Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-07
Capital fractions View Is
That Next Move Should
Start Elsewhere.
QUESTION OF RAILWAY
STOCK CONTROL PENDING
Utilities Body to Re-examine
Right of Control by New
York Company.

OClllCleS commission 10 re-eXamlne the
whole matter of acquisition of control
of the Washington Railway g. Electric
Co., by the North American Co., New
York utility holding corporation, were
outstanding developments yesterday in
the somewhat complicated situation
surrounding Washington's street rail-
ways and their future.
The first development grew out OF a
letter sent by the commission to the
two street car companies, June 20, ask
ing for suggestions for basis for work.
ing up a new merger agreement, to be
presented to Congress for ratification.
The companies were asked in the event
that they elected not to submit any
plan, to state their reasons at length.
Taking advantage Of this invitation, the
Capital Traction Co. wrote the commits
sion that to draw up any new merger
plan at this time would be futile. The
company said 1t was still as eager as
ever to have what Congress, the people
of washington, the commission, and the
companies all desired-a unification OF
the city's street transportation. But the
companies had prepared scheme 10
bring this about, had submitted IL 10
Congress, and the Capital Traction Co,
at least. was willing to accept the modi-
fcations to the plan suggested by the
Senate District committees expert, DR..
Milo r. Maltbie But Congress adjourn
ed last March without approving the
plan, and the next move should be up
to Congress.
w. R. & f. Reply After July "a.
The reply of the Washington Railway
e. Electric Co. is not expected untli
after the regular meeting of its board
of directors, July "a. July 20 hearings
will start on the petitions OF the Two
companies for increased fares, and m
dications are that merger negotiations
probably will be held in allegiance untii
after those petitions are disposed oil.
The commission yesterday received
formal acknowledgement OF It's letter
from the railway company: with
statement that 1t would be taken up oy
the board of directors at as early
date as practicable"
Washington Railway & Electric COS
stock by the North American co. mas
been gone into several times before.
At the hearings before the comrp1ssion
on the last merger plan, William NICK:
CLAYTON, representing the Federation OF
Citizens Associations, asked the COM
mission to subpoena ofncerS OF Ing
North American to testify as TO tneH
ownership of Wreco stock. The COM
mission refused his demand. put W[oCe
To the company asking for the 1nfor.
nation. and when the company replleo
that It owned q majority, Mr.. Clayton
suggested that this was IN violation OF
the La toilette anti-merger law. Inc
commission called Corporation Counsei
william w. Bride into consultation, ana
he suggested that the hearing proceed
without a ruling on Mr.. Claytons point
which could be decided later. the mat.
ter was next taken to the Dlstrlct
Supreme Court by John j. Noonan,
stnckhoider i'm the railway company,
hut in his suit Justice Peyton Gordon
ruled the North Americans purchase
legal.
Offer TO Stockholders.
Recently the North American GO.
sent a letter to stockholders OF the ran.
way company offering five snares Oh
North American stock for eacn OUT
standing share of railway stock.
Rride who took it up with the COM
mission at the latter's meeting yester-
day. The commission instructed MI.
Bride. who is its legal ofhcer, to go nto
the whole situation and prepare re-
mort. Mr.. Bride told the commission
he had not made up his mind whether
Justice Gordon's decision. which was
not appealed, represented the maj we"
of the matter. 80,
utility concern by any foreign noiolng
CORPORATION is forbidden by the terms
of the Ia toilette anti-merger act, In
March. 1925, however, the reStrlctlons
of this act were partly lifted SO as 70
allow a merger Of the street railway
companies to be affected. The car
COMPANIES were allowed to buy eacn
others stock, or the stock was allowed
to be sold to q company especially
formed for the purpose OF enecCnls ~, .
merger. One Of the sections OF the
act allows the car companies 70 sen
their stock to "any corporation, ana
legal opinions are divided as to
whether this means any corporation
in the world, or any corporation re.
ferred to in the preceding sections OF
the act. This Is the point that Mr..
Bride Is called upon specincally 70 oe-
eide.
p. E.. p. Ownership Question.
A collateral matter to be decided Is,
even If the purchase of the railway
stock is strictly legal, whether this
would allow the North American Co.,
as a foreign holding corporation, to ex-
ercise ownership of the Potomac Elec-
trio Power Co. All of the common stock
in this company is owned by the Wash
ington Railway g. Electric Co. Assum-
ing, therefore, that the North Ameri-
can Co. is successful In obtaining all
of the stock of the railway and then
disposes of its interest in the railway
to the new merged street railway COM
pany, as proposed In the Wilson merger
plan, the North American co. would
have acquired absolute ownership OF the
power company, apparently against the
intent of the La Toilette act. AS 1t Is,
the North American now controls the
power company by virtue OF its control
of the railway.
The effect on the commission of the
refusal of the Capital Traction Co. to
engage In any further merger discus
sions at this time Is problematical.
None Of the members would discuss 1t
yesterday beyond saying that they
would await the response Of the Wash
ington Railway g Electric Co. before
making any statement. One view OF
the situation, mentioned informally,
was that the company was unwllling 70
get into the same corner that faced 1t
during the course Of the hearings On
its last application for fare increase
At that time the merger legislation was
pending in Congress and the commas
sion decided to await the outcome OF
Congress adjourned without acting on
the legislation and shortly afterward
new commission took ofice. The net
result was to delay action on the COM
pauy's petition for months. ANY further