Evening star., 1952-02-28
Area Transit Crisis

ofhand, 1t is bit ditticult for the average
citizen to reconcile Capital Transit President
BroadWater's gloomy picture of his companys
future with the roster aspects of the melon cut
ting that has been going on since the change
In management in l949 In all fairness, how
ever it must be kept in mind that the special
dividends have come from surplus long ear
marked for distribution to the stockholders.
These funds could not have been used to improve
the companys services to the riding public.
Whether or not the melon splitting was iIl-timed
from a public relations standpoint, the blunt
fact Is that Washingtons transit situation is
at critical stage.
Capital Transit may not be doing so we'll
by the thousands OF bus and streetcar patrons
who rely on 1t for daily transportation, but
1t has done remarkably we'll by the Wolfson
group which now owns SO per cent of the stock
1t is for this group that Mr.. Broadwater spoke
before joint committee meeting of the Board
Of Trade Out of $2,189 100 which the Florida
group originally paid for a controlling interest
In the company, nearly 50 million has been re-
turned to them In the form of dividends and
salaries, not counting paper profits on increased
value Of the stock Furthermore, Mr.. Broad
water hinted that another special dividend may
be paid out of the remaining 81 million surplus
A million Of this surplus Is available for such
distrbution-the remainder being tied up by
indenture restrictions.
Regardless of what happens to the surplus
made up Of undistributed profits Of the past,
the company's immediate fiscal outlook is in
deed, beclouded. According to Mr. BroadWater
the present rate of return allowed by the District
Public Utilities Commission, 634 per cent, is not
high enough to provide the investment incentive
required to keep the company operating as
private enterprise. The PUG disagrees. The
company says its average return since its Or
ganization in 1884 has been 4T per cent. The
recent l0-cent increase in the weekly-pass cost
was protested by the company as insufficient
to produce fair return. The PUG Is still check
ing on the effect Of this increased fare, to see
If the CTC complaint is justified. The company
points out that If the pass raise brings in the
$39400O estimated by the PUG, the additional
revenues would still fall far short Of the in
creased operating costs resulting from last years
wage increase and other rising costs. Moreover,
new wage discussions are scheduled for June.
Against this disturbing background Mr..
Broadwater presents two choices" as the only
salvation for washington's transit troubles. II
the company Is to continue operation under
private management, he declares, "fair" re-
tttrt1 Of at least ~ per cent must be allowed,
With sueh guaranteed fetufh, he says the
company would consider consolidating all 6f
most Of the separate transit lines operating In
the Metropolitan Area, The alternative, he
insists, IL s6fhe sort Of public Or duasispubiIe
6WheFship=sueh ~ the Bingham plan tor d
Metropolitan Area Transit Operating Authority,
financed with revenue bonds and supervised by
beard representative OF b0hdh9ldefs and ieada
Ing citizens
OF the TIVE, the hFst Weuld be preferable
by faF Any form OF publle ownership, ineiHdlng
the Bingham plan, would involve open or hidden
subsidies which ought 10 be avoided There IA
no hope OF ten=Gent fare In Washington or
any other city without adding burden 10 oil
the taxpayers who must provide the subsidies,
Both OF Mr. Rroadwater's proposals involve the
absorption by Capital Transit or new com.
pany OF some suburban lines which now are
losing money or making little profit The eFo
husnes In nearby Maryland are an example,
Consolidation, therefore, would mean that Dis
trict passengers would take on part OF the cost
Of operating Improbable suburban lines,
All in ALL the problem is tough one that
cannot be solved by superficial or one-sided
studies. 1t is a problem that vitality concerns
the District government and the Federal Gov
ernment for the future welfare of the National
Capital is involved. There is obvious need for
an expert and comprehensive inquiry OF the
type proposed in pending bills for an Interstate
Commerce Commission study of area transit
facilities and difficulties. Until such an authori-
tative appraisal of the problem has been made,
any talk of drastic changes in the transit setup
is premature,