Evening star., 1921-05-20

the rate of per cent per annum, with
second preference as to dividends to
the stock of the Capital Traction
Company at the rate of per cent per
annum; the common stock OF the
| Washington Railway and Electric
Company to be converted into the
same number of shares as present of
common stock. without par value, and
both preferred and common stock to
have voting power: or if for any
reason neither of the foregoing is
deemed acceptable or eminently just.
The Washington Railway and Elec-
trio Company believes it could. and
would endeavor to. purchase and pay
| for in cash at ninety dollars $500 per
| share all of the capital stock of the
Capital Traction Company. If deliver
able. or substantially all of it.
BY unanimous direction of the board
| of directors of the Washington Rail-
way and Electric Company.
BY (Signed) IS R. Bowen. Secretary
| Washington, D. c., May 2. 1921
AS the two companies. after con-
sideration of these plans. were unable
| to reconcile their differences. the con-
ferees representing the Public Ctil-
| tiles Commission undertook to formu-
late basis for a merger.
Three Elements in Plan.
The Public Utilities Commission plan
comprises three elements: First. the
determination of the equity in the
stock on the basis of the priced in
Ventories; second. the ascertainment
of what is denominated the "inde-
terminate equity" that is. the excess
of the par value of the stock over
the equity therein as first deter
mined. and the distribution of this
amount between the two companies
in proportion to the amount of their
physical property on the basis of the
priced Inventories: third. the ascer-
ia inment of the excess earning power
of the Capital Traction Company over
that of the Washington Railway and
Electric Company.
AS first step the conferees for the
commission took the balance sheets
OF the two companies as of Decem-
Der 81. 1920. as contained in their
annual reports to the commission for
the year 1920. substituting for the
book value of their plant and equip
ment the priced inventories deter
agreed basis outlined above.
The equity in the stock was arrived
at by adding to the priced inventory
of the physical property of each COM
pany the other assets as they ap-
cember 81. 1920. and then deducting
the liabilities as shown on the bal
ance sheets. This was a simple proc
ess. as far as the Capital Traction
Company was concerned. as it is a
SiuSic SOrpoTdtlou without owner
ship of interests in any subsidiary
company.
Process In Involved.
In the case of the Washington Rail-
way and Electric Company, the proc
ess was more involved. as it includes
among its assets either a complete
stock ownership or controlling
stock ownership of five other sub
sidiary companies. The figures used
by the commission are given in full
in the balance sheet of the Capital
dated balance sheet of the Washing
ton Railway and Electric Company.
attached hereto as appendices.
From these figures the equity in
the 10000 shares of the Capital
Traction Company (par value 5000
was found to b" 713S7S.O3 or
$S0.94 per share: in the case of the
Washington Railway and Electric
shares of stock (s5ooo shares pre-
ferred and $1,000 shares common.
each of 800 par value) was found to
be $7.6S9.392.SS. or $51.11 per share.
In any liquidation of the property
of the Washington Railway and Elec-
trio Company the preferred stock, by
the terms under which it was issued.
has preference over the common
together with all accrued dividends
The amount of the stock equity, 81
6S9.392.S8. would therefore. give to
the $4,000 shares of preferred stock a
value OF $90.1S per share. l"aring thu.
$4,000 shares of common stock with
out any equity. considering only the
reproduction costs outlined above.
Purpose Of COmmission.
The purpose of the commission in