26.01 10/17/28 MERGER OF STREET RAILWAY CORPORATIONS HOUSE OF REPRESENTATIVES, COMMITTEE ON THE DISTRICT OF COLUMBIA, Friday, April 20, 1928. The committee met at 10.30 o'clock a. m., Hon. Frederick N. Zihlman (chairman) presiding. Present: Messrs. McLeod, Gibson, Bowles, Lampert, Jenkins, Blanton, Gilbert, Hammer, and Cole. The CHAIRMAN. The committee will be in order. This meeting is called for the consideration of House Joint Resolution 276. I will insert at this point a copy of the resolution. (The resolution is as follows:) [H. J. Res. 276, Seventieth Congress, first session] JOINT RESOLUTION To authorize the merger of street railway corporations operating in the District of Columbia, and for other purposes Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That pursuant to the act entitled "An act to permit the merger of street railway corporations operating in the District of Columbia, and for other purposes," approved March 4, 1925, the formation of a new corporation to be known as the Capital Transit Company to acquire properties and/or stocks or securities and to succeed to the powers and obligations of the Capital Traction Company and to succeed to the powers and obligations of the Washington Railway and Electric Company directly connected with, or relating to, the operation of electric railways, motor busses, and/or other forms of public transportation, having been provided for by certain unification agreement on terms and conditions agreed upon by vote of more than a majority in amount of the stock of the respective corporations and approved by the Public Utilities Commission of the District of Columbia on April 13, 1928, such unification in accordance with said agreement dated as of April 7, 1928, and each and every of the provisions therein, be and the same are hereby ratified and approved, and said Capital Transit Company, when organized under the provisions of Subchapter IV, Chapter XVIII of the Code of Laws of the District of Columbia, shall have all the powers, benefits, and obligations expressed in said unification agreement, approved as aforesaid, and that the Public Utilities Commission of the District of Columbia be and is hereby authorized and directed to do all such acts and things as may be necessary or appropriate on its part to carry out the provisions of said agreement and of this resolution. SEC. 2. That all provisions of law making it incumbent upon any streetrailway company to bear the expense of policemen at street-railway crossings and intersections, the laying of new pavement, the making of permanent improvements, renewals, or repairs to the pavement of streets and public bridges, and the permanent improvements, renewals, or repairs to public bridges over which the street-car lines operate, are hereby repealed, such repeal to be effective on the date the unification herein authorized becomes operative: Provided, That the Capital Transit Company herein provided for shall bear the entire cost of paving repairs or replacements incident to track repairs, replacements, or changes made at a time when the street or bridge is not being paved, and shall bear one-fourth the cost of other paving, repaving, or maintenance of paving between its tracks and for two feet outside the outer rails, and shall bear the excess cost of construction and maintenance of public bridges due to the existence or installation of its tracks on such bridges: Provided, That nothing herein contained shall relieve said Capital Transit Company from liability for street paving as owner of real estate apart from rights of way occupied by its tracks, as provided by section 8 of the act of Congress entitled 1 "An act making appropriations to provide for the expenses of the government of the District of Columbia for the fiscal year ending June 30, 1917, and for other purposes," approved September 1, 1916, as amended to date. SEC. 3. That the Capital Transit Company shall be reasonably protected against competition with any of its street-railway lines, bus lines, or other forms of transportation by the Public Utilities Commission of the District of Columbia. SEC. 4. That the Capital Traction Company is hereby authorized and empowered, upon the consummation of the aforesaid unification agreement, to dissolve and to liquidate its assets and make distribution among its stockholders in accordance with said agreement: Provided, That the existing liabilities of the said the Capital Traction Company, and the rights of its creditors shall not be affected thereby, and that such creditors shall have, as to the said Capital Transit Company, upon the transfer of property to it as provided in said agreement, all hights and remedies which they may then have as to the Capital Traction Company: And provided further, That no action or proceedings to which the Capital Traction Company is a party shall abate in consequence thereof, but the same may be continued in the name of the party by or against which the same was begun, unless the court in which said action or proceedings are pending shall order the Capital Transit Company to be substituted in its place and stead: And provided further, That the fact of such dissolution in accordance with this provision shall be published once a week for two successive weeks thereafter in at least two daily newspapers of general circulation published in the city of Washington, District of Columbia. SEC. 5. That the Washington Railway and Electric Company is hereby. authorized and empowered to retain 'and hold stocks and bonds as provided in said unification agreement. SEC. 6. That in accordance with said unification agreement, the Capital Transit Company to be created as aforesaid is hereby authorized and empowered to purchase all or any part of the outstanding capital stock of the Washington Rapid Transit Company: Provided, That said company shall be merged or consolidated with the said Capital Transit Company when and if the Public Utilities Commission shall so require. SEC. 7. That nothing contained in this resolution shall be taken as extending or limiting the powers and duties of the Public Utilities Commission except as provided in this resolution and by said unification agreement, and all powers granted by this resolution to the Capital Transit Company shall be exercised subject to the supervision of and regulation by the Public Utilities Commission as provided by law. SEC. 8. That Congress reserves the power to alter, amend, or repeal this resolution. The CHAIRMAN. I will also insert in the record House Document No. 232, which includes a letter addressed to the Speaker of the House from the chairman of the Public Utilities Commission, Mr. John W. Childress; a letter from the Public Utilities Commission to the Board of Commissioners, District of Columbia; a communication from the Board of Commissioners to the Director of the Budget; the reply of the Director of the Budget; and the unification agreement entered into between the Washington Railway & Electric Co., the Capital Traction Co., and the Washington Rapid Transit Co. (The document referred to is as follows:) [House Document No. 232, Seventieth Congress, first session] The SPEAKER OF THE HOUSE, Washington, D. C. PUBLIC UTILITIES COMMISSION SIR: Pursuant to authority contained in an act of Congress entitled “An act to permit the merger of street-railway corporations operating in the District of Columbia, and for other purposes," approved March 4, 1925, there is transmitted herewith an agreement under date of April 7, 1928, by and between the Washington Railway & Electric Co., the Capital Traction Co., and Mr. Harley P. Wilson, owner of 98 per cent of the stock of the Washington Rapid Transit Co. Under date of November 8, 1927, this commission addressed letters to the parties to this agreement, urging them to submit a plan of merger which would be acceptable to them and to the public. On February 10, 1928, a plan was submitted and thereafter, commencing on February 29, 1928, hearings were held for 10 days at which 1,526 pages of testimony were taken. Transcripts of this testimony have been furnished the Committee on the District of Columbia of the House. After several conferences of the members of this commission and discussions between them and representatives of the three companies, this commission advised the parties to the agreement that it would not be acceptable unless certain modifications were made. On April 7, 1928, the parties to the agreement submitted a revised agreement incorporating therein the modifications proposed by this commission and certain other modifications to which this commission has no objection. In the meantime there was prepared by a committee, consisting of an attorney for each of the parties to the agreement, a member of this commission, the general counsel and the people's counsel of this commission, a draft of a joint resolution designed to approve and give effect to the agreement. Under date of April 2, 1928, this commission addressed a letter to the Commissioners of the District of Columbia asking that they refer section 2 of the said draft to the Bureau of the Budget for an expression as to whether or not it was in conflict with the financial program of the President. Under date of April 9, 1928, the Commissioners of the District of Columbia transmitted the letter of this commission to the Director of the Bureau of the Budget, saying in their letter of transmittal: "The commissioners favor the proposal to relieve the new company to be created under the merger agreement from the salary expense of policemen at street railway crossings. They also favor relieving the new company from bearing a share of the cost of renewals or repairs to public bridges crossed by its lines, including new construction, to the extent indicated in the quoted paragraph of the proposed legislation. "The commissioners do not at this time desire to express an opinion as to whether the new company should be relieved of any part of the cost of new paving and maintenance of paving as established by law." Under date of April 13, 1928, the Director of the Bureau of the Budget advised the Commissioners of the District of Columbia as follows: "You indicate that the commissioners desire to report favorably to Congress upon the proposal to relieve the new company to be created under the merger agreement from the salary expense of policemen at street railway crossings, and also upon the proposal to relieve the New Company from bearing a share of the cost of renewals or repairs to public bridges crossed by its lines, including new construction, to the extent indicated in the above-quoted paragraph, but do not desire to express to Congress an opinion as to whether the new company should be relieved of any part of the cost of new paving and maintenance of paving as established by existing law. "You are advised that such a report to Congress would not be in conflict with the financial program of the President." Copies of this commission's letter to the Commissioners of the District of Columbia under date of April 2, 1928, the letter from the Commissioners of the District of Columbia to the Director of the Bureau of the Budget under date of April 9, 1928, and the reply of the Director of the Bureau of the Budget to the Commissioners of the District of Columbia under date of April 13, 1928, are attached hereto. This commission on April 13, 1928, approved the terms and conditions of the merger agreement of April 7, 1928, but under the provisions of the act of March 4, 1925, no merger of street railway companies shall be finally consummated until approved by a joint resolution of Congress. The draft referred to above is inclosed. Respectfully yours, JOHN W. CHILDRESS, Chairman. PUBLIC UTILITIES COMMISSION The Board of Commissioners, District of Columbia: Under the provisions of an act of Congress, approved March 4, 1925, entitled "An act to permit the merger of street railway corporations operating in the District of Columbia, and for other purposes," the Washington Railway & Electric Co., the Capital Traction Co., and Mr. Harley P. Wilson, owner of 98 per cent of the stock of the Washington Rapid Transit Co., presented to the Public Utilities Commission on February 15, 1928, a unification agreement. After public hearings lasting over a period of 10 days and numerous conferences between utility officials and this commission, the parties to the agreement have been advised that certain modifications should be made in the original agreement before it would be acceptable to this commission. In the modified agreement paragraph 13 will provide as follows: "This agreement is conditioned upon the new company being relieved from the expense of policeman at street-railway crossings and intersections, the laying of new pavement, the making of permanent improvements, renewals or repairs to the pavement of streets and public bridges, and the permanent improvements, renewals, or repairs to public bridges over which the street-car lines operate, except that the new company shall bear the entire cost of paving repairs or replacements incident to track repairs, replacements, or changes made at a time when the street or bridge is not being paved, and shall bear onefourth the cost of other paving, repaving, or maintenance of paving between its tracks and for 2 feet outside of the outer rails, and shall bear the excess cost of construction and maintenance of public bridges, due to the installation or existence of its tracks on such bridges, but nothing herein shall relieve the new company from liability for street paving as owner of real estate apart from rights of way occupied by its tracks, as set out in the so-called Borland law, approved September 1, 1916, as amended to date." The present law provides for the payment by the street-car companies of the wages of special crossing policemen (act, June 24, 1898, defining the rights of the Belt Railway Co.) to pay all paving costs between tracks and for a space 2 feet outside the outer rails (20 Stats. 106), and one-half the cost of maintenance and repair of any bridge over Rock Creek (District of Columbia appropriation act of August 7, 1894). There are also provisions requiring the payment of a certain part of the costs of bridges constructed to eliminate grade crossings. The salaries paid crossing policemen during the calendar year 1927 were, for the Washington Railway & Electric Co., $78,246.75, and for the Capital Traction Co., $49,253.25, a total of $127,500. The Washington Rapid Transit Co. does not pay a similar tax. In submitting to you the cost of paving assessed against the two railway companies it is thought well to state for your information the average of this assessment divided between maintenance charges and capital expenditures for a period of three years. For the Washington Railway & Electric Co., including its subsidiary lines, the average annual cost for maintaining paving for the period indicated has been $126.380.51, the comparable figure for the Capital Traction Co. being $39,786.30. The paving expense assessed against these companies that was properly chargeable to capital account No. 511 is based on an average for the years 1922, 1923, and 1924, these three years being representative of normal capital expenditures due to new paving. They are, for the Washington Railway & Electric Co., $28,600.36, and for the Capital Traction Co. $48,341.10. The reason for not giving the average for the last three calendar years as was done for the maintenance average as given above is that in 1926 there was assessed against the Washington Railway & Electric Co. an item of $117,975.64, due to the widening and general improvement of Wisconsin Avenue between Massachusetts Avenue and River Road NW. In the same year in the accounts of the Capital Traction Co. there was a credit or refund of $2,678.39. Both of these items would cause a distortion in a three-year average that would be misrepresentative. Under the terms of the modification a saving to the company and increased cost to the District of Columbia would be something less than three-fourths of these paving costs. There is also an indeterminate element involved having to do with accident liability due to defects in paving within the area between the tracks and 2 feet outside. The best information which this commission has been able to secure on this expense is that it amounts to less than $300 a year for each of the two companies. The reason accurate information is not available is that the items are all small and are paid out of petty cash and are not segregated in the accounts of the companies. This commission is of the opinion that the payment of crossing policemen is more properly chargeable to the general tax fund of the District of Columbia, or perhaps more particularly to a gasoline tax, than to revenues derived from the operation of street cars and busses. Crossing policemen devote the major portion of their time to regulating automobile traffic. In this connection, the following is quoted from a memorandum from the major and superintendent of police to Commissioner Dougherty under date of March 13, 1928: "Conditions have materially changed and the most important duty devolving upon crossing officers, whether paid by the railway companies or by public funds, is that of regulating vehicular and pedestrian traffic rather than the regulation of street-car traffic. "It may be of interest to the commissioners and the Public Utilities Commission to know that the major and superintendent of police has on several occasions recommended and urged that the 63 men employed as street railway crossing officers, whose salaries are paid by the street railway companies, be transferred to the permanent rolls of the Metropolitan police force, and that appropriation be made for the payment of their salaries from public funds." This commission is of the opinion that the payment by the street-car companies of all paving charges within the track area and in the space 2 feet outside of the outer tracks is an improper burden upon the street-car fares, as the benefit of this paving accrues almost entirely to the automobile riding public. It has not been able to agree, however, that the companies should be entirely relieved of this cost inasmuch as obviously some excess cost of paving and some damage to paving is due to the existence of condition of the tracks. It is impossible to estimate the exact amount of the cost which should be borne by the companies, but the commission believes that the provision that they bear one-fourth of the cost would be a fair division with the exception, of course, that whenever they tear up a street to make track repairs, replacements, or changes, that they must replace the paving. This commission believes that the provision inserted by it with relation to public bridges is the only fair way of apportioning the cost of construction and maintenance of these bridges. To the Board of Commissioners, District of Columbia: The entire effect of these provisions in the modified agreement is to remove an improper burden on the street-car riding public, which must eventually make, if they have not already made, the fares higher than they should be. The legislation which this commission would submit to Congress would not attempt to say how the deficiency so created would be supplied, as it is not within the province of this commission to do so; however, as a matter of principle we believe that paving should be paid for by those who use it. The busses pay their share of the gasoline tax. In view of certain agreements by the existing companies to allow the present rates of fare to remain in effect, pending legislation by the present session of Congress and in the event of favorable action during this session, for one year after the date of closing, the commission is anxious to submit the proposed legislation to Congress as soon as possible. We are, therefore, taking the liberty of placing before you at this time the particular paragraph quoted above, having reference to relief from cost of special policemen and paving, and which has been definitely agreed upon between this commission and representatives of the companies. The companies are modifying their agreement in compliance with our objections thereto, and as soon as the revised agreement is available in printed form a copy will be forwarded to you. Representatives of the companies and this commission have agreed upon the following draft of the paragraph designed to give effect to the provisions of paragraph 13 of the agreement as modified, same being section 2 of the joint resolution: "That all provisions of law making it incumbent upon any street-railway company to bear the expense of policemen at street-railway crossings and intersections, the laying of new pavement, the making of permanent improvements, renewals, or repairs to the pavement of streets and public bridges, and the |