The Washington times., 1916-01-07
RAIL WAY DIVIDENDS
FROM LIGHTING Co.
Profits to Stockholders Of For
mer Come From Holdings in
] Latter Firm.
Continued from First. Page.)

shares were issued to the railway COM
pany, part going to the United states
Mortsage and Trust Company. as trus-
tee. to guarantee the performance Of a
contract under which the power COM
pany was to receive from the railway
company the 'atter's two-thirds inter
est In the Great Falls water power site.
About this particular transaction more
will be said anon. The interesting fact
at present is that the stock ownership
OF the Potomac Electric Power Com
pany. as shown in the sworn statement
OF the company to the Public Utilities
Commission, Is distributed as follows
One share each to each of the niue
directors Of the power company and
one each TO two private Individuals
9.as9 shares to the United States
MORTGAGE and Trust Company. trus-
tee: and 10000 shares to the Wash
inaton Railway and Electric Com
pany.
The fact that the directors of the two
companies are identical and that the
United states Mortgage and Trust Com
pany is holding its shares as trustee
may explain the fact, not otherwise
made M e. clear. ,,y why the railway company,
credit and devotes to dividends on rail
way stock the dividends on the entire
$1,000 shares OF Potomac Electric Power
Company's outstanding stock. Thus II
appears in the report Of the power COM
pany for 1914 that 1t (the power COM
pany) paid 10 per cent dividends on this
stock. or $600.0O0. and i'm the report OF
the railway company for the same year
that 1t. the railway company. received
5000. 200 in dividends from it's ownership
OF the power company's stock.
First Figure Separately.
In arriving at its gross income" the
Washington Railway and Electric Com.
pany's bookkeepers first figure sepa.
rately the gross earnings from opera
tions," under which are included in
come from the street railway business
and income from sale of power, anc
miscellaneous income under which
Is included the dividends the compan,
receives fron it's Potomac Electric
Power Company stock, and from it:
the TRANSPORTATION business of the corr,
rsny alone showed deficit OF .43, $40
the company was able from its mis-
cellaneous income and its sale Of pow
amounting to ssS0,0OO, divided as follows
Seven per cent on its common stock
or a55,oOO, and 5 per cent on its pre-
ferred. or H25 COO: In other words. tn,
customers Of the Potomac Tlectri,
enough to allow the Washington Rail
way. and Electric Company sfH0.too i,
dividends on its power COMPANY stool
oEi the adenas astsay Ffe the Taway SS eeas
panv's outstanding stock.
Why. as matter of fact, the railway
company should be paying per cent OF
its common stock in view OF the fac
company is operating at q loss. seem,
a pertinent question for the railway
conlpanv's officers and directors to an.
s~er For 1t brings us to the collatera
might not. with better resuits fer thu
public. Improve it's eouir,nent and taxi
or Its fat-wheel cars. Two wears ag,
the Public Utilities Comr,issf~n beear
an investieation into this matter q,
learning thai the railway comnanv wn:
about TO declare IN eNtra dividend. an,
while II was decided tbnt q 'or,prehen
sive valuation OF tho comnany's ontir'
DroDertv vos necessary for \ nroCe
study OF the concerns 3 business III,
commissions statistician afte~ an ex
haustive study OF tho cornnnnv's books
came to an amazing conclusion.
Large Sum Is Set Aside.
IT was that even If the COMPANY
were allowed to continue enterin,
charges for depreciation of its prorert,
to the surplus account instead of {,
operations. as sound bookkeoping wouT(
seem to dictate, lust $3.50 900 had bee,
set aside in ton years time to nrovid
for the depreciation during that time q,
Droperty stated to renrcsent an invest
In this connection it seems re'evan
to observe that large proportion o
the outstanding capital stock of tn
Washington Railway and Electric Com
rany Is held by the Fidelity Trust Com
panY of Baltimore as trustee under In
denture Of the WASHINGTON Uttlitie
Company of Virginia. which severa
wears ago tried to put through a eian
merger OF the various public utilities o
Washington. The plan fell through bll
subsequently efforts have been made t
sell the WASHINGTON Railway and Elec
trio Company to the Capital Tractio
COMPANY. BY reason Of the high divi
dend paid on the common stock of tn
Washington Railway and Electric. tn
market quotations on this stool hav
increased In few years from $40 to Ss
share. despite the fact that the trans
portation business of the company /
shown in its sworn reports to be un
profitable.
In the next and concluding article q
this series attention will be directed I
detail to the Interesting financial AT
ranRement under which the capita
stock Of the Potomac Electric Powe
Company was increased to ACQUIRE cor
trolling rights in the Great Falls waite
power site. and the effect of this on tn
people of Washington is preventin
cheaper electric rates.