Evening star., 1901-09-16
REORGANIZATION SCHEME
INTENTION OF WASHINGTON TRAC-
TION COMPANY REVIEWED.
That BOndhOlders of Con-
stituent Companies Will Not Part
With Their Securities.

''The water which will be squeezed out
of the capitalization Of the Washington
Traction and Electric Company under the
proposed scheme OF reorganization Will
amount to a saving Of half million dol
lars a year in interest" was the remark to-
day Of local financier who has been max
ing study Of the securities and earning
capacity of the properties composing this
company.
The committee which has proposed the
Reorganization of the company as set forth
in the public advertisement in the Saturday
Star is composed entirely Of New York
capitalists None of these gentlemen are
in Washington, and nothing could be learn
ed from those in touch with the scheme,
except that 1t was projected solely 1or the
purpose of securing a saving in interest and
to allow Of further consolidation In the way
of power plants and other incidental econo-
mics, which In the aggregate, 1t Is said, Will
| amount to many thousand dollars annually.
The plan proposes the issuance OF new
securities follows:
Seventeen million five hundred thousand
dollars ffty-year per cent gold bonds,
secured by mortgage covering all property
and franchises of the company, including
after-acquired property, of which bonds
50. 1O7 $50 will be reserved to retire under
lying liens and for such other purposes as
shall be expressed In the mortgage.
Eight million five hundred thousand dol
lars per cent preferred stock, cumulative
after June l. 1904, entitled to no other div
idends, but preferred in liquidation to the
amount Of it's par value. together with all
Six million five hundred thousand dol
lars common stock.
Review of the Company.
A brief history Of the origin and financ-
ing Of the Washington Traction and Elec-
trio Company was given to Star reporter
by local broker today as follows:
THE company had it's inception in the
fall Of 1898, when a number of New York
and Washington capitalists formed a syn
dicate and acquired the majority Of the
stocks Of all of the Washington street rail-
ways except the Capital Traction Com
pany. and also the stocks Of the electric
lighting companies of this city. They then
organized under the laws of the state Of
Virginia, under the name of the Washing
ton Traction and Electric Company, with
a total authorized stock capital of $4,000
600, and the right to issue bonds to the
amount Of s2O,Oo0O0o. On May 70. 1899,
stock to the amount of $1OOOO,OOO was is
sued, and the same year $12 600 OF bonds
were issued to pay for the property which
cost the original syndicate in the neigh
borhood of $9,O0O,OOO.
1.-The Columbia Railroad Company the
Metropolitan Railroad Company and the
United States Electric Lighting Company
are paying institutions. The other prop
critics which were absorbed in the combin-
alton are not paying properties. All of
these properties were practically consoli-
dated under one management. Since the
first bond issue of s12,OOO,OOO at least $2-
coo, 600 more Of the $2OOOO,OOO authorized
have apparently been issued to pay the in
terest on the first issue of $12, 600, GOO and
other obligations Of the Washington Trac-
ton and Electric Company.
Character of the Bonds.
These bonds are not lien in any man.
ner, shape or form upon the property or
franchises Of the different railroad COM
panies or Of the electric lighting COM
panies, but are simply a mortgage or
trust upon the stock Of these constituent
compa nies, and the value Of these bonds is
simply what the stock of these constituent
companies will bring at public auction or
private sale.
I'm order to cary out the present scheme
tisement, persons holding the old bonds
must turn them in and receive so per cent
Of their value in the new bonds and the
balance in preferred and common stock,
the latter Of which may be realized on at
some distant period.
Position of BOndhOlders.
1.-THE constituent companies under the
present management have never been able
to pay sufficient dividends to the WASH
ington Traction and Electric Company as
stockholders for them to pay the interest
upon the bonds, which are q mortgage on
their stock. While this scheme Of reor-
ganization is possibly the best thing that
can be done 1t is simply reduction Of in
terest charges upon the securities Of the
Washington Traction and Electric Com
pany. which they hope the revenues OF the
constituent companies will be sufficient to
meet. No man holding a mortgage on any
of the actual property Of these constituent
companies will accept the bonds Of the
Washington Traction and Electric Com
pany, which are q collateral mortgage
only, while the security Of their mortgage
on the property is absolute"