Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-08-01
LATEST DEVELOPMENTS IN
Wv. RAILWAY SITUATION
Default on Equipment Trust Notes In
terest-May Be Part Of Through Line.
Features of Money and Stocks
BY 1. A. FLEMING.

GINA Company continue to pile up.
I pile upon pile until the structure
itself is threatened.
1 1t is generally understood that the
corporation has defaulted on the in
terest on underlying bonds, the ST.
100000 first-mortgage bonds of the
i Washington, Mount Vernon and Alex
andriaN Company, the original corpor-
alton which was merged in 1910 with
the Washington Virginia Railway
Company, but it is a matter of latest
news that the corporation has also
defaulted on the interest on $4,000
IS per cent coupon equipment notes.
put outin August. 1918, in payment
for number of passenger cars. etc,
to be used between Mount Vernon
and Camp Humphreys.
| 1t is noted by investment bankers
familiar with conditions that some
efforts are being made to acquire the
overdue coupons. probably with IN
| tent to prevent the seizure of the
cars by the holders of the equipment
| trust notes.
Most of the local stockholders in
the Washington Virginia Railway
| Company may have parted with their
stocks; likewise the former local
bondholders, but the banks of the
sorrow, have blocks of notes floated
by the company that are long since
overdue.
The wonderful earnings of the war
period seem to have gone; the heavy
transportation of people to ana fro,
| the high rates of fare and the ap-
pearance of prosperity have produced
nothing tangible against the many
claims that are awaiting settlement
and which the banks holding them
may eventually be compelled to
charge off entirely or greatly reduce
book value.
/ Banks in making loans to street
railway companies have expected re-
payment of the same at maturity o.
after a few renewals with curtail-
ment or at regular periods, and not
with any intent Of permanent invest
ment. Recent experience will make
them shy of such loans in the future.
Il Took Days Of Grace.
The Washington-Virgin Railway
Company took full days of grace with
the coupons for interest on the I'M
derlying bonds of the system. due
March l. 1919. not paying them until
July /, and the September coupons,
1919, were paid January, 1920. with no
further payments.
In 1913 the Observation-Disclosures
Railway Company was merged with
the Washington Utilities Company.
but the early clipping Of the wings
of that ambitious corporation forced
withdrawal and independent opera
ton.
Dividends have been paid on both
| the common and preferred shares,
the latter being cumulative. but they
are not being paid at this time.
The market value Of the stock of
the corporation is very small.
Working for Liquidation.
The hope of the future of the cor
poration. operating a really impor-
tant part of the traction system of
| the city and nearby Virginia points,
would seem to lie in the bankers
poration.
Their interest is naturally selfish;
they want their money out of the
system, get it where they will, not
desiring to have it frozen" ire
| trievably.
In casting about for sheet anchor
the holders of obligations junior to
the bonds upon which default of in
terest has been made. have come in
touch with the Washington. Balti-
| more and Annapolis management. on
the theory that through line. Balti-
! more to Washington, to Alexandria,
to Mount Vernon. to Camp Hum
phreys and to Falls Church. might
! be a decidedly desirable routing.
No one knows just how the Bal
| timore people feel upon the project,
but this much is certain, local in
! terests are trying to find a way out
so that obligations will be repaid
| at least in large part.
1t is equally certain that condi-
t1ons have become SO enmeshed that
| the present management, largely re-
| sponsible therefor, cannot go much
further; in other words, il the
creditors working for the safety Of
nearly a million in notes, plus the
other senior securities, find a way
! out, it will mean the elimination of
the present management.
Peculiar Conditions.
| The New York stock market and in
| cidentally security markets general
| ~ are in a very peculiar condition
Old timers, men who have watched
! the rise and fall of stocks and other
securities for scores of years, are
willing to admit that it is unusual
| Transactions are at a low record,
prices are lower than many traders
| expected to see them for years to
come-the unfavorable strain on
American bank credits is over. Wall
! street has liquidated a cool billion
dollars of its loans and has but about
/! $S00,000,0o0 now in loans on collat-
| eral.
The scare thrown into the street BY
federal reserve officials, the call and
urge of conservatism. have been ef-
fective in bringing about such
changed conditions that authorities
no less important than Gov. Harding
ton Williams. controller of the cur
irency, assert with equal positiveness
that conditions are vastly improved,
the latter official declaring that
| "there is no justification of 10, ~
and Is per cent money on Wall
lstreet"
Half Suspected 1t.
Very many close observers have
more than half suspected the truth of
this statement. Bankers are nothing
more than human and the big fat
rates have been decidedly tempting,
resistless in fact. Advised to put the
! screws ON essential loans they
! willingly did so and helped along a
monetary tightness that was largely
| forced. although local bankers have
seriously felt the need of ready cash.
i vet few customers have been turned
II awav and numerical paper has been
4 acouired in moderate sized blocks.
The controller of the currency goes
II m record as believing the disturbed
II and alarming state of affairs in parts
of the old world" are due to this
countrys refusal to ratify the peace
II treaty"
Weeks of Drought.
So far as the stock market is con-
II cerned there have been weeks of
drought; weeks of depression, a long
II Grinding of prices on a low basis and
sgben an advance was looked for the
trend was the other way.
Time and again the movements were
reneated-probably one of the longest
neriods that the market has ever
PPnown without rally worthy of the
name.