Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-22
hartman PROBES
". R. {. METHODS
Questions Apparently Would
Show System Fails to
Give True Rate.
Continued From First Page.)

years quite a variation. The amount Of
Federal income tax paid in 1927 was
SCI ,9O6, compared with $50, 22l in 1928.
For the IA months ending April 80,
1929. the amount dropped to $49,682.
This decrease was partially explained
by Ham as due to the settlement of the
w. b. d. A. rate case.
The costs of the Portland street track,
Mr.. Ham told the commission In re-
sponSe 20 one of its earlier questions,
had been included by the company in
its claim Of q minimum valuation OF
SIG, 28o. 900. This cost was estimated
at 377,C23. Mr.. Hartman then proceed
ed to draw from the witness eXplana-
ton of how various items for improve
ment were charged and why an expense
account Is needed when no capital Is
involved.
Technical Questions.
Commissioner Hartman entered upon
q long series Of highly technical ques-
tons designed to disclose the methods
Of accounting used by the Washington
Railway g. Electric Co.. especially with
reference TO depreciation upon its prop
critics.
When Mr. Hartman referred to the
report of the Bureau of Efficiency upon
the proposed merger, Mr.. Ham took ex-
ception to the methods OF the account
ants OF the Interstate Commerce COM
mission. who assisted the Bureau OF
Efflciency.
Il don't think those who Investigated
our accounts for the Interstate Com
merce Commission were in sympathy
with the idea that depreciation should
be computed on present value" declared
Mr.. Ham. II think the methods fol-
lowed by the Interstate Commerce Com
mission accountants are in error"
Mr.. Hartman wanted to know whether
computation of retirements of capital
value on the basis OF reproduction cost
rather than original cost would not re-
suit In an increased amount of money
being collected from the public before
computing the return Of the company
on fair" value.
Rail Weight Is Cited.
mot as We attempt to compute it,"
replied Mr.. Ham,.
Mr.. Ham said that his company cap
italized a portion Of its costs represent
ed by changes in price levels. For in
stance he said. II the company installed
70-pound rail and then replaced it with
l00-pound rail, it believed 1t was proper
to charge to the capital account the cost
OF the additional 80 pounds.
That is in conflict with the Inter-
state Commerce Commissions classifi-
cation, but we have followed that clas-
sif1cation."
Commissioner Hartman then read q
series Of questions from his little black
book" relating to the way the company
had computed Accrued depreciation
since 1919. Mr. Ham said that before
that date the company had written up
depreciation on equipment from surplus
and sometimes in an arbitrary manner.
Commissioner Hartman asked whether,
since 1919, the company had not been
accruing depreciation on unit straight
line basis.
Not on All Glasses.
Not on all classes Of property" re-
piled the witness.
Mr. Hartman asked whether, in ac-
counting for depreciation. the company
had begun on the theory that all prop
Ham said that depreciation had not
been computed on the basis OF new
property on that date. but It so had
been computed afterward.
Amy other system than that followed
by the company in this respect said
Mr.. Ham. would be most harsh and
practically unavoidable.
Are there any tracks OF your COM
pany not used for regular service, but
barns?" asked Mr.. Hartman.
Mr.. Ham replied that there were such
tracks at Ninth street and Florida ave-
nue.. on Fourth street northeast,
near the lexington carbarn and several
other places.
In response to other questions Mr.
Ham gave . brief history Of the build
ing and former uses of a number of
structures owned by the company. as
loy
included the lexington carbarn. the
Nichols avenue station, Tenleytown
power house, Great Falls power house,
Thirty sixth street and Prospect avenue
station, the carbarn at Fourteenth and
East Capitol street. the street shops,
the building at Eleventh and Florida
avenue, the Brightwood carbarn. the
Fifteenth and H streets northeast barn
and the building at Four-and-a-half
and o streets.
Following this, Mr.. Hartman inquired
in detail about the replacement OF
tracks. Mr.. Ham said the company
never constructed entirely new tracks
at one time, but kept replacing the parts
when necessary.
Most of our deterioration" explained
Mr.. Ham, comes from the condition OF
our rails. When We put in new rails,
We practically renew the whole track,
including the underground construction.
because the rails deteriorate faster than
anything else. The replacement OF
rails makes the whole track as good as
new, in my judgment"
Ham and Fleharty Clash.
II the commission should permit the
Washington Railway & Electric Co. to
charge a lO-cent cash fare with four
tokens for 80 cents, the rate Of return
a.. Ill Ia,
"confiscatory," Mr.. Ham told the COM
mission at yesterday afternoons session.
When Ralph B. Fleharty asked Mr..
Ham whether he would regard as con-
fiscatory O return of 6.25 per cent,
which is the estimated effect Of the pro-
posed fare increase, the witness an
Swered in the Affirmative. He said the
trend of the rulings of commissions and
courts was toward III and per cent
for street car companies.
Then, If the increased fare you ask
would still be confiscatory what is the
good of considering this petition?"
asked Fleharty.
THE fare we ask would be about
100000 q year less confiscatory than
the present rate" replied Mr.. Ham.
Mr.. Ham admitted that some Of the
company'S street cars are several years
older than the estimated service life
on the basis of which the company set
aside depreciation reserve for them. He
said IS of the cars included In the
company's valuation were purchased In
1897, IS were purchased in 1899, 2 In
1903. % in 1905 and 81 in 1905.
The commission has fixed 4.39 per
cent a year as the rate of depreciation
for street cars. which would make the
estimated service life of each car be-
tween 20 and % years. Mr.. Ham said
the age Of the cars did not mean they
were unserviceable, because, for in
stance, the cars bought In 1899 were