Evening star., 1901-06-01
OMcial Announcement on the Part of
Washington Traction Company.
TO PROPOSE PLAN OF ORGANIZATION
Current Gossip as to the Future of
the Enterprise.
ACTION OF BONDHOLDERS

company Will not be paid. This decision
was reached late yesterday by Mr.. Geo.
w. Young after conference in New York
city with those largely interested in the
financial management of this company.
This morning Mr. Young furnished The
Star with the following announcement:
ITO the holders of the first mortgage
collateral trust bonds of the Washington
Traction and Electric Company: Default
having occurred in the payment Of the in
terest due June 1, 1901, on the bonds of
this corporation the undersigned have
been requested by the holders of a major
tty Of said bonds to act as committee
for the protection of the interests of all
the bondholders, and are now engaged IN
preparing plan of reorganization. The
details Of the plan, when formulated, will
be communicated to the bondholders.
"BondhOlderS are requested to send their
names and addresses, together with
statement of the number of bonds held by
them, to the secretary of the committee.
Signed: Geo. w. Young, chairman; John
Crosby Brown. James Timpson, William II.
Hollister, Gardiner NJ. Lane, committee.
Davies, Stone and Auerbach, John G.
johnson, counsel
''kichard. M. Hurd, secretary, 80 Cedar
street, New York.
Speculation as to Outcome.
What will be the outcome of this phase
III lIe affairs OI lue COMPANY Is IlldllSI
of much speculation. OF course the failure
to pay the interest renders the company
liable to foreclosure, but such action on the
part of any bondholder must be made
through the trustee, which is the United
States Mortgage and Trust Company OF
New York city, and the circumstances
would have to be such to Justify ex-
posing the property for sale to satisfy the
collateral bonds.
The situation, as far as 1t relates to the
failure of this company to earn its fixed
charges to the full extent of the interest
on the Az per cent callateral bonds, is not
a new one The fact is that the earning ca
pacity has never been equal to the de-
mands.
The company was organized two years
ago with capital of $12 600 GOO in stock
and $40 10000 In AZ per cent bonds. Ow-
ing to the fact that its property consisted
Of the stocks of the eleven street railroads
and two electric lighting companies, which
were then and are now Independent con-
Germs. the traction bonds are collateral Sc
cucties and not a mortgage bond. Under
authority OF an act Of Congress, which be-
came law last June, the company was
given the right to consolidate these various
concerns, and a plan is to be now an
nounCed. OF the total authorized issue Of
$20. coo of bonds $12COO,0OO was at first
issued, 81 .442 ,0O0 being held for the future
uses of the company and the balance being
held as a reserve to retire the outstanding
bonds of the constituent companies.
The treasury bonds have since been is
sued, which makes the total over s13. .OoO,-
600. All the stock has also been practically
Issued.
Deficit In Revenues.
The deficit in the revenues Of the COM
pany has been made good at each success
sive period by those largely interested in
the property, and the general understand
Ing is that the funds have been supplied by
an assessment on the stock. To this fact
In part at least, the common gossip on the
street attribut as the action of some who
had rather large holdings, in selling their
stock. 1t is said that quite recently Mr.
Hayward of Baltimore, Mr. Scott Of Will
mington, Del. and Mr.. Frederick c. Ste
vens Of this city sold out their stock, and,
according to the same authority it was
purchased by the Roeblings.
Inc extent OF these advances, so to
speak, Is not known. but 1t is supposed
that floating debt has in this way been
accumulated. Some conjecture this form
Of incunbrance has recahed a million of
dollars, while others add to these figures
over and above the money
that was provided by the issue Of the col
lateral bonds However, there is no def
mite statement in this particular, nor is it
a gap exists between the receipts end
the expenditures.
Mr.. George W. Young told Star re-
porter this morning that he estimated it
receipts of the company on its present ba-
sis would be able to meet the operating
and the fixed charges.
Large Total.
The latter reaches a large total, for 1t
includes the interest on the bonds of the
constituent companies. which amounts to
nearly a half million Of dollars, and then
there Is the interest on the collateral
bonds. which reaches total of 1924 $50
1t will be noted that the fixed charges
alone, not including, of course, dividends
or the stock, are more than a million of
dollars
Mr.. Young was asked over the tele-
phone this morning by a Star representa-
tive in regard to plan of reorganization
printed some days ago In The Star, which |
would provide for a cut in the collateral
bond issue Of 25 per cent, and a reduction |
In the rate of interest from ~ to per
cent.
Mr. Young was asked to state whether
such plan, If adopted, would make it |
possible for the company to earn the fixed |
charge. He said he thought it would not.
When the point was further pressed and |
In his judgment in the amount of the bonds |
would be required, he replied that he would |
not discuss the plan Of organization, as !
that was matter for the committee to |
|
The impression seems to be, and has |
been for some days, among people here |
WHO TAKE iii interest the securities or |
this company that the plan as outlined in |
The Star recently Is likely to be followed |
In fixing upon basis of organizing the |
under the act Of Congress.
Outline of Plan. |
This plan, in brief, provided for a new
issue of bonds. which would not be a col |
lateral but a mortgage bond, bearing 4 |
per cent. They were to replace the pres
ent AZ per cent bonds on a valuation of
$3.50 per bond. 1t would appear from Mr.
Youngs statement that this is not re- |
garded as a sufficiently heavy cut, and it !
may be that the committee will recommend |
that the amount of the present issue Of |
bonds be cut in half. |
OF course this is conjecture largely, as |
there are no definite figures given out upon |
which to base a judgment as to the extent |
Of the difference between the receipts and |
expenditures of this company. About a |
year ago it was said, in a half authorita-
tive fashion, that the deficiency was about 4
$30O000 Since then 1t Is claimed that the |
receipts have increased and the expenses
been cut down. SO that the annual deficit |
is less than 100000.
1t Is further stated in the same way that
In the course of the next four or five years.
CONTINUED on Second Page)