think of transferring the cost of bus rides to the general taxpayer, the more you will consider it in the interest of the entire community. It would remove the dark spots from our area and help make our city hum with new movement and new life. I recommend that we make the plunge.

Senator EAGLETON. Thank you, Mr. Dudley, for an excellent and intriguing statement. I take it from page 5, in terms of the franchise matter, that you don't specifically recommend that we give him a 1-year notice in canceling that?

Mr. DUDLEY. No, I do not, Mr. Chairman, and I will tell you why. As Mr. Chalk has indicated here, he is a very skillful negotiator. If you cancel the franchise and go to him to buy his equipment, which is what he would expect us to do, he would say, "You can't get buses from anybody else," so the price is-whatever he was quoting this morning, $40 million to $70 million.

In other words, he would have us in the palm of his hand, because we couldn't get buses in time to meet the need.

Senator EAGLETON. Even in a year?

Mr. DUDLEY. No, it would take more than a year. I don't know how long it would take. The franchise is going to expire in 1976. Congress has to do nothing about that.

Senator EAGLETON. We don't want to wait that long, do we?
Mr. DUDLEY. No. He hopes that will be extended.

Then have the Transit Authority to talk to General Motors and other suppliers of buses and see what supply of buses is in this country and how much they would cost. The Transit Authority ought to be able to find out how many buses we need, when we can get them, and what the price will be.

Then we can go to Mr. Chalk and say, "We would like to buy buses from you, but we are not going to buy them at an exorbitant price, because we can get them elsewhere, and we still have time to get them elsewhere, so you don't have us cornered. We are even."

Then he knows as time runs on, he is going to have to sell buses to somebody. He can sell buses to other people. After all, he had to go out of the streetcar business. He sold the streetcars all over the world. He is a good salesman. He sold them in Europe, and in South America. He is not stuck. But I think it ought to be an even proposition, that he has so many buses and what can he get for them from us or somebody else.

Let us make an even negotiation, and not let him get us caught with a franchise termination, and not let him get caught, either. I would expect if we got offers from other companies for buses, he might well want to make a deal. We might have to buy the Bladensburg barns, by condemnation.

That is a fairly new piece of property. It is a large repair shop and so forth. They bought and built that, and the book values and the rate of depreciation would be clear. We have some protection there. We would have to go to a jury, I suppose, in terms of what it would be worth, but I don't think he would have us caught except with respect to the Bladensburg property, and that I would settle by condemnation and the jury.

Senator EAGLETON. What do we do in the interim, while this is going on?

Mr. DUDLEY. This is the basic question. What I would like to do is to persuade the WMATC and George Avery to be more realistic and socially minded and keep the bus fares down.

We felt subsidy is preferable to a high fare, and if we have to, in order not to have the fares go up, I recommended the subsidy. I do that reluctantly. I share Mr. Terris' opposition, but if we have to pay a subsidy through the nose to keep the fares down, I would pay it, but through a temporary basis.

Senator EAGLETON. On page 5 of your prepared statement, in the third paragraph, is your interpretation of the WMATA compact that it would presently have the authority to condemn without any authority being granted by Congress?

Mr. DUDLEY. The right of condemnation is given in the act without any strings whatever, and the provision that it cannot operate buses is a separate provision. As far as I can see, there is no limitation on the right to condemn anything that it needs in its business. Now, probably you would have to remove the provision prohibiting it from engaging in surface or bus transit in order to make that a legitimate object of its business, in order to make the condemnation suit legal.

I might point out that I was gratified at Mr. Babson this morning. He made some of these specific recommendations, namely that condemnation be clearly legal, and also that, obviously, the Authority be allowed to operate a surface bus transportation system. I had not consulted with him. Likewise, the provision that requires the authority to contract with an individual or transit company be removed, and that the authority be given the alternative, the option of either operating buses and subway cars, or not, as it thought best.

I think you realize Mr. Chalk is active politically. He has a lot of influence with this Congress. We shouldn't kid ourselves about that. When the first act was up to authorize the subway authority, Mr. Chalk opposed it, and part of the lobbying he did was to get provisions in here to protect the bus company, and I cited that, and to protect his possible right as a private contractor to come in and get a contract to operate it.

He had in mind himself. He still has in mind himself. He has referred in current conversations that he would try to get the contract to operate the bus company and the subway system.

Senator EAGLETON. One of the last things he said here today was that he thought he wasn't interested in operating it any longer.

Mr. DUDLEY. But he didn't say that before the House committee the other day, and his position is go on and off in this. I think you have to recognize that Mr. Chalk's desire to get out of the business is a negotiating stance.

There is no question but what it is for sale. You remember the comment this morning, "I am seriously interested in anything if the price is right." That is the only problem, if the price is right. If you want to buy somebody's property and they are a good negotiator, they immediately tell you it is not for sale. "I wouldn't dream of selling that property."

All Mr. Chalk is doing now is negotiating on the price. He makes it hard and difficult to try to build the price up, and that is the only issue between Mr. Chalk and the public and the community. Generally,

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the decision has been made. He is going out if he can get a price. He is a good businessman, and you have to respect him for that.

Senator EAGLETON. Thank you, Mr. Dudley. You were a very interesting witness.

Mr. Alfred Trask of the D.C. Federation of Civic Associations, Inc.

STATEMENT OF ALFRED TRASK, D.C. FEDERATION OF CIVIC ASSOCIATIONS, INC.

Senator EAGLETON. Mr. Trask, we are glad to have you with us. Mr. TRASK. Thank you, Mr. Chairman.

I am Alfred S. Trask, representing the D.C. Federation of Civic Associations, having a total of 20,000 members representing all sections of the city. To save time, I shall briefly state our position and request that our statement be included in the record.

(The prepared statement of Mr. Trask follows:)

PREPARED STATEMENT OF ALFRED S. TRASK, D.C. FEDERATION OF CIVIC
ASSOCIATIONS, INC.

Mr. Chairman, I am Alfred S. Trask, representing the D.C. Federation of Civic Associations as a member of its Public Utilities Committee and a delegate from the Friendship Citizens Association. We have two bills to discuss.

S. 1813 TRANSIT SUBSIDY BILL

This bill would authorize the WMATC to certify to the District an amount found necessary to bring D.C. Transit earnings to a level found just and reasonable by the Commission, with a 25g adult fare.

We oppose this bill for the following reasons:

1. It would guarantee to the company a rate of return higher than it has ever earned except for one year, 1963. See page 46, line 11, House District Committee hearings on H.R. 7802 (1967). The company has seldom earned the amount authorized by the Commission (Hearings on School Fares, Senate District Committee, July 29, 1968, page 81), and the bill would force the City to see that it did. The actual earnings for several years were higher than the U.S. Court of Appeals, D.C., thought were indicated, and we would not want them to be even higher from now on. As taxpayers, we object.

2. With a percentage return on expenses, the more the company can allowably spend, the higher the profit. There is not only no incentive to economy, but an inducement to extravagance. With the present authorized rate of 5.2% on gross operating revenues, the company would be allowed a return on allowed property expenses of 5.48%. We regard this as an unsound method of determining private "profits".

3. With a profit guaranteed at the taxpayers' expense, the company would cease to be a "private enterprise" in the usual sense of the word. The City, though paying the bill, would have no control over the amount of the subsidy. The principle is quite different from the school-fare payment, which is simply the product of the number of student rides and the fare differential.

We are all for the principle of spreading the cost burden beyond those who use the system, but we do not believe in increasing the profits to the transit company at the same time.

S. 1814 TRANSIT PURCHASE BILL

This bill is a commendable attempt to have the Transit Authority acquire D.C. Transit System directly to avoid having the City first acquire title and then transfer it to the Authority if and when the Compact is amended to undo the mischief perpetrated when the framers put in restrictive provisions against public ownership and other provisions against the public interest.

The bill would authorize the Transit Authority to initiate negotiations with the transit company for acquisition of all its facilities used in bus operations, and assumption of labor obligations. It has a feature that the WMATC might well have used in the past, that is, to have a representative participate in any labor negotiations.