Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-24

Representative Hull of Wisconsin
one of the new members of the House
District committee, has placed in the
Record his views on the power clause
Of the proposed merger agreement. AT
the same time the committee has an
nounced postponement until May of
further consideration of merger legis-
lation. 1t becomes apparent that such
legislation at this session of Congress is
either to suffer the fate of its prede-
cessor and die a lingering death or
squeeze through by the skin Of its
teeth, with several of its provisions
changed.
If the merger legislation does die. its
fate may be blessing in disguise to
the people of Washington. Notwith-
standing the undisputed benefits from
applying the principle of merger to the
gross waste and inconvenience result
ing from separate operation Of two
competing lines here-where COMPETE
ton is in name only and its advantages
rebound only to the ompetitors-ob-
jections I'd the form of agreement raise
considerable doubts as to whether the
people Of Washington should buy 1t at
the price demanded. It might be bet
ter policy to wait for bids from the
companies. In time those bids will be
made, and they may offer concessions
not apparent now.
MFR. Hull's objections to the power
clause in the merger agreement are
founded on the fact that the agreement
perpetuates and sanctions a rebate sys-
TEN that Congress has for years been
endeavoring to stamp out; that to con-
firm by congressional approval the
manipulation Of rates implied by the
power clause is contrary to every
principle of public utility regulation
for public protection"
What he is talking about is this:
For many years the Washington Rail-
way & Electric Co. has been buying
power from its subsidiary. the Po-
tonac Electric Power Co., at cost
or below cost. The actual rate is
s.003309 per kilowatt hour, compared
to the rate of AZ for other users. At
the same time the railway company
sells part Of this power to four other
railway companies, the profit from the
transaction being about $235,000. The
cost Of the power used on its own
lines is about 100000.
The power company's earnings in ex-
cess Of 7h per cent are divided be-
tween the company and the public,
the latter's share taking form in lower
rates. Mr.. Hull's contention is that
the favorable contract for power en-
1oyed by the Washington Railway g.
Electric really costs the power COM
pany $4,000. If this item became a
profit, instead Of loss, it would bring
about still greater reduction in cleo
tric light rates.
On the other hand, the street car
company's ability to buy cheap power
lessons its operating costs, and its
profits from sale of this cheap power
70 other railroads have been included
as part Of operating revenue, thus in
creasing returns and offsetting, to
some extent, difference between profit
and loss that would serve as further
argument for higher fares.
AS a matter of fact, the electric light
consumers, who do obtain cheap cleo
tricity, pay for the cost of power to the
street railway companies instead of
having this cost betrayed by the street
car riders. That might be construed as
reasonable, and the Public Utilities
Commission has construed 1t as reason
able. Electric light consumers are better
able to pay this cost than the car riders.
Mr.. Hull's objection is that the whole
transaction, boiled down, amounts to a
manipulation of figures wherein Peter
the electric light user, is robbed to pay
Paul, the street car rider. For the
North American Co., recently described
by the Wall Street Journal as soon to be
numbered among the country's billion
dollar concerns, owns the controlling
share of the Washington Railway
Electric Co., while the latter owns all
the stock Of the power company. One
company reduces its earnings, while the
other company gets them all back again
and the people pay the toll.
In addition, the merger proposes to
saddle the street paving costs and the
trafic policemen's pay upon the tax
payers. In return the taxpayers are
promised free transfers and possibly
better service, with no guarantee that
higher fares will not accompany both.
The merger will undoubtedly help the
North American Co. What is it going
to do for Washington?