The Washington times. (Washington [D.C.]) 1901-1902, 1901-08-30
TRACTION COMPANY SUITS
The City and Suburban in Debt to
Other Syndicate Concerns.
Vast Sums Cinined by Electric
Light. Anncostia. and United
states Mortgage and Trust Com
panics-Thc Reorganization Plans.

Light. Anncostia. md United
states Mortgage and Trust Com
panics-Thc Reorganization Plans.
The first formal steps toward the finan-
cial reorganiza ton of the street railway
system of the Washington Traction and
Electric Company were taken yesterday.
Several suits were filed against the City
and Suburban Railway Company. one of
the constituent companies for vast sums
OF money loaned to it by the other con-
stituent companies and by the United
States Mortgage and Trust Company the
New York financial concern which aided
in forming the consolidation.
No direct statement as to the signifi-
canoe of the suits could be obtained from
any officer of the Washington Traction
Company last night, but 1t was learned
that the expectation is to force the City
and Suburban into the hands of re-
ceiver and thus to foreclosure. for failure
to settle the suits. What the intention
of the management of the Washington
Traction Company is after this step has
been taken could not be learned. It is
not known if, In foreclosure sale. it is
intended to buy in the City and Subur-
ban at a low price, relieved of some of
its stock and bonded Indebtedness, or to
let it go into other hands
1t is said to be probable that other suits
of a similar nature will be filed against
others of the constituent companies that
have been running behind in their receipts
and unable 20 meet their obligations.
Three suits were filed yesterday against
the City and Suburban to recover a to-
tai of s193, 80. claimed to be due on prom
issory notes, made payable on demand.
In another suit to recover on note for
$50. 900 the Washington Traction and Elec-
tric Company, which is the endorser, is
also made defendant with the City and
Suburban Company. The entire sum in
which the City and Suburban is alleged to
be in default is thus about s225.0o0.
In the first suit filed the United States
Mortgage and Trust Company sues to re-
cover on five notes aggregating $l29,2 50.
The second suit is by the United Stats
Electric Lighting Company to recover on
two notes aggregating $4,000. The third
is brought by the Anacostia and Potomac
River Railway Company on note for
10000 The fourth suit is by the Column
bia Railway Company and is against the
City and Suburban Railway of Washing
ton and the Washington Traction and Elec-
trio Company. on a note the face Saiue
which is So, Oo0. Fred McKenney and John
s. Flannery are named as counsel for the
plaintiff.
The Washington Traction and Electric
Company was formed two years ago by
the purchase of the stocks of all the rail-
ways of the District, except the Capital
Traction. The two electric lighting COM
panies We're also purchased. Practically
all the capital stock of a number of the
companies was purchased and a very
large majority in every case. The gentle
men who made the purchases and COM
pleted the deal sold out to company form
ed for the purpose, the Washington Trac-
ton and Electric Company. This concern is
thus simply a holding company, owning
the stocks of the constituent concerns.
This company had an authorized bond
issue of SO 0O0.0 900 and an authorized capt.
tai stock of 81. 0eo, 600 both of which We're
simply collateral issues based on the value
and earning power OF the stock of the
constituent companies.
The Washington Traction and Electric
Company has not been paying concern
from the beginning. number of the
City and Suburban, ran behind on the in
terest on their bonds, and some of them
did not even earn their operating ex-
penses. Those concerns which did pay
were not productive enough to make UP
for the deficiencies on the poorer lines.
The result of this was shown last June.
when the Washington Traction Company
was unable to meet the semi-annual in
about S13, 900. 900 had been issued. At that
time the United States Mortgage and
Trust Company, the trustee for the
bonds, applied for receiver for the COM
pany in the Virginia courts. and it's APP
plication was granted. President Allan
c. McDermott. of the Washington Trac-
companies. was made the receiver.
Since that time committee represent
ing the bondholders has been endeavoring
to formulate plan for getting the COM
pany out of its difficulties. 1t was mani
fest to the committee almost from the
beginning that the company would not
be able to meet its interest payments ac-
cording to the original organization. 1t
was proposed that the issue of bonds be
cut down to about half and that pre-
ferred stock be issued to the bondholders
in place of the bonds, which they would
give up. IT was also proposed that the
interest rate be cut from ~ per cent to
per cent.
further step which seemed necessary
was that money be raised to liquidate
large floating debt and for working capt.
tai 1t was proposed that this be accom-
Plished by an assessment on the capital
stock of the company, which was, as
above stated. Sl2.01O00. 1t is said that
this latter plan was not found feasible
because the stockholders. some of them
were unable or unwilling to pay the as
Sessment.
People who have been familiar with the
affairs of the company have been con-
WINGED that some further and more dras-
tic measures would be necessary to place
it on a sound financial basis. 1t has been
thought probable that some of the con-
stituent companies would be allowed to
go into the hands of receivers as one of
these measures.
\ law was passed more than n year
ago providing for the entire reorganiZa-
ton OF the Washington Traction system.
The law provided that the Washington
and Great Falls Railway should be al
lowed to purchase the other constituent
companies and form them into one con-
Germ doing away with the fiction of the
holding company. The provisions of this
law have never been carried out on ac-
count Of the financial difficulties of the
concern. It is understood that the steps
now taken are in the nature of prelimi- |
nary moves looking to the final carrying !
out of the reorganization.