Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-08-07
Giiye-and-Ta
Accord Frees
&c Dividends
Agreement Includes
Bon on 1854 Move
To Increase Fares
By John w. Stepp

tklC cAtCllOlVc ulCGIlllS Vi tIlC
minds between Capital Transit
Co. and the District Public Util-
tiles Commission-mutual UNI
derstandings designed to protect
the public right to a sound tram
sit system.
Agreements announced jointly
by the two parties yesterday
provided chiefly that:
l. The company be allowed to
distribute $4,000 in dividends
declared but blocked by the COM
mission for as long as five
months.
2. The commission drop its in
vestigation of transit financial
policies and its injunction suit
to prevent distribution of the
dividends for the first two quar-
terly periods of 1854.
Would Reduce Dividends.
3. The next three dividends be
lowered to 20 cents per share in
the next two quarters and 80
cents per share in the first quar-
ter of 1855. The present rate is
40 cents.
4. The book value of transit
stock be reduced from the pres
ent $3.50 per share to STA
total reduction of "$2.4 million
spread over the existing $50, 900
shares.
5. Capital Transit refrain from
petitioning for another fare in
crease before next January 1,
A key source of approval, how
ever cautious, was the three
members of the special transit
investigation subcommittee of
the Senate District Committee
which last May reported out a
whole string of suggestions to
better mass transportation serv-
ice here.
tr Express Qualification.
Chairman Payne, Republican,
OF Maine said he was gratified,
as were Senators Morse, indie
pendent, of Oregon, and Beall,
Republican, of Maryland.
All agreed. however, that they
would like report from the
utilities commission members to
learn in detail the import of
the commission transit under
standing. They will probably get
such brief1ng next week.
Senator Beall expressed the
general hope.
II feel" he said, chat the
commission has made an honest
effort to bring about an under
standing that will be beneficial
to the public and not in any
way jeopardize Capital Transit
endeavors to operate effectively %
AS soon as the injunction suit
was dismissed in the U. S. Dis
trlct Court for, the District of
Columbia around noon yester-
day, Capital Transit announced
it would Immediately begin mail
ing out $384,000 in dividend
checks for the first 1854 quarter
A special Board of Directors
meeting will be called as soon
as possible to set a date for dis
tributing the second-quarter div
idend. also amounting to
$384,000.
Biggest Concessions.
The biggest concessions made
by the transit company were the
lowering of the dividend rate
for the next nine months, and
the book value reduction of
stock.
Even without the understand
Ing the company probable would
not have asked, before next year,
for fare increases over those
granted six months ago. Com
pany officials seemed willing to
give the new fare structure, with
the weekly permit feature. a
years tryout.
BY lowering the value of the
stock by $2.4 million and trans
ferring this amount to offset a
deficiency in the company's de-
preciation reserve account the
company's rate base, on which
fares and company profits are
computed, would shrink from the
present $23.6 million to $21.2
million
While this Shrinkage would
have no immediate effect on
either fares or the size of earn
ings. it could ultimately do so,
The company now is getting a
4 per cent rate of return on the
basis of the present rate base.
It is entitled. by an earlier COM
mission ruling, to a 6.3 per cent
rate of return. With revenues
remaining at present levels, but
with the now reduced rate base,
the rate of return would go up
an estimated 5 of l per cent,
But company income would re-
main the same as now.
May Prompt Request.
The upshot of all this is that
the company. in order to get
''fair and reasonably income
may well ask the commission
ultimately to fix an allowable
rate of return higher than the
present 6.3 per cent to COM
pensate for the reduced rate
base. This. in turn, could mean
higher fares.
Capital Transit. through 8
spokesman, today termed the u
often-long negotiating session,
as friendly and conducted in 9
complete atmosphere of CO.
operation"
The utilities commission had {
rather wryer observation tx
make:
THE present understanding
indicate a change in prior poll
cies and attitudes and a possible
improvement in the unhealth.
local transit situation.
1.-THE present understanding
are a start in the right direction
srl,o,,ol, VIC halieve that an ever