Evening star., 1928-12-06

| or consolidated with valuations ap-
proved by State legislatures or Con-
| gress. They are commonly lacking in
| mergers or consultations approved by
regulatory commissions. Unltlcatlon
does not change the constitutional status
of property. It has all the protection
| of the Constitution afterWard that 1t
had before OF course, where a new
| lot of stockholders are acquiring prop
erty valuation may be very necessary,
but where there is merely redistribu-
| ton Of interests 1t is not so important" "
Question Value Included.
Report raises question as to whether
| $50, 100000 rate base provided excludes
! working capital.
| Further States: "The rate base is not
| limited to property within the District
of Columbia or to property used for in
| terstate service. 1t includes the prop
! erty used In part or in whole for
service in the State of Maryland. What
| authority does the Public Utilities Com
mission have, or may it have, to estao-
lish a rate base or value OF properly
used for intrastate service in Maryland?
What, then, is the legal ERECT
or validity of an agreement that calls
for the establishment of rate base or
value by body which has no authority
to establish it?"
THE limitation OF $50,000,00 to
used and useful property Is not bene-
fetal to the public. Car riders woulo
be better off if the $50,000,OOO covered
all of the property of the Capital Irac-
tion Co. and all of the physical prop
erty Of the washington Railway & Elec-
trio Co.-everything proposed to be
Caplir1tlpS
"All liabilities which attach to the
| properties pass to the new company,
| but the proposed agreement makes no
provision for the transfer of any de-
probation reserve or any depreciation
| funds The reserves of over
| S7,7O0,0O0 are ignored by the agree
| ment, The only funds transferred are
| part OF current assets. None Is to be
earmarked as devoted to accruing de-
| probation. Further. part of these funds
| is to be used at once to pay for the
stock of a bus company; and when any
other part is used to acquire addltiona
! property, the cost Is to be added to the
rate base.
Depreciation Fund Missing.
"T'he agreement is completely silent
about an initial depreciation reserve
and there Is to be no depreciation funo
This means that the income from the
securities taken over by the new com
pany, which belong to the depreciation
| reserves of the old companies, will bt
diverted from the depreciation funds
to surplus or profit and loss. This viii
increase the future burdens of the ca
riders, as will be more fully pointed ou
In another place in this report.
1T is important to keep these fact!
In mind, for when one comes to con
slider the value of the property IN re-
lation to the rate base of $50,0000 900, 1
must be remembered that there Is NJ
depreciation reserve or fund OF an!
kind or description.
There are unsettled claims for in
iuries and damages which the nev
company Is required to assume by th'
agreement. In the Statemen
submitte dto the Public Utilities Com
mission showing the current assets ant
liabilities to be transferred to the nev
company by the Capital Traction Co.
no damage reserve or fund Is included
AS the Washington Railway & Electric
Co. Is to match this transfer, presum
ably that company will not include an!
damage reserve or fund in the settle
ment, and I am advised that both com
panies expect that the new compan!
will settle all claims for injuries ant