Evening star., 1952-01-05
Dividends, Fares and the Public

1t is not surprising that the public is be-
fuddled and resentful over the spectacle of the
Capital Transit Company paying out special
dividends with one hand while grasping for a
rare increase with the other. The picture as
the average transit rider sees it, is that of a
very prosperous public utility stufing money in
It's pockets and, at the same time, pleading
poverty to the Public Utilities Commission. The
picture is distortion of the real facts of course,
but explanations by the company are not ant
TO clear it up Nor will the people be satisfied
with the legally correct statement by the PUG
tnat 1t could not consider dividend PAYMENTS
IN oecldlng to grant the company slight rate
increase. Under the circumstances proposals
Tor congressional inquiry into the company's
policies and operations have considerable merit.
A careful, impartial study of the Capital Transit
Company'S policies under its recent ownership
management might clarity some of the questions
which now puzzle many persons. And clarifca-
tion would be to the advantage of the company
as well as its customers. -.v :--
The company could have eased the impact
OF the news of its $24 million melon cutting
by more judicious timing of the dividend pay
ment. Instead, the juicy pay-off-fourth since
the WolfSon group took over in the fall of 1949-
hit the headlines while the companys applica-
tion for higher fares was still pending and in
While it is true that the two matters are unre-
lated from strictly technical viewpoint, it is
not easy for the public mind to separate divi-
dend payments from fares and services. The
only ameliorating factors in the company's
New Years Message and Report to the Public
Our Employees and Our Stockholders" as far as
the transit customers were concerned were the
promises of new equipment and of debt reduc-
ton. incidentally, this will be the first sub
stantial purchase of new buses since the COM
pany came under new management
The PUG could not take cognizance of the
company's slicing off and distribution of sur
plus funds for the reason that the courts have
held that the commission may not include past
earnings in the rate base. The surplus which
Capital Transit has cut into was earned in
past years. Under the conservative policies of
the former management undistributed profits
were allowed to accumulate until, at the time
the WolfSon group bought in, the surplus stood
at $5.4 million 1t had gone over the Sc million
mark by last fall. After the special dividend
payment just authorized, the surplus will
amount to 81 million-most of it in frozen
assets. But the PUG was restricted to rate
base embracing only assets available for current
operations of the company. On this basis the
PUG decided that Capital Transit now-regard-
less OF leftover earnings from past years-is
not making a fair return on its invested money
Hence the granting of a 10-cent increase in
the cost of weekly passes. Tokens will remain
In use, despite the companys desire to abandon
them in favor of straight 15-cent cash fare
Even though the PUG has given the COM
pany only small concession, most transit riders
In the District and Maryland will not like it
because they do not understand why fares
should be raised and services reduced by a COM
pany able to pay special dividends to it's stock
holders. If some committee of Congress can
throw more light on this seemingly anomalous
situation, so much the better. 1t may we'll be
that the new management is justified in digging
into the big surplus built up by its predecessors,
in curtailing services and in other things it has
done since coming here. If SO, it will improve
the company'S relations with the public to bring
out the facts. If not, it is in the public interest
that the truth be revealed without further
delay.