Evening star., 1921-05-20
Traction Merger Terms Which Failed accept

share. Preferred stocks to have equal prpfer
ence both as to assets aAd income
Management to be in board Of director.
| selected as follows: Each director to IN No suh
stitute or p.Oxy when necessary.
by tive stockholders Of the Capital Tractio.
Company. nine.
way and Electric Company. seven.
| Appointed by the Public Utilities Commis
| sion. one. Total. seventeen.
| The number Of directors to be select.
ed by the stockholders Of each com
pany are In proportion to their re-.
spective equities in the reproduction
value as found by the commission.
The revised plan now submitted fol-
lows the suggestion Of the commission
! as to the division of income. and is
one which we think Is certainly fair
/ to the Washington Railway and Elec-
! trio Company. 1t provides for a pref.
erence both as to assets and income
to our securities, to which, accordins
to the suggestion of merger submitte ed
by the washington Railway and Elec-
views expressed by Col. Kutz. they are
entitled This plan gives also to the
preferred stockholders Of the wash
lnston hallway and Electric Company
their present status and spreference.
AS we view the situation. the public
expectation that a merger Of tho com
panies will result in a betterment in
fare.
We fail to find in the plans sub.
! mitted any reasonable assurance OF
any considerable reduction in fare.
The Capital Traction Company, az
now directed, and under existing con.
dltlons. will continue to give good
service. and Is able and willing to dc
SO on a reduced fare.
(Signed) GEORGE E.. HAMILTON.
lS1gnedD ]. H. HANNA
Conferees for the Capital Traction
Company:
Second Merger Plan OF w. r.. 4 e.
ITO Messrs. William F. Ham and Mil
to f. Allies and the committee on
merger, appointed pursuant to in
vitation Of the Public Utilities Com
mission.
Gentlemen: The board of directors
OF the Washington Railway and
and thoughtful, though necessarily
hasty. consideration to the plan of
merger outlined by the Public Utili-
ties Commission at a meeting on Mon
day last of the conferees to bring
about merger of the Washington
Railway and Electric and Capital
Traction companies.
This company has repeatedly ex-
pressed it's willingness to enter into
such merger, provided it were given
reasonable return upon the fair
value of it's properties, with the re-
tention of such equities as 1t has in
properties not included in the valua-
ton of the commission and such other
equities as it may have as the result
of pending litigation with reference
to valuation proceedings.
AS we understand the plan of the
commission. it has given consideration
to both of these factors. and to that
extent the principles laid down by
the commission are acceptable to US.
The commission has determined the
total equity in stock Of the two CON-
panies as follows:
Capital washineton
Investment equity .s'7iss3sos s'Ss ts*ss:
l n d e e inmate
equity. ........ S,184 .S7JlJ 6.So6. O37 )!
ENcs'SS r i n"
power n p ital-
Totals ....... SIS. .OOs. 1918 sli.4?i s:
Excess Earning Power High.
In the above determination the ex.
cess earning power of the Capital
Traction Company has been capital
lied at $2.500.000. an amount which
in our judgment. is unreasonably
the Potomac Electric Power Com.
pany, which in every way has and
should be entitled to as high earning
power as the Capital Traction Com
pany. In addition. it must not be for.
gotten that prior to the war. in 1917
the most the Capital Traction Com.
pany was able to pay at any time
upon its stock was 6 per cent. and
the year before was compelled to re-
duce its payments to 5 per cent. while
failing to set aside appropriate
amounts for depreciation. and that
it's recent prosperity was due almost
wholly to war conditions. of an ab-
during this period it is admitted the
excess war earnings enabled the COM
pany to restore the deficiencies in its
physical properties.
Further, the Capital Traction Com.
pany. by reason of its limitations
crest Of its earning power. while the
| Washington Railway and Electric Com.
pany, with its far more extensive sys.
tenn, together with the Potomac Elec.
I tric Power Company. with its almost
unlimited field of expansion, has a far
ereater earning potentiality in the
ears to come. However. assuming for
the moment an excess of earning pow.
er so capitalized and for the purpose
of cooperating with the commission
IN bringing about. if possible. a merger
we will accept, subject to the approval
of our stockholders. as a proper basis
OF merger the respective equities as
determined by the commission, namely
Capital Traction. SIS zoos, 1853. Is
Washington Railway. .$14. .491. .246.82
Would scnle Down Equity.
II the Capital Traction Company's
equity in stock is to be scaled down
to s12.000,00O of par value, that is
1895 per cent of its equity, ours, sim
ilarly, would be scaled down to $11,-
5S5,751.S2.
The commission, then. has deter.
mined, everything considered. that il
| terms of stock the Capital Traction
Company has equities represented b,
$12.0O0,000 Of stock and the Washing.
ton Railway and Electric Company
equities represented by $11.5s5,751.8
of stock-in short. that the net equi'
ties of the two companies are approx.
| imately even.
An 0hyiouS error u.s noada how