Evening star., 1952-06-07
Point of Diminishing Returns

VIII VI DHWWSsHS NStUHS
The Capital Transit Company's latest request
for higher fare raises anew the question of how
long the upward trend of transit rates can con-
tinue before the critical point of diminishing
returns Is reached. AS Colonel s. H. Bingham
chairman of the New York Board of Transporta-
tion recently told the United States Conference
of Mayors fare increases will produce added reve-
nue. ito point" He warned however, that "be-
yond that point the industry prices itself out OF
the market"
The transit outlook here is bleak. Even If
the Public Utilities Commission, after due hear
tngs and study, should decide to grant the COM
panys petition for straight 15-cent cash fare
In lieu of tokens and passes, the prospect of an
other fareraise application in the near future is
almost certain. Capital Transit is engaged in
negotiations with its operating employees for an
other pay increase. The company asserts that
If all the union demands were to be met the
annual additional cost would be nearly 50 million,
with wage demands alone accounting for $23 mil
lion. Every pay raise since World War II-and
they have occurred every year except 1949-has
been followed by fare increase. This pattern
seems as regular as night following day. There
is no reason to believe that any substantial wage
increase can be granted without so reducing the
companys net income as to require further
rise in rates.
The skyward fare spiral, now approaching
the Critical point" began slowly in 1947. For
q decade before that the rates had remained
stationary at 10 cents cash. three tokens for IS
cents and $1.25 for weekly pass. In May, 1947,
tokens were abolished and the pass was raised to
$3.50. In October 1948, the cash fare of 10 cents
was raised to Is cents tokens were restored and
priced at three for 35 cents and the pass went up
to SITS. In June, 1850, the cash fare was boosted
to Is cents, tokens to three for 40 cents and the
pass to $2 Last January the pass was raised to
$210 Now Capital Transit is asking abolish
ment of the pass and of tokens, leaving only the
15-cent cash fare
The diminishing return tendency already is
becoming evident. Whereas the p. u. c. has esti-
mated that the higher cost Of passes would cause
no more than per cent drop in pass sales,
which would be offset by per cent gain in
cash and token customers the sale Of passes
actually has declined more than 10 per cent and
the gain in other customers has amounted to
only 173 per cent. As result, the company says
it is earning only 5.24 per cent on its rate base.
The P. u. c. has said that CTS per cent return
would be reasonable.
Capital Transit.s desire for prompt action by
the p u c. is understandable. But the situation
does not warrant decision without beneft Of
hearings and careful consideration not only Of
the companys plight but of the public's plight
Congress meanwhile could help by relieving the
company of at least part of the private subsidy
which now goes to the citys school children The
requirement by an outmoded law that the COM
pany transport students for three cents is bur-
densome and should be changed Nowhere else
in America may school children ride public buses
or streetcars for less than 5 cents. Most cities
have 7-cent rate.
Adjusting school fares would help, but major
financial problems would still remain. The prob
lens will be greater if transit wages take another
jump. AS the wage-fare spiral goes on dizzily,
Washington, in common with many other cities.
comes ever closer to the alarming threat Of some
sort Of public ownership with all its disadvan-
tages. That specter should be enough to justify
every effort by the P. U. c. and by the public to
keep the transit system in private ownership. But
it is hard to see how it can remain private
enterprise if the wage-fare spiral has no ceiling.