The Washington times., 1916-01-07
RAIL WAY DIVIDENDS
FROM LIGHTING CO.
Profits to Stockholders Of For
mer Come From Holdings in
/ Latter Firm.
CcOntinued from FIRST Page)

shares were issued to the railway COM
pany, part going to the United States
Mortgage and Trust Company, as trus-
sotrsot nrder bob bhS pebsoTSCe tbn nosp com. S5
pany was to receive from the railway
company the latter's two-thirds inter-
est In the Great Falls water power site.
About this particular transaction more
at present Is that the stock ownership
OF the Potomac Electric Power Com
peny, 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.Ssa shares TO the United States
MortgaCe and Trust Company. trus-
tee: and 5O,00O shares to the Wash
ington 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
In its annual reports writes to its
credit and devotes to dividends on rail-
way stock the dividends on the entire
1900 shares OF Potomac Electric Power
Company's outstanding stock. Thus II
appears in the report OF the power COM
pany for 1918 that It (the power COM
pany) paid 70 per cent dividends on this
STOCK. or $6OO.0OO.. and in the report OF
the railway company for the same year
that It. the railway company. received
5000 900 in dividends from its ownership
or 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. and
miscellaneous income" under which
is included the dividends the company
receives from it's Potomac Electric
Power Company stock. and from its
subsidiary companies. Although in 1911
the TRANSPORTATION business of the corr.
Esny alone showed a deficit of s43.51O
the company was able from its mis-
cellaneous income" and its sale Of pow
ef to subsidiaries. to nav dividends
amounting to $3.50, 900, divided as follows
seven per cent on its common stock
or A55,OOO, and 5 per cent on its pre-
ferTed. or A25, COO. In other words. the
customers OF the Potomac Electric
Pcwer Company, hy paving rates high
enough to allow the Washington Rail
way and Electric Company ssno.t0O "
dividends on its power COMPANY stocF
holdings. actually paid IS ler cent o1
the dividends on the, railway com
Why, as a matter of fact, the railway
company should be paying per cent or
its common stock in view OF the fact
that the transportation business Of The
company is operating at q loss seems
n pertinent question for the railway
ccmpany's officers and directors to an.
swer: For It brings us to the collatera
question, as to whether tho company
micht not. with better results fer thC
public. Improve its eduippl4nt and taxi
on Its fiat-wheel cars. Two wears aRt
the Public Utilities Comr1issi~n begar
an Investigation into this matter. or
learning that the railway cemnanv wa;
about TO declPre IN eNtFn dividend, and
while It was decided that copnprehen.
Rive valuation OF tho connany's entire
study OF the concerns business III,
commissions statistician after an eN.
haustive study OF tho connanv's books
came to an amazing conclusion.
Large Sum Is Set Aside.
IT was that even II the company
were allowed to continue enterinJ
charges for depreciation of it's Dropert,
TO the surplus account instead of Il
operations. as sound bookkeeping wouTC
seem to dictate. lust $50 900 had bee1
set aside in ten years time to nrovid,
for the depreciation during that time OF
property stated to represent an invest
ment of practically $50, 100000.
In this connection 1t seems relevan
to observe that a large proportion o
the outstanding capital stock of tn,
Washington Railway and Electric Com
pany Is held by the Fidelity Trust Com
ranY of Baltimore as trustee under in
denture Of the washington Uttlitie
Company OF Virginia, which severa
years ago tried to put through a gian
merger of the various public utilities O
Washington. The plan fell through bu
subsequently efforts have been made t.
sell the Washington ReilwaY and Elec
trio Company to the Capital Traction
Company. BY reason OF the high divi
dend paid on the common stock of tn
Washington Railway and Electric. tn
market quotations on this storE hav
increased in few years from $40 to IS
a share. despite the fact that the trans
portation business of the company 1
shown in its sworn reports to be un
profitable.
In the next and concluding article q
this series attention will be directed &
detail to the interesting financial ar
ranRement under which the capita
stock Of the Potomac Electric Powe
Company was increased to ACQUIRE con
trolling rights in the Great Falls waite
power site. and the effect of this on TIL
people of Washington is preventin
cheaper electric rates.