Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-01-10
Merger Demands by Senate
Group Accepted Only in
Part by Companies.
VALUATION QUESTION
BECOMES MINOR FACTOR
Capital Company Head Reports
$500, ,405 Total Net Income for
1928-Decline Shown.

Apparently defeated in their efforts
to get congressional approval Of a
merger agreement with fixed $50, ,00O,-
900 valuation, representatives of the
transit companies are comforting among
themselves today to determine whether
to accept the terms of unification laid
down by the Senate subcommittee or
whether to seek a compromise with the
committees special envoy, DR.. Milo r.
Maltbie.
The transportation officials most
vehemently deny reports they have
agreed to accept the committees terms
in toto, and point out that further con-
ferenceS with DR.. Maltbie, at which he
will be asked to shed more light on the
committees wishes, will be necessary
before they take any definite action to
revise the merger pact. DR.. Maltbie
was In session with the traction COM
pany representatives until nearly mid
night last night, and left Immediately
for New York. He is expected to re-
turn tomorrow and resume the discus
sion.
Fare Question Important.
Although no issues are said to have
developed at the initial conference, the
traction officials, 1t was explained, made
it clear that they are in no way bound
by the action of the committee and will
insist on certain legal rights to which
they claim they are entitled.
The fixed valuation, which has long
been the stumbling block in the merger
negotiations, no longer seems to be the
most important factor The traction
a hot
question of valuation can be taken care
OF in another way, should they decide
to abide by the committees resolu-
ton and remove 1t. 1t has been re-
placed, however. by another factor,
which is considered far more serious
by the transit off1cials-the principle
laid down that the rate of fare should
remain unchanged pending a new valu-
alton, to be completed in not later than
two years.
The merger agreement in its present
form provides that the existing rate of
fare shall continue for one year after
consummation of the unification, and
the traction representatives seem re-
luctant now TO agree to an extension Of
that period.
The transit companies are willing to
risk the uncertainties of one years
operation on the existing rate of fare.
IL was said, but two years is Just ~
months too long, for in that time many
unforeseen developments could occur
which might drain the operating income
OF the consolidated company.
Stockholders Approval in Doubt.
Another development which has come
out OF the committees refusal to accent
sne merger agreement as now written
Is the question whether the stockhold-
ers Of the Capital Traction and Wash
mgton Railway & Electric companies
would have to approve the changes
made IN the original contract. This is a
legal question which is to be settled
within the next few days.
The board OF directors of the two
companies. acting for the stockholders,
approved the original plan of merger.
and there is strong belief that they
also would be required to pass upon any
changes.
Such action by the stockholders would
work to delay congressional action on
the revised agreement, it was said.
unless q clause could be written into
the joint resolution of Congress au-
tnorlzlng the merger to make a condi-
ton for subsequent approval of the
owners.
The stockholders of the CAPITAL Trac-
tlon Co. held their annual meeting To-
Gay, but consideration was not given
the developments in the merger nego-
uatlonS, 1t was announced.
Chairman Capper Of the Senate sub
Conmlttee said that from what he had
learned some headway was made i'm
tne conferences which DR.. Maltbie had
with the representatives of the COM
panies.
Senator Capper explained that DR..
Maltble'S trip to New York bore no
relation to the local merger situation.
The subcommittee decided against
having any fixed valuation provided for
IN the merger legislation, recommending
that the value be determined by a conn
plete revaluation of the properties. to be
completed within two years. It also
recommended that rates of fare remain
undisturbed pending the revaluation,
except that universal free transfers be-
tween car lines be made effective i'm
mediately following the merger. It was
further provided that the Public Utili-
ties Commission should employ DR..
Maltoie to supervise the revaluation.
Vandenburg Sees Wilson.
The resolution which the subcom-
nittee approved yesterday embodying
these principles was offered by Senator
Republican, of Michigan.
Several days ago Harley P. Wilson had
a conference with Senator Vandenburg.
1t Is not known whether the particular
phases of the merger plan acted upon
by the subcommittee yesterday were
gone over at that time. Following his
conference with Mr.. Wilson last Satur-
day, however, Senator Vandenburg said
ne saw no inSurmountable reason why
merger agreement could not be worked
out.
Mr.. Wilson conferred with Senator
at that time in order to 60
over memorandum which the SEN
ator from Michigan previously had sub
nitted to the Senate subcommittee out
lining his views regarding the basis
'or the merger. This memorandum
had been turned over to the traction
representatives for comment.
Senator Blaine, Republican, of Wis
,onSin, member of the subcommittee,
S considering whether to propose some
egislation that would define the meth
IDS of valuation to be followed by the
Utilities Commission. He said today.
lowever, that he is waiting for the
'utcome OF the conferences between DR.
daltbie and the representatives Of the
raction companies before determining
lpon his course Of action Senate
Blaine said he favors valuations basa
n the amount prudently invested pir
editions and less depreciation.
Senator Capper viii call another
Meeting of the subcommittee as scon
IS DR.. Maltbie has definite word to re-
'ort from the negotiations.
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