Evening star. [volume] (Washington, D.C.) 1854-1972, 1899-05-20
street Railway FinancierinG.

street Railway FiuanCierinG.
WASHINGTON and neigh3oring Baltimore
have many interests in common. In the
matter Of ih, street railway organ cations
IF the two cities there is a present Il
striking resemblance. ard one which the
citizens &C Washington are Studying just
now wiki marked interest. The trarSpor-
JatiDu companies of Baltimore have lately
been consolidated under a single manage
meut as "a result of the truSt-making en-
t-rprise of a few capitalists From present
Indications the same thing is threatened in
Washington. All the local lines except
those of the Capital Traction system have
been bought by associated syndicates, one
Of which has at the same time reached
forth and secured the electric lighting com
panies and has just missed cOrralling the
gas company as we'll. The situation affords
opportunity for an instructive study III
corporation fnanciering
The Baltimore experience is not reasSur-
ing from the business point of view. The
assembled street railway properties are to-
day capitalized at $I6HD.D0O. One-haf of
This is in the form of interest-bearing
bonds The price current of these bonds
according to the ordinary rules of the
market. should be high, for they represent
the Sum-t0tal Of BaltimOre's local trans
portation facilities on the contrary. those
bonds yesterday sold for 1014 and 1oai2.
or nearly five points lower than the eXpgc-
tatjun held out at the time of tireir issue.
Income bonds are rated at -. the preferred
stock is selling nearly l. points below par.
and the common stock is drug on the
market at about - points below
The reason for this decline in these Sc
L.
edged. commanding high prices and hold
ing themselves firmly. is that the properties
are very much over-stocked and are more
over unable to earn the fixed charges. The
official statement of the business of the
consolidated roads for the past year
showed net earnings of about 81 go. DDl.
while the annual interest charge on the
bonds is approximately $2,oj".tso. Natur-
ally. the stock dividends are minus. while
the bondhoIders cannot confidently eX-
Pect their income unless there is a change
in the balance sheet. Such a change can
only b. effected by a reduction of ex-
penses-meaning a deterioration of the
service-or a marked increase in the vol
ume Of business. The roads already alb
sorb all of the business. and its growth
can come only from the growth of the
city or the winning of new patrons Re
duced efficiency will not accomplish either
result.
This state of case explains the phenome-
non ef the shrinking values The bonded
Indebtedness is thought to be excessive. 1t
is believed that il represents several trans
actions resembling that just alleged by
stakeholder in the Anacostia railroad Of
this city, who charges in a petition to the
court that The new owners of that prop
erty, in combining it with the Belt road
sold the Belt to themselves at handsome
profit. which is represented in the proposed
bonded Indebtedness.
1t IS known that the new owners Of the
Metropolitan road bought it at very high
figure. So high. indeed. that satisfactory
dividends seem impossible. 1t is asserted in
this connection that the syndicate hopes
10 recoup by combining Iow-priced prop
critics with this luxurious purchase. and
So average the cost and the income to
respectable figures. But if the Baltimore
experience is to be repeated. with excessive
bonded Indebtedness standing against the
properties To cause a constant and paralyz-
ing drain upon the resources. surely the
same spectacle viii be Witnessed here. with
the roads staggering under the top-weight
OF mortgages while the stockholders wait
ur.SIccessfuIIy for dividends.
Washington desires above all things else
well-cnnstructed. safe. welI-managed street
railway system II is not a matter of ma
terial public concern whether the title rests
i'm one OF a dozen companies as long as the
rate IF fare IS unchanged. adequate trans
fer facilities are afforded. the service is
good. and the employees are justly treated
as To- hours and wages. At the same time
the capital is interested 10 know whether
II Will come 10 The same condition as Bal
tjmpre. with these magnificent properties
threatened with possible bankruptcy. with
a growing indebtedness. with possibly a re-
dGction in efficiency. and with the specter OF
a rece.vership in the horizon.
The city Is concerned. too. in the interests
of the local shareholders. 1t does not de-
sire To become the scene Of a gigantic deal
which has for its object only the enrich
ment IF the few from the outside who per
nit themselves to buy the most favored
securities while the other holders wait with
ouJ possibility Of redress for promised but
invisible incomes
Consolidation of weak, suburban lines
with a strong. trunk line. TO which they
become feeders. is q natural operation and
10y improving the suburban service and
cheapeuins the fare for such service it is
beneficial tu the public. But consolidation
Of the trunk lines of a city into a single
system controlled 10y outside capitalists de-
stroys all local competition and is not to
the public interest
Washington may look with equanimity
upon certain consultations which have
been effected. but the union of natural com
petitors Ike the Capital Traction and the
METROPOLITAN systems and the control nf
the combination by outside CAPITALISTS
would he nothing less than a local disaster.
OF the same kind that would result if
natural competitors like the gas and cleo
tric light companies should pool their issues
under the same ownership.
II becomes evident that Aguinaldo is not
giving Mr.. Atkinson the support which thar
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