The Washington herald., 1921-05-17
Fortune is not on the side of the faint
Washington Street Railways.
Tx. SOUNDS LIKE ROMANCE.

events which led up to IT, to all interests
and purposes the history OF the birth of the w. R.
E 1t is given quito in detail in the commission
valuation report though its existence was unknown
to the commissions valuation experts until they had
nearly completed their work. Its promoters first
appeared On the in 1896 when this District
with less raan 100000 people had had provided for
their transportation convenience, thirty street
railways, to average of under 10000 men,
women and babies
The most profitable in fact the only profitable
lines then in Washington that were amenable to
purchase, the Metropolitan and the Columbia
Their stocks-S5o par value-sold the market at
$I45 and $3.50 respectively. The would-be mergers
issued printed proposal addressed to their stock
holders, offering to pay $3.50 and SIso share re-
sPectively for the shares of stock OF those COM
panies Naturally the stockholders hung on for
still higher prices
The excuse given for such extraordinary tao
tics that only by such an offer could the stock
be bought. This brings the natural query: Why
make it in that way, rather than through the usual
market methods? The Herald has been told that
to get the stock of the Metropolitan $500 share
paid. If this true a merger on such a
basis is hardly sufficient for saddling such
obligation upon this people who had no part in
it 1t is not far to that if the people had been
considered the Metropolitan and Columbia would
have been induced to take the other lines which
losing propositions, had a combined market value
OF only SII25,ooo. Why should this people pay per-
petualy for such patent fleeing of the innocents:
But a fact $500 was not paid for any OF the
Metropolitan stock. The highest price was $42s
for eighty-four shares par value $50 and paid-in
value $50. Another block of SS5 shares was bought
at $3.50. But these, far as known, were the peak
prices OF course, whatever was paid, was only ad-
vanced through bank loans and ultimately reap
Il
bonds when the merger completed were SI2-
100000 while the highest market value of all the
stocks taken over was so465,54S, and including
bonds, notes and cash the total was SI2252548.
But included in this total the Potomac Elec-
tric Power and the United States Electric Lighting
companies, both of which these promoters con-
Tolled well the Georgetown and Tennally-
town Railway. 1t is not intrmated that they paid
any extravagant prices for any of these. The stock
OF the G. & T., a losing concern sold at the
peak for SIS, and low as S. for $50 share. As
to the total result it is but necessary again quote
the commissions report, in addition to the sI2,-
100000 bonds the w. T. & E. issued $Iooooooo
in stock. The report says:
1t viii thus be seen that S22 100000 OF new
securities were issued for certain stocks, bonds,
notes. and cash, the face value of which aggre-
gated SS,377,5oo- Taking the bonds and notes
at par, and assigning the stock reasonable
market value, using the highest market quota
tions prior to January I, 1900 this $8,377,5oo be-
comes So,82645I25. Therefore, it appears to be
conservative to say that $o82645I.25 was a fair
and reasonable estimate of the then exchange
value OF the assets acquired by the Washington
Traction and Electric Company upon which it
hoated S22ooo,ooo OF its own securities.
Since the W. R. & E. is but the Washington
Traction and Electric with the word Traction"
changed to Railway" the story Of the w. T. & E
is of the utmost importance. 1t tells much of the
why of the continuous financial difficulties of the
w. R & E 1t tells why Washington is not re-
sponsible for that corporations lack of prosperity
and why Washington does not owe it a sufficient
revenue to allow it to make fixed high revenue
on its fixed valuation over and above its fixed
charges including interest bonds.
In 1896 certain men not now residents OF wash
ingron as The Herald is informed formed the Po-
tomac Light and Power Company of Virginia
which was sold that same year to the Potomac
Electric Power Company, controlled BY the same
men. The latter had through these men, control
OF the Georgetown and Tennaytown Railway which
was operating at loss.
At the same time these men acquired A8sa
shares of stock of the United States Electric Light
ing Company the P. E P.'s only competitor and GOT
complete control in 1900 These stocks were used
as collateral for loans for other operations leading
to control of other railways 1t was in 1900 that
the Metropolitan and Columbia were secured nrob-
ably with such funds 1t was then proposed to the
supporting trust company to transfer all these
stocks-electric and railway-to holding company
which should issue its stock and bonds in exchange
in order, probably, to simplify loaning transactions
and relieve these manipulators from personal liza
bity.
The trust company, according to the utilities
commission valuation record got SI2,oooooo of AZ
per cent bonds of the corporation and $500
$50 OF its total issue of 100000 of capital stock
for.SIo6o5ooo in cash to be advanced from time to
time as needed to close options. The option con-
tracts were issued collateral So it was that the
Washington. Traction and Electric was born, June