Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-16

rectly out Of depreciation" Mr.. Clay
| ton asked.
mo, it would not" Mr.. Hanna re-
piled.
| In answer to further questions. Mr.
Hanna next said that the Capital T'rac-
ton Co. has not yet applied for an in
!, crease in the fares charged for Its
Maryland operation, but that the COM
pany had such request in contempla-
| ton, particularly with reference to the
Kensington line. He said the company
! had an informal understanding with the
Maryland Public Service Commission
that it should receive fares on the
! Kensington line enough to allow 1t TO
meet operating expenses, and thaS the
company is not now even making oper-
ating expenses on this line.
Queried on New Benefits.
eff the commission should grant the
| increased fare you ask, what dement's
would the car riders derive which they
| do not now enjoy?" asked Mr. Clayton:
/ "They would have the satisfaction OF
knowing that they were paying the
proper price for the service they re-
ceived," replied Mr.. Hanna.
Anything else?" insisted Mr.. Clayton.
| Are you asking what improvements
we would make?" Mr.. Hanna asked.
IF so, 1 would rather you asked a
direct question:
"Wo,.Jd YOU grant lower fares for
school children?" queried Mr.. Clayton.
| NO" replied Mr.. Hanna, that would
| be a matter for the commission TO de-
termine."
Haven't you always resisted it?" in
! sisted Mr. Clayton.
| I'VE have always taken the position
that the commission should determine
/ matters of this sort, bearing In mind
| the effect that reduced rates for school
children would have upon the general
rate of fare and the service rendered"
declared Mr.. Hanna, Il don't person
ally think reduced rates for school
children would seriously affect our in
| come, but, of course, 1t would nave
some effect"
Mr.. Clayton wanted to know whether
reduced fares would not result in an
increased number of children riding on
the cars, and therefore increase the in.
come in the long run. Mr.. Hanna said
! that in other cities with a reduced
school fare it had been found that the
number of such children riding was
| only about per cent of the whole num-
Der of riders, and therefore he did not
think the income of the company would
| be increased in that way.
i Then you are not willing to take
! that chance?" Clayton declared.
II prefer to let the commission de-
| eide that?" Mr.. Hanna replied.
Objects to Question.
Commissioner Hartman asked Mr..
Hanna why the Capital Traction Co.
had requested a rate of return higher
than the maximum which the steam
railways get under the act Of 1920.
This rate is 6 per cent. Counsel for
the company lat once objected to this
question on the ground that the opera
ton of street railways and steam rail-
ways was different.
us there any reason why street rail-
ways should receive a higher rate Of
return than steam railways?" asked
Mr.. Hartman.
Again counsel objected. and Commits
sioner Hartman conferred with Com
missioner Ladue, after which he an
nounced that the witness would be re-
quired to answer the question, and later
when Chairman Patrick was present,
the objection would be considered, and
the answer ruled out of the record in
case the objection should be sustained.
Mr. Hanna then said that he could
not answer the question, so far as a
comparison with steam railways was
concerned, because he was not familiar
with that subject, but he could state
why the Capital Traction Co. should
be permitted to earn a minimum Of z
per cent.
1.-The rate of return necessary to con-
duct the public utility" explained Mr..
Hanna, depends largely on the rate it
has to pay for borrowed money to ex-
pand its business. Credit depends on
earnings and their ratio to capital stock
and value. A return of less than z
per cent on value would impair the abil-
ity of the company to borrow money on
favorable terms.
"Our per cent bonds are selling
considerably below par, although they
represent only one-third of our capital
ization. Our stock is also below par,
although paying z per, cent dividend,
all of which, however, it does not earn.
I would like to point out that not
withstanding all this our estimate OF
return under the proposed rate Of fare
would be less than per cent"
J.E. Heberle, chief statiStician Of the
Capital Traction Co., who has prepared
most of the statistical exhibits being
used in the case, took three-day va
cation, after the session yesterday. The
burden of the hearings has fallen heav-
lily upon Mr.. Heberle's shoulders, as he
was asked a barrage of questions on
financial matters that took exhaustive
research of old company records 10
answer. Everybody present at the hear
ing yesterday, including members OF
the commission, approaching his work,
wished him good luck.
Ralph B. Fleharty, peoples counsel,
in the course of his brief cross-examina-
ton of John H. Hanna, president OF
the Capital Traction Co., yesterday
going value Of the company allowed
IN the valuation. Mr.. Hanna admitted
that if the company could not earn a
fair return" by means of higher fares
a change in conditions would be one
remedy. He SHE'D away, however, from
an answer that might have been COM
strued as approval Of the proposed uni
f1cation agreement.
Mr.. Hanna said many things might be
done to bring about changed conditions.
"A subsidy might be deemed wise and
necessary" said the witness. I'm Sc
attic there is a considerable sum turn
ed over to the street car company by
way Of taxes. In Boston, there is a
considerable sum contributed by the
city in cash to make up the earnings
which the street railway company
should have"
Street cars are necessity, Mr.. Hanna
held, and If they are operated by pri-
| vate capital then private capital must
be reasonably compensated. When Mr..
Fleharty tried to pin the witness down
to a statement regarding the worth of
the street car service to the public, Mr..
Hanna said:
1.-THE service is worth what is costs
until such time as the public won't pay
for it,
1t was conceivable, Mr.. Hanna, ex-
planned, that fares might be increased
beyond what the service was worth, but
4s,.k - 60