low
as this
Gin nm tN IEWEI pY