Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-09-19
JUDSON IS PUZZLED
Gives Views on Proposed
$50, 200, 900 Corporation.
THINKS ACTION STRANGE
Fears Certain individuals" Will
Reap Profit.
FOR PUBLIC UTILITIES LAW
President King of Railway and
Electric Company Gives Rea-
sons for Organization.
THINKS ACTION STRANGE
FOR PUBLIC UTILITIES LAW

Declaring that it seems strange that a
corporation in need of funds should.
within few months past have doubled
the dividend on its common stock, Engi-
neer Commissioner William V. Judson
today gave out Il statement containing
his impression of the explanation made
by Washington Railway and Electric
Company officials that the reason for the
formation of the new million dol
lar corporation was to provide funds for
financing the railway company and its
allied properties in the future.
Commissioner Judson already is on rec
ord as being emphatically opposed to the
amalgamation of local public utilities,
which is understood to be the real object
of the new corporation, known as the
ACKNOWLEDGEMENTS Company
Recently the Potomac Electric
Power Company. the stock of which is
owned by the Washington Railway and
Electric Company, increased or author
lied the Increase Of It's capital stock
by 100000 Why does not the sale
of this stock put the Washington Rail-
way and Electric Company in funds ?''
Commissioner Judson asks
The District official fatty states that
1t looks as though the capital sought
to be secured was principally in the
shape OF profits for certain indi-
portance Of the District of Columbia
being provided with a public utilities
commission. His statement, in part, is
as follows:
in such need of funds, as was stated by
Its president, should. few months past,
have doubled the dividend on it's common
stock incidentally, it may be noted that
this common stock was quoted year ago
at "a, while now. with the increased divi-
dend, 1t is quoted in the 9Os.
Thinks It Queer.
IF a public utility corporation, which.
of course. should be carefully and con-
servatively financed, needs additional
capital. 1t seems queer way to begin to
raise it by having stock sold in a great
holding company at 10 cents on the dollar
and. in large part, purchased by officers
and directors of the needy corporation, as
has been reported.
1T certainly does look as though the
capital sought to be secured was princi-
pally in the shape of profits for certain
individuals And somebody must furnish
these profits Who is this to be? l am
afraid. in the long run, it is to be the
public.
"A public utilities law would doubtless
provide for the issue of bonds for all
proper purposes.
Let us have public utilities law be-
fore anything else is DONE
Mr.. Stephens Views.
That the Attorney General of the
United States could proceed at once to
prevent the proposed amalgamatio
even before the organization plans are
completed. is the opinion of Francis H.
Stephens, acting corpora ton counsel for
the District of Columbia.
I'm my opinion there is an analogy be-
tween the proposed merger and the
Northern Securities case. as il appears
that 1t is planned to form an illegal
combination In restraint of trade" Mr..
Stephens said.
MIR. Stephens takes the position that
the amalgamation. if effected, would
be unlawful and backs up his views
with legal authority: First. he says.
the combination would. in his opinion,
be violation of the Sherman anti
trust law. while. in the second place,
he points out that foreign corpora
ton. like the one slated to effect the
merger, should not be permitted to
evade the District laws which pro-
hibit local corporation from doing
more than one line of business.
The question arises whether corpora
ton can be organized in the states 10
transact various kinds of business in the
District Of Columbia which would be for
hidden Ga district corporation" said
Mr.. Stephens. This is question that
never has been decided in this jursdic-
ton, but the United States Supreme Court
has held, under a different statement OF
facts. that state is not bound to recog
nize or enforce the laws of another state
when such laws are inimical or hostile to
the policies of the first state.
Might Apply Doctrine.
PROFESSIONALLY that doctrine might be
applied In the case of the proposed
merger, and l am convinced that it
would hold, as commonsense suggests
that our laws would be worthless and
law a farce If individuals or corpora
lions could simply step into another state
long enough to get Incorporated and then
return to do as they please. in utter de-
fiance to our policies
The need of the Washington Railway
and Electric Company and the Potomac
Electric Power Company TO raise large
sums of money to pay for great i'm
provements and extensions in their serv-
Ice and TO retire outstanding indebted
ness as it falls due was given as a rea-
son for the Organization OF the Mary
land and Virginia Railroad Company as
4 holding corporation by President Clar-
ence p. King, president Of the local COM
panies involved, In an interview with a
reporter for The Star today.
Another reason given by Mr.. King was
The desire Of the men back of the plan
10 provide for the best possible service
10 the public both in transportation and
lighting
Mr.. King explained that the power to
issue bonds under the charters OF the
Two old companies. was fixed by Con-
.rIess. and that all the bonds possible
under these charters have been issued
The Washington Railway and Electric
Company and its subsidiary companies
during this year is spending 81 ,2Oo. 900 on
improvements and extensions, said Mr..
King. Its operating expenses will reach
about S2.2.aJ,Up
He said that lie believed that at least
Sl.UUub "A year would be needed for the
next twenty-five years To pay for the
improvements and extensions which the
system would, and should, install for
the benefit of the Washington public.
To false the money needed, Mr.. King
said, either plan for holding cor
poration, such as the Maryland and Vir-
ginia Railroad Company, with power to
issue stocks and bonds, was required, or
else the company must take on a floating
debt which would not be good business
: Must Pay Off Bonds.
In addition to the expenditures for ex-
tensions and improvements, Mr.. King said.
money was needed to pay off the out
standing bonds of the old companies as
HOY fal In Saf1 hat