Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-24
NEW YORK BANKER
TELLS OF GAS FIRM
FINANCING DEALS
Books Of Washington and
Suburban. Companies Shown
to Travel frequently.
RECORDS KEPT MOSTLY
TN CHICAGO OFFICES
Letter Suggesting Dividend In
crease introduced Into Probe
of Corporations Here.

Fred s. Burroughs, q member OF the
firm Of Harris Forbes & Co, which
arranged the deal whereby the Wash
tngton Gas Light Co., was sold to out
side interests, was put through a long
cross-examination this morning at
public hearings on present ownership
OF the company, most Of it directed to
showing the intimate association be-
tween the Washington & Suburban
Companies owner of record of the local
company. and the Central Public Serv-
Ice Corporation, which the commission
believes Is the real owner
Although the Washington e. Subur-
ban Companies is a trust holding Sc
curities valued at upward of 90 mil
lions Of dollars, Mr.. Burroughs said
that 1t had no accounting staff of its
own, and that its accounting was done
In the Offices of the Central Public
Service Corporation in Chicago under
the direction of r. A. Gallagher, con-
troller of the c. P. S.
Books Travel Frequently.
BY reference to numerous letters
which Mr.. Burroughs was asked to
identify. the books of the Washington
Il Suburban Cos. were shown to have
made frequent journeys between New
York. which Is the headquarters for the
Harris, Forbes 81 Co.; Boston, which
Is the headquarters of the Washington
q Suburban Co.'S, and Chicago Most
OF the time, they stayed in Chicago,
being written up by accountants in the
employ of the C. p. S.
Mr. Burroughs said that in his
opinion the Washington e. Suburban
Cos. ought to have q staff OF accoun-
tants Of its own, but that it has always
been pressed for money and has not
ben able to afford il
Urged Dividend Raise.
A letter was introduced from sher-
man Damon, trustee of the Washing
ton q Suburban Cos, to a Mr.. Nc
Cullough, an officer in the Central Pub
lie Service Corporation, in which
Damon suggested an increase in the
dividend rate of the Washington Gas
Light Co. from $3.50 per share to SIS.
so that the income of the washington
Il Surban Cos. might be increased to a
point where it would exceed the amount
necessary to pay its fixed charges con-
sisting of interest on its preferred stock
and gold bonds.
Mr.. Burroughs said that the banking
group which he represents had a diff
ference of opinion with the trustees
over this matter and that finally the
dividend was not increased. The
bankers. he said. felt that the money
should stay in Washington to develop
the properties here, rather than 20 to
Boston and Chicago in the way of extra
dividends, making 1t necessary for the
Washington properties to go into the
money market for money for expansion.
He said, however, that the increased
dividend could have been paid without
exhausting the corporate surplus OF the
Washington Gas Light Co.
He testified that the $500, 900 in
nf H. "a R14fr a.
companies had been sold by Harris.
Forbes az Co. to the public. He said
that the $6,O0O,000 collateral notes OF
the Westfield Trust, issued under an
agreement between the Westfield Trust.
the Central Public Service Co. and the
Harris Trust q Savings Bank, which
are guaranteed by the Central Public
Service Co, were made exchangable for
class A stock of the Central Public
Service Corporation, so that II the stock
rose above its then market value of $25
per share. holders of these collateral
notes could realize a profit. Instead,
the Central Public Service Corporation
stock has declined and is now quoted on
the curb market at IS per share.
Other Letters Identified.
Other letters introduced by Assistant
Corporation Counsel William A. Rob-
showed that bills for professional sery-
ices TO the Washington and Suburban
companies were approved by officers of
the Central Public Service Corporation
before being paid.
Burroughs testified that he and
George d. Woods, a vice president of
Harris, Forbes e. Co., were paid $50 900
for their part in arranging the pur-
chase Of the stock In the Washington
nf fnF ho int ne
A letter from Mr. Gallagher to Mr.
Damon, dated August %. 1881, was
read In which Gallagher suggested that
certain correspondence of the Wash
1ngton and Suburban companies be
kept out OF its regular files. This mas
not been explained.
The status of ownership OF the gas
company, according to attorneys for
Col. Peirce, as explained before the
commission yesterday. follows:
OF the capital stock Of the WASH
ington Gas Light Co. 109, 900 shares are
owned by the Washington 81 Suburban
Cos. tthe common law trust). This
ownership makes the trust owner Of
SO per cent Of the voting stock of the
local company and gives it an IRON
clad control.
All OF the voting stock of the wash
tngton e. Suburban Cos. is owned by
the Westfield Trust, second common
law trust. All Of the shares of bene-
fetal interest in the Westfield Trust
are owned by Col. PIERCE personally.
The Westfeld Trust. which has a
capital OF $4,000, has issued $4,000 ,0OC
worth Of per cent collateral notes
and these notes are guaranteed by the
Central Public Service Co. To secure
them the Westheld Trust has pledged
all Of the voting stock of the Washing
ton d Suburban Co.'S, under a col.
lateral trust agreement.
Junior TO these collateral notes is 8
10-year income note for $i3,725 900
held by the Central Public Service Cor.
poration And finally. the Central Pub.
lie Service Corporation holds the not,
OF the Westfleld Trust for $945,650.
The difference between the Contra
Public Service Corporation and thu
Central Public Co. is that the latter. &
Delaware corporation, owns all of tn,
stock Of the former, Maryland cor.
poration. Mr.. Peirce Is president o
both.