G. S. Thorvaldson, K.C., special counsel for Winnipeg, in the Winnipeg Electric Co. application for increased transit rates, Monday afternoon labelled as "propaganda" accusations made against the city by A. E. K. Bunnell, Toronto consulting engineer.

Mr. Thorvaldson made this charge when Mr. Bunnell, witness for the company, was cross-examined by A. E. Johnston, counsel for the Municipal and Public Utility Board hearing the application.

Under cross-examination, Mr. Bunnell charged that the city of Winnipeg "was trying to run the utility into bankruptcy."

Mr. Thorvaldson rose to his feet and heatedly protested that Mr. Bunnell's statement was "propaganda"

"That is a gratuitous remark," declared Mr. Thorvaldson, "which you also made in 1931."

In 1931 Mr Bunnell reported for the board on the company's valuation during its last application for fare increases.

"That has been virtually the history of all utilities — put them into bankruptcy," replied Mr. Bunnell.

"The purpose of the remark was propaganda in 1931 and the purpose of the remark today appears the same," countered Mr. Thorvaldson.

The hearing adjourned until Thursday morning when final arguments will be given by R. D. Guy, K.C. counsel for the Winnipeg Electric Co., Mr. Thorvaldson and Mr. Johnston.

Wednesday morning, the Municipal and Public Utility Board will hear the application by the company for an increase in gas rate charges.

Completing his evidence Monday afternoon, Mr. Bunnell said that even with an increase in fares effective Sept. 1, the company would have a deficit of $197,743 for 1948.

He estimated that, in 1949, the company would show a deficit of $90,743.

Mr. Thorvaldson asked Mr. Bunnell if he agreed that depreciation should be charged before dividend were paid, Mr. Bunnell agreed but he would not apply the same preference for bond interest.

W. C. MacDonnell, consultant accountant who reported on the company's financial position to the board, strongly criticized the testimony given by John H. Bickley, public utility consultant of Louisville, Kentucky.

Mr. MacDonnell protested that Mr. Bickley, witness for the company, did not examine basic fact and material before giving evidence.

"It was an attempt to salvage from the inadequate information available maximum figures of investment and annual depreciation allowance," charged Mr. MacDonnell.

"My objection to this testimony is that he did not examine basic material available ... He should not have given testimony without investigation."

Mr. MacDonnell declared that considering all the factors available he considered his evaluation of company property at $6,,500,000 as a generous one.

He referred to the "impropriety" of Mr. Bickley's "judgement" to factors not investigated, such as the $1,200,000 reported by the company to be spent for property in 1948. For one thing, he said, Mr. Bickley failed to bring in the retirements for 1948.

Mr. MacDonnell contended the company failed to produce a "true picture" of the railway set-up.

In spite of the testimony by the company that $653,000 remained to be written off on street car depreciation, Mr. MacDonnell believed this property fully depreciated.

The company, he said, reported no depreciation on street cars before 1917 but there were surpluses, most of them which went out in dividends.

He noted that depreciation was set up in 1917 and the company was able to set up funds of $1,000,000 for this purpose.

On the question of observed depreciation, Mr. MacDonnell said the rate of three and a half cents per vehicle mile was adequate.

If, as had been argued, that was not sufficient and a rate of five cents per mile should be allowed, this would from 1930 to 1947, bring in a sum amounting to $8,930,000.

He asked what could be done with such a sum.

Dealing with the life of vehicles, Mr. MacDonnell said that the onus should be on the company to prove that trolley buses will last less than 15 years and gas buses less than 10 years.

Even under the company's own accounting the street cars are fully depreciated, he contended.