Evening star., 1948-06-22
WAGES, Prices and Fares


It may be doubted that any one was
much surprised by the Capital Transit
Company's request for increased fares At
the same time, the news cannot well be
taken complacently Higher fares are
never popular under the best of condi-
tions. They are particularly resented by
those who must submit regularly to the
discomforts of queue lines at unsheltered
curbs and of crowded buses and streetcars
in Washington's rush hours. The COM
pany itself did not relish taking the un-
popular step of asking for higher rates.
But, according to President Merrill, the
company "had no choice"
1t has been apparent for some time that
Capital Transit has been in squeeze and
that cry for help would be inevitable.
When the Public Utilities Commission re-
luctantly granted the last fare increase,
little more than year ago, it was
company had been afflicted by constantly
rising operating expenses, due to wage in
creases and higher material costs" and
that a continuation of this trend might
we'll prevent the attainment of the finan-
cial stability expected to result from the
new rate structure"
The trend continued. Within six months
an arbitration award added approximately
$2,300,000 year to the companys payroll
costs. On July second wage increase
will impose further annual burden of
$1,100,000. Meanwhile, costs Of materials
have continued on the upgrade, with no
letup in sight. Before the war 1880, it
cost 2478 cents to operate a bus for one
passenger mile. Today the cost is 50.36,
an increase Of 103 per cent. Streetcars,
despite adoption of the one-man system of
operation, cost about So per cent more to
operate today than in 1899. 1t costs twice
as much to reconstruct track now as it
did in 1899. Other costs have skyrocketed.
Yet, since 1889, CTC fares have risen
only 16 per cent overall. The company is
asking for token fare of 1917 cents and
cash fare of IS cents, an increase which,
If granted, would bring the overall fare
raise since 1899 to about 46 per cent. The
company asserts that an increase of this
amount is necessary to wipe out a pro-
spective deficit of $335,0OO for the new
4ASSd1 yCdl, o11Sl6geO dooulC, UCyOI1Q GA1dV, q
minimum fair return of $2,220,000. That
income would be based on the 7Ha per cent
return heretofore fixed by the PUG as
fair and reasonable. It would take into
account, also, economies in operation
effected after the wage increase of May,
1947.
The problem which thus faces the PUG
is tough one. Its primary job is to
protect the public interest To deny the
utility fair return on investment would
be against the public interest," for without
reasonable profits the company cannot be
expected to provide adequate service to
its customers. 1t cannot obtain the capital
necessary to maintain present standards
and to expand as community needs require.
The PUG, on the other hand, will be
obliged, through it's concern for the public
interest, to examine carefully the figures
presented by the company. These figures
are predicated on continuance of the
712 per cent return previously approved
by the PUG. This rate of return may be
too high, under present conditions. It is
unlikely that any transit company in the
country actually has earned any such
return IN recent years. Many are losing
money and are seeking fare increases. The
figure has become goal to be hoped for
an inducement to investors to continue
their interest in transportation. The PUG
may find it feasible to lower the "fair
return" rate without imperiling the finan-
cial stability of the company. And the
commission should satisfy itself that the
economy program instituted last year has
squeezed all nonessentials from the oper-
ating expenses. Further savings may be
possible at no sacrifice of efficiency.
In short, the PUG has the heavy respon-
sibil1ty of determining that all possible
economies have been undertaken, and that
the lowest rate of return consistent with
sound financing and operation has been
before any fare raise is approved
All the facts requisite to a final decision
will not be available until full public hear
ings in the case have been held.