The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1899-01-20
Oakland Office San Francisco Call,
COS Broadway, Jan. 10.

will expire and with its expiration IL
is probable that the consolidation OF
the two water companies may become
an actual fact.
In April occurs the annual election Of
the Contra Costa Company and most
determined effort will be made If con-
solidation has not taken place by that
time TO Dust the Pierce element in the
directory, as that element is now all
that stands between the coming to-
gether of the two companies
For the first time The Call publishes
the interesting facts connected with
one of the greatest financial deals ever
promulgated in this State. 1t affects
every citizen of Oakland and other
towns supplied by either the Dingee or
Contra Costa water companies be-
cause water consumers are threatened
with a raise of rates to twice what they
are at the present time.
All that keeps the two companies
from coming together is paltry $685.
900, while the capitalization of the pros
pective consolidation is 100000.
At the present time the two COM
panies are deadlocked. Practically they
are very close together and a conces-
sion by the Pierces would instantly
bring about a combination. Ali the de-
tails are arranged, everything is ad-
justed with the exception of the diff
ference between the price paid for the
Mount Eden Water Company and the
amount President Henry Pierce de-
clares that the Contra Costa Company
has paid for it. Theoretically they are
as far apart as they were three years
ago and the conditions are such that
within a month water rates may be
raised to the highest notch permitted
by the existing eXtortionate schedule
or a rate-cutting war may begin, such
as existed two years ago.
For over a year the two companies
have been anxious to combine and the
only obstacle in the way was the in
flexible demand of AlvinZa Hayward
that if a consolidation were effected it
should be on equal terms. Hayward
always argued that his plant was
newer than that of his rival, that it
cost less to operate it, that 1t was as
valuable, that his water supply was of
better quality, more reliable, not de-
pending on catchments, needed no ex-
pensive system of filtration, and that he
had more customers than the Contra
Costa Company. Nothing could swerVe
Hayward from his fixed purpose, and
not until a few months ago could he
be persuaded to accept the terms upon
which the combination is to be eff
fected. The terms are that Hayward
and his associates are to have three
million dollars in stock and that the Con-
ira Costa Company after consolidation
should guarantee the payment of the
new company's bonds, aggregating one
million dollars.
To fully understand this big financial
problem it is necessary to know that
the Contra Costa Company has bonds
outstanding of two million dollars. Its
authorized issue Of stock is six mil
lion shares, of which three million
have been issued and the remaining
three million are still in the treasury Of
the company.
The Dingee Company is capitalized
for four million, Of which one million
dollars is in bonds and three million
dollars in stock. Both bonds and stock
are held by Hayward, Dingee and their
associates and neither has ever been
put on the market, consequently has
no known value.
The proposed plan of consolidation
which is all ready to go into immediate
effect capitalizes the combined COM
panies at nine million dollars. This
amount is made up of the Oakland
Company's bonds. the Contra Costa
bonds, the three million dollars worth
of stock issued by the Contra Costa
Company and the remaining three mil
lion now in its treasury, which would
be turned over to Hayward, Dingee and
their partners.
This arrangement appears at first
sight as though the Contra Costa Com
pany would absorb the Hayward con-
Germ, but this is not the case in reality
The 1000 shares held by the Contra
Costa company are distributed among
perhaps 100 shareholders, between
H. 10,
many years. On the other hand, Hay
ward would absolutely control his
10000 shares, and when it came to a
vote on the directorate he would have
no difficulty whatever in getting the
dissatisfied element of shareholders
now holding Contra Costa paper 1t
has been known for years that the
shareholders, Of whom the Chabots are
the largest, are opposed to the regime
of the PierceS. The Pierces have al
ways maintained themselves in office.
and in addition to Henry Pierce (the
president), Orestes Pierce general
manager), and Marshal Pierce Can
other Officially, there are several rela-
tives and friends well placed in the
company. So long as good dividends
were being paid on the stock no one
cared much who ran the concern, but
when Alvinza Hayward entered the
field and created a disastrous competi-
ton dividends ceased and factional bit
terness within the company increased
to a great extent.
Prior to the negotiations taking def
mite shape it was stipulated that each
company should meet free of debt-that
is TO say, that prior to consolidation
each should pay off it's floating indebt-
edness The Dingee Company has no
floating Indebtedness, and the Contra
Costa Company was understood to
have had but $4,000 outstanding, but
when balances were struck this amount
was found to be over 100000.
This large debt had to be cleared off
by the company before basis Of agree
ment was reached. The Contra Costa
people were very anxious that it
should be taken care of by the COM
bination, but Hayward was obdurate,
and finally the debt was provided for
by its contractors.
About two years ago, when competi-
ton was at its height, Contra Costa
stock fell from par to $50, and there
was great fear that Hayward would get
in and obtain a majority of the stock
at the low figures. This was feared
by Messrs. Prescott, Tom Brown and
Whittier, and they at once formed a
large pool composed of a controlling
amount of the stock and agreed that
under no condition should any of such
stock be disposed of for two years. At
the annual election last April the pool,