The Washington herald., 1921-05-21
A wise player ought to accept his throws
and score them, not bewail his luck-Sophocles.
Washington Street Railways.
XIII. MERGER OF A MERGER.

TAVING waited for nearly two years while
n the Washington Traction and Electric col
lected its swag and wrecked it, the Wash
mgton Railway and Electric took over all of its
properties. According to the statement of its comp
troller the W. T. & E. for its first year ending
August 81, 1900 (the W. R. & E. franchise is dated
June 5, Iooo), only earned $4,000 above operating
and fixed charges with which to pay interest on
SI3442ooo OF outstanding "A per cent bonds. There
was nothing for dividends. Defaulting its next
semiannual interest it foreclosed bank
rupt concern
If its financial condition correctly given
IT was property capable of earning less than half
its interest charge and dividends. What it
worth; what sensible business men would pay for
such concern, business will know 1t had
outstanding besides its bonds over SIooooooo in
stocks These securities all exchanged for the
stocks and bonds of the W. R. & E. The PROPOSE
ton as carried out was this:
For each $1,000 in "a per cent bonds of the
w. T. & E., the w. R. & E. gave in exchange $3.50
OF its own bonds, $3.50 of its per cent preferred
and $500 of its common stock. That ST 800 for
$1,000. bunch of $672,ooo of w. R. & E. bonds
was also set aside which those who surrendered
their w. T. & E. bonds could purchase as an extra
inducement, the following terms: For each $50
bond deposited, the depostor could get $50 W.
r. & E. bond on payment of that amount of cash
a bonus. The stock exchange was made on the
basis of share OF w. R & E. per cent preferred
and $50 of common stock for each share of Trac-
ton stock, payment of So in cash.
To carry out this arrangement sIz5oo,ooo of
w. R & E. bonds $8,5ooooo of per cent pre-
ferred and S6,5oo,ooo of common stock author
lied, total of $3z,5ooooo. OF this amount, how
ever S76o7ooo bonds were held to retire underlying
prior liens: S7,3o3,Ioo of bonds for exchange
along with S7,3o3Ioo of preferred and S2,688ooo of
common stock; S672ooo of bonds and S336ooo of
common stock were held by the syndicate for pur-
chase by the bond holders; SI,ooSooo preferred
stock for the So purchasers S32o,25o of bonds,
$4,000 preferred and sIIsyooo common stock were
used for Reorganization" and SI,5oo,ooo held
in the treasury.
The commissions valuation report says that the
Washington Traction and Electric Company orig
inally issued of its securities in exchange
for assets of fair and reasonable exchange value
of So,S2645I Later it added $2525,ooo to its Sc
curties making the total S24525ooo by the purchase
OF two more bankrupt roads of par value of ST.
o6Sooo. OF the following exchange to the w. R
& E after the w. T. & E. had failed the report
says: cit thus appears that the Washington Railway
and Electric issued its securities the par value of
szeooo,6oo and received therefor property which,
by the most liberal estimate, did not have market
value exceeding sI3562,882.'
1t would seem this might have read "had not
had market value" according to the Traction
Company's own report and its sale by foreclosure,
it had become bankrupt. Its earnings of $4,000
above operating expense and fixed charges would
have paid per cent par value of but S5,4oo,-
600. 1t would appear therefore, by simple arithme-
tic leaving out all chicanary and speculative value
that this the real value of this property as
cash business investment.