Evening star., 1926-10-18
QUEST|0NOF STOCK
ST|RS BUS HEARING
Clayton Charges Transfer
Was Illegal and Stephens
Is Given Task of Deciding.

A tilt between William Nick. Clay
ton, chairman of the public utilities
committee of the Federation of Citi-
zens' Associations and George p.
Hoover, counsel for the Washington
Rapid Transit Co.. over the legality OF
the transfer of the company from the
former to the present owner, marked
the resumption of the hearing before
the Public Utilities Commission today
on the companys application for au-
thority to charge a straight 10 cents
cash fare on it's bus lines.
MIR. Clayton contended that the
North American Go. Of New York had
acquired a. majority interest in the
capital stock of the Washington Rapid
Transit Co. without the approval of
the commission, in direct violation OF
public utilities act. The injection of
the question Of a transfer of stock
into a valuation case, Mr.. Hoover
argued, is wholly irrelevant and inn
material" His contention was that If
the commission considers this point,
it should do SO as an independent pro-
cedure, and adhere to the provisions
OF the statutes by giving the share
holders proper notice.
Debate Starts at Outset.
The debate on this question started
at the outset of the hearing when Mr..
CLAYTON began a croSs-eXaminatlon OF
f.. d. Merrill, president and general
manager of the bus company, and con-
tinued for almost an hour. The COM
mission then referred the matter to
Corpora ton Counsel Francis II. Steph-
ems for an opinion and proceeded with
the valuation case.
Mr.. CLAYTON pointed out that Eu-
gene Thompson OF the local banking
firm of Crane. Paris & Co. is trustee
for q 900 shares, or a majority, OF the
Genital stock Of the bus company.
The records of the commission show
that Mr.. Thompson is a trustee TOR
Roswell c. Tripp, member Of an in
vestment banking firm of New York
City, who acquired majority inter-
est in the capital stock of the COM
pany in December, 1928.
After reading q provision of the pub
lie utilities act, stipulating that 1t is
unlawful for any foreign or local hold
ing corporation or any other public
utility corporation. directly or indi-
rectly, to own, control, hold or vote
stock or bonds of any public utilities
corporation in the District without the
official sanction of the commission. Mr..
\
the Washington Rapid Transit Co. is
in the hands of the North American
Co. or any other company without the
approval of the commission, it is Vio-
lation of this act
Objects to Question.
Mr.. Hoover objected to the raising
of this question, declaring it was ir-
relevant. but Mr.. Clayton insisted that
it involved "a very important prin-
ciple.'
"Is this law to be regarded or cast
aside" he asked.
Mr.. Merrill opened the hearing by
submitting four additional exhibits
pertaining to the financial condition
of the company for the first eight
months Of the current calendar year,
showing that it's losses in this period
amounted to $29. 1906 A straight
1O-cent cash fare for these eight
months, he said the statistics re-
vealed would have turned the losses
into a net profit of S393.21.
Maj. w Z. r. Covell, senior assist
ant Engineer Commissioner assigned
to public utilities. cross-eXamined MIR.
Merrill extensively regarding various
items making up the company's own
valuation of $685., 900. Two of the
items uluoE lire INV OlNeu TIE pay InoIll
of $50, 900 to w. Elkins Reed, a broker,
for selling stock, and bonus stock"
amounting to $4,000.
While the commission has not yet
indicated what valuation it will allow.
thes company's figures of $685. 900. it
was learned. probably will be scaled
to less than $500,000 The rate of
fare which the commission will
authorize is to be based upon the
valuation it fixes.