Evening star., 1953-12-27

W. ohA OAAO Wdo11111S OO41, WALL
boro and Annapolis Motor Lines
Declines Comment.
Joseph L. Arnold. president oi
the w. v. and M. line. said last
night he was not well enough ac.
quainted with Mr.. Wolfson'.
statement to comment "at thi,
time"
Concerning the idea of public
ownership of the transportation
industry here, he declared, "We
hadn't thought about or talked
about it,"
These things are nice to tall
about. You always hope thai
some benefit to the public will
accrue but I wouldn't want tt
make any statement until I've
had chance to examine it (tht
Wolfson plan) with my lawyer.
he added.
Top officials of the w. M. anc
A. and A. B. and w., lines were
not Immediately available fol
comment.
No Outlay of Cash.
Mr.. Wolfson said his plan
would call for no outlay of cash
Instead. the regional authority
would issue revenue bonds, to be
paid out of operating income, the
bonds to be issued to replace
stockholdings in the four private
companies.
The authority would Supplant
the transit controls now held by
the District Public Utilities Com
mission and the similar commits
sions in Maryland and Virginia
and, presumably, some of those
of the Interstate Commerce
Commission.
The Payne subcommittee asked
Mr.. Wolfson to outline his plan
in detail and staff experts from
the consultant firm of Ernst &
Ernst will analyze it. but it ap-
peared there would be no quick
decision. Mr.. Wolfson, himself,
noted that it's adoption would
entail not only an act of Con-
gress but also ratification by the
State legislatures of Maryland
and Virginia.
Wants Majority on Board.
Under the proposed plan. the
revenue bonds would bear per
cent interest and in addition the
transit operations would be freed
of taxes and stockholders would
be freed even of capital gains
taxes on their holdings.
Mr.. Wolfson proposed that the
majority of the board of Is
members of the Transit Author
ity be representatives of Capital
Transit and the three suburban
lines.
He set up pro-forma income
statements for the merged oper-
ations, which indicated there
could be a net income the first
year of 1881 900, after provid-
ing for annual depreciation and
annual interest charges at S per
cent on $50 million of revenue
bonds.
In this connection, he sug-
gested there could be huge
saving to the public. This was
on the assumption that in the
next 80 years Capital Transit
would be able to continue its
present dividend rate of $1.60 on
its stock, split four-for-one in
1851 to raise the total from
24O,0OO to 100000 shares.
It was recalled, however. that
dividends this year have ex-
ceeded net returns and the last
declared melon is to be paid
after the turn of the year.
Bond Power for Authority.
But the Wolfson document
adds it up that if the present
dividend rate were continued for
the next 80 years it would
amount to $46 million, whereas
the interest that would be due
on the S per cent revenue bonds
would amount to only $23 mil
lion. In addition, of course. there
would be an annual 81 million
payment toward the retirement
of the bonds.
AS Mr.. Wolfson pit it, how
ever, in discussing the difference
between the prospective divi-
dends and the bond interests
charges: This would result in a
saving of $23 million by the
transit patrons over the 30-year
period, without taking into con-
sideration the additional costs
to the transit-riding public OF
the dividends that would be paid
by companies. other than the
Capital Transit Co. over the 30
year period
The WolfSon plan would give
the regional operating authority
the power to borrow and issue
bonds to cover it's financial needs.
It declares that the Transit Au-
thority should be required to
operate at no-less than break
even" basis. Stock dividends, of
course are dependent on net
revenues or some cushion of un-
distributed profits. whereas the
substitute S per cent revenue
bonds would be on break
even" basis with the authority
authorized to fix rates or serv-
ices or to float new bond issues.
Legislation Needed.
In an outline of the needed
legislation, Mr.. Wolfson said, in
part:
such an act should contain
appropriate provisions for the
exchange of bonds of the Wash
ington Transit Authority for the
capital stock of the companies
involved, without penalty OF
capital or other income taxable
gains up the book value of the
property acquired. as recorded
in the accounts of the existing