Evening star., 1925-08-09
BY I. A. FLEMING.

bellcNe 1t or not, dS hlpley "Ouiu
say. but the facts in the case gathered
from sources that should know, and
are believed to know, are said to be
these: So far there has not been the
slightest approachment between Wash
ington Railway and Electric and
Capital Traction interests looking
toward merger. 1t is believed, how
ever, that between now and the 1st
of December some negotiations may
be opened, with a view to the union
of the two admittedly great systems.
The North American Co, admitted
owner of two-thirds of the common
stock of the Washington Railway and
Electric Co., accumulated with and
since the original purchase of 27,5OO
shares, and of a fair amount of the
preferred stock of the same corpora
ton, does not own a controlling stock
interest in the corporation.
This does not mean that it is not
in a position, with other stockholders,
friendly to it's interests, to practically
control the affairs of the company.
The capital stock of the Washington
Railway and Electric Co. is $4,000
900. divided, $6.500,00 common and
SS.500.000 preferred, the latter entitled
to per cent cumulative dividend
and the former to whatever the direc-
tors choose to declare from earnings.
May Have Considered.
1t is within the probabilities that
the subject of a merger and the prices
at which the stock of the interested
corporations may enter the combine
has been a topic of conversation be-
tween officials of both companies, but
not at a meeting called for considera-
ton by representatives Of either-noth-
ing of even a semi-official character.
On the face of it a merger of two
companies with such large stock
and bond interests, nearly SAT 900, 900
exclusive of any of the securities of
the Potomac Electric Light and Power
Co., a very important integral part of
the Washington Railway and Electric
Co., would require many conferences
to reach a basis mutually agreeable.
Action I'm Common Stock
The action in the common stock of
| the w. r. & +. Co. during the past
week has been sensational in the ex-
treme. After the declaration of the
20 per cent dividend from the released
escrow money, presumably the price
of the stock reacted to par again but
it's advance to 1877 to $50 has since
been made with a speed that seemed
to indicate that IL was bound for much
higher figures.
Another case OF Believe II or not, !"
| but the said-to-be facts in the case
are that this outstanding advance has
been made without aid or assistance
of buying by the North American Co,
which also is said to have all the
stock 1t wants, common and preferred.
Preferred stock has been slowly ad
vancing but 1t seems natural in these
| days of easy money that a per cent
preferred stock should be supported
on It's merits at S5, especially with the
common at 137.
The preferred stock shares with the
| common the voting power In this
last statement there is food for thought
TO the thoughtful at present prices.
New Financing.
For years the Potomac Electric
| Light and Power Co., has been going
along with an authorized capital of
| 81 0 ,06o 900, of which $4,000 900 has
| been issued OF this capitalization all
| is common stock, but S250.o00, which
is preferred. This latter will be made
| common. All of this $4,000. 600 is de-
posted with a New York trust com
pany, trustee of the first mortgage 4
per cent bonds of the Washington
| Railway and Electric Co., owner of
the Potomac Electric Light and Power
CO..
Consolidated As and does not mature
until 1851. They are callable at S11O,
| but even in these days of cheap
| money 4 per cent is a rate that Is
| relatively low, SO that there is not the
! slightest chance of their being called
| They are considered one of the sound
est investments on the LEGAL list, being
first mortgage on Washington rail-
way and Electric Co., and backed by
| Potomac Electric stock.
| On the &c instant meeting of the
| stockholders of the Potomac Electric
| Co. has been called, for the purpose
of voting on a proposition authoriz-
| ing an issue of $50, 100000 new
stock, which will not be under the
per cent railway bonds, which will
| be held in the treasury of the COM
! pany and sold when necessary to pro-
vide funds for extensions and enlarge
| ments of plants etc.
OF the new stock 200, 900 shares will
| be of preferred and 100, 900 shares of
| common. each having par value of
| $l00 a share.
Although the present stock is tied
I'D. the directors will vote on the pro-
posed issues.
To Avoid Fixed Charges.
Here's another case of believe it
4
| that this stock issue is proposed in
order to save fixed charges in the
future-or words to that effect.
The Potomac Electric Co. has out
standing SIS, $500 900 of bonds bearing
5 to per cent interest, with but ST.
| zoe, 900 first So coming due before
1886, SO that no refunding operations
are likely here.
Every time a bond issue is placed
,-lr lnu a 1
adds just that much to the annual
fixed charges. If 1t is 4 per cent
bond, 1t will add $40 a year and with
each additional l per cent of interest
an additional $40 a year.
Moreover. a bond is a debt secured
against the assets of the corporation
and interest must be paid; default
might result In immediate foreclosure
in the bondholders taking posses
sion of the company, unless speedy
settlement was made.
A. share of stock represents a part
nership interest in a corporation. The
owner thereof Is minority partner
and doesn't have to receive any dis
tribution unless profits are made and
the directors vote its payment.
There Is another and quite serious
item that is avoided by the owner of
shares of stock in local corporation is
against the owner of bonds. This
refers to the District intangible tax
of one-half of | per cent.
The security back of the bonds is
really better than that back of the
stock.
There is another advantage in favor
of shares In that stock dividends are
not subject to the normal income tax
while interest from bonds is assessible.
Upsetting Theories.
Reported facts which you are asked