Adding back these figures gave a total of $23,765,914, which does not include the allowance made by the commission for intangible elements of value; that is, right of way and development losses.

These three figures amounted to approximately $2,321,000, which, added to the total, gave approximately $25,087,000.

The Supreme Court of the District of Columbia and the Court of Appeals of the District of Columbia in the Capital Traction Co. case decided, however, that the use of the Bureau of Labor index was not proper, and they so definitely stated in their decision.

I therefore sought for a way to translate this index into what would be considered proper figures. This involved a study of a great many different curves, among which is one compiled by an engineer by the name of Feustel, who drew up such a curve for the Philadelphia Rapid Transit Co.

His curve extended only as far as 1921 or 1922, and that curve was extended by an engineering cost analyst in the employ of the commission, with a revision of the weightings that had been used by Mr. Feustel. This analyst who assisted me in these computations, by the way, has been working for the last 10 months with the commission in the valuation of the gas company, and he has used in assisting me the information that he has collected on cost of labor and materials for the gas company and the District of Columbia.

He also took into consideration a curve drawn up by an engineer in Baltimore named Handy. The Handy Co. publishes semiannually a bulletin which shows for a number of different sections of the country various public-utility costs.

The particular one that was considered in this case was the cost of electric-power properties.

There was also taken into consideration the curves published by the Engineering News Record, that of the American Electric Railway Association, that of a man named Brewer-I have forgotten for the moment just who he is.

A combination of these figures was made which produced a composite trend based on December 31, 1914, as 100, which brings the index January 1, 1928, to 202.

Another method of combining them brings it from 100 to 201.5. This led me to the conclusion that inasmuch as the index of the Bureau of Labor wholesale commodities was about 98 in 1914 and 150 in 1927, that one-third of the cost of the physical property found by the Bureau of Labor index should be added to get the proper figure.

These additions would show $23,275,000 for the physical property, excluding the land of the Capital Traction Co., as compared to $18,287.000 found by using the Bureau of Labor's index.

That this is approximately correct is shown by taking these actual combined indices and applying them to the original cost and the additions, and we find $23,744,000, a difference of only $31,000 in $21,000,000.

A similar computation for the Washington Railway & Electric Co. showed $28,650,000 for the physical properties, without including land.

The application of the annual indices to these properties showed a higher figure, probably for the reason that considerable of the additions was made in years to which a rather high index had to be applied to bring them up to date.

The difference there is about $1,900,000. Taking this figure of $28,650,000 for the Washington Railway & Electric Co., I deduct 15 per cent, which is probably a maximum that could be deducted for depreciation. That leaves $24,362,500. I then add to that the land which was valuation by the commission at $830,600. questionably have to be increased to-day $25,193,100.

included in the original That figure would unThis makes a total of

There are certain other elements which have not been included, which were included by the commission in the previous hearing. As stated before, there were $2,321,000 for intangible elements which is, to my mind, probably a rather poor way of covering the question of going-concern value.

The courts have in many cases decided that 10 per cent for goingconcern value was a reasonable allowance. This makes a total of $27,500,000, to which must be added present-day allowances for working cash and materials and supplies. These amount to $318,000, which is one-twelfth of the operating expenses for the year 1927; $205,000, which is the actual inventory of materials and supplies at the end of 1927, a total of all of those being $28,037,000, without including any Maryland property.

Worked on the basis of the figure found by taking the actual annual indices, they will come out almost exactly $30,000,000, still not including any of the Maryland property.

If we take this $28,000,000 as the low figure and add the $26,000,000 of the Capital Traction Co., and an allowance of $2,500,000 for Maryland property, where they claim $4,000,000, and $500,000 for the Washington Rapid Transit Co., where they claim something like $800,000, we have a total then of $57,000,000, in which I have used what may be considered minimum figures.

It is highly improbable, of course, that minimum figures would stand before the courts, and I would like to point also that whereas in the Capital Traction Co. case, the court refused to permit deduction of any depreciation, I have here deducted over $4,000,000 depreciation in the case of the Washington Railway & Electric Co.

My reason for deducting 15 per cent is that after consulting engineers on the subject, I came to the conclusion that properties that had been in existence for the time these had, are ordinarily maintained at 85 per cent condition.

Would you like to have me go on with the paving, or would you like to ask questions on my statement thus far?

The CHAIRMAN. I think that you had better conclude your statement, Colonel Brand.

Mr. BRAND. I have an exhibit in connection with paving costs that I would like to introduce into the record.

The CHAIRMAN. It may be received.

101738-28- 4

(The statement referred to was marked Exhibit No. 1, and is as follows:)

Mr. BRAND. This exhibit shows for the Capital Traction Co. an average of maintenance for paving for the last three years of $39,786.30; an average for the same period of paving charged against depreciation reserve of $27,100.59; an average for the same period of paving charged to capital, $7,574.61; and a total of these averages of $74,461.50.

I now wish to introduce a similar exhibit for the Washington Railway & Electric Co.

(The statement was received and marked "Exhibit No. 2," and is as follows:)

Mr. BRAND. That shows paving charged to operating expense averaged for the last three years, $124,695.69; charged to deprecia

tion reserve, $19,534.86; charged to capital, $59,621.13; and a total of the three of $203,859.68.

Adding to the maintenance charge of the railway that of the Capital Traction shows a total of $164,481.99.

From this I deduct one-fourth, leaving $123,361.49. Somewhat less will be saved in operating expenses by the company under the terms of the resolution, since it provides that wherever paving, repairs, or replacements are necessitated by repairs, replacements, or changes in tracks made at a time when the street or bridge is not being paved shall be entirely paid by the company. However, it seems that these paving costs are on the increase, and that the increase will probably offset that difference, although it is impossible to estimate either.

The total of the two companies in the last column is $278,321.18, from which I also deduct one-fourth, leaving $208,740.89, which would be the maximum cost to the District of Columbia of this paving relief, provided the costs remained the same.

Again, the companies will have to pay a part of the $208,000; exactly how much I can not estimate.

I stated that I had examined a bulletin of the American Electric Railway Association, which gives a summary of the paving relief in other places, and I will read a few of those.

First, in the State of Connecticut: This is for the whole State. The paving requirements were reduced from 8 feet 8 inches over all for single track and 19 feet for double track to 8 inches on each side of each rail for double track.

I may say that we considered some similar provision here, but felt that it would be easier to administrate if we merely said one-fourth of the cost in that 19-foot area.

In Massachusetts, providing for state-wide relief, all companies were relieved of excise tax which had covered paving, repaving, maintenance, etc., of public ways. This tax was as high as 3 per cent of the gross earnings.

In Montana, state-wide relief; from all obligations except the repair of injuries caused by the presence of the railway in the street. In Texarkana, Ark., which has been of indeterminate permit law and surrender of franchise, calling for paving exempts the company from paving all the street surface between the rails of each track and 2 feet on each side, as well as the dummy between the tracks.

In Aurora, Ill., an annual fee of $1,000 provided for in former ordinance, not provided for in new ordinance. The company relieved from all future paving obligations. Had been required to pay for the paving of the street between the rails, and the tracks, and 1 foot on each side in addition to fee.

The CHAIRMAN. Have you any large cities mentioned there?

Mr. BRAND. Here is Indianapolis. Relieved of old franchise obligation to pave, repave, and maintain the space between the tracks and 18 inches outside the outside rail; only expense to company in connection with paving to be where company desires to have different kind of paving material in its track area than the kind used by the city. The extra cost of this special material over and above the cost of the material provided by the city shall be borne by the company.

Louisville, Ky.: Relieved of all paving obligations except the construction and maintenance of the supporting substructure under the tracks and repair of damage resulting directly from operations of company's cars.

That is an extremely difficult thing to determine, it seems to me. It would involve endless controversy, and so I thought it better to provide for one-fourth than to get into those endless disputes as to whether it was due to the operation of the cars or not.

Portland, Me.: Company to bear the entire expense of relaying track; paving costs proportioned between city and company; 80 per cent to be met by city and 20 per cent to be met by company.

Saginaw, Mich. Relieved of all paving, repaving, and maintenance charges except the cost of repairing the space between the outer rails and 12 inches outside thereof. City bears cost of paving in connection with the laying or the relaying of its tracks. Company replaces paving torn up in the work of repairing its tracks.

Cincinnati: Relieved of all paving charges except repairs to paying, etc., in connection with its track work. If company proceeds with its track construction at the time the city paves the street, the city assumes the cost of the paving foundation and surface paving in the track area. Company required to pay 50 per cent of the actual cost of all the repairs to paving between points 18 inches outside of the outer rail.

Cleveland: Relieved of all obligations to pave and repave except the maintenance of the track area.

Toledo: Company not required to repave but to keep track area in constant repair. City voted to place $100,000 at the disposal of the company to be used in repairing the pavement between its rails.

The Pittsburgh Railways Co. in Pittsburgh and suburban communities: In lieu of all paving, repaving, and maintenance of paving, company pays city $200,000 per annum, if earned. Had been required to pave between the tracks and 1 foot outside each outer rail.

Providence, R. I.: Required to pave when track is laid and keep pavement in repair, but is relieved from obligation to pay where whole street is being paved by city, except for excess cost due to presence of tracks.

Charleston, S. C.: Company relieved of one-half of paving obligations in 1922. In May, 1925, relief from all paving, repaving, and maintenance of paving charges was granted. Company now need bear only excess cost due to presence of tracks in streets.

The CHAIRMAN. I take it that the committee does not care to go into the matter of crossing policemen tax, because I think it has been pretty universally agreed in the committee that this tax should be borne by the city as a whole and not by the car rider as a part of the operation expense.

Have you concluded your statement, Colonel?

Mr. BRAND. There is one other thing I would like to state, and that is that at a time when the Public Utilities Commission of the District of Columbia was composed of the members of the Board of Commissioners of the District of Columbia, the Public Utilities Commission placed itself upon record several times as being in favor of relief of the street-car companies from paving costs.