Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-20
LUNDVALL BARES
NORTH AMERICAN
TRACTION DEAL
Continued From First Page.)

T1Icb
Both the common and preferred stock,
he declared has voting rights, so the
North American controls Ssh per cent
of the voting stock of the Washington
Railway 81 Electric Co, which in turn
owns the profitable Potomac Electric
Power Co.
The North American, Lundvall said.
acquired its first interest in the Capital
Traction Co. in 1925. purchasing 4,436
shares Of capital stock at par value
of 800 share, paying for 1T SAIL ,644
in cash. Later IN 1925 and early in
1925, he testified, it sold 1884 shares
for $l37 .55003, so that as of Deem
Der 81. 1929. 1t held 3,0l2 shares at a
cost of S274 09392 or s91 share. These
holdings represented 2lz per cent of the
120, 900 shares outstanding on that date.
Mr.. Lundval outlined in complete de-
tail how the North American acquired
control Of the Washington Railway IL
Electric Co. Some Of the stock. he said,
was purchased in open market and
some by the exchange of its own stock
for the railway stock.
Exchange on Stool Ratio.
In the exchange negotiations, he tes-
lifted, the North American gave 5 shares
of its stock for one share OF railway
stock. The stock of the railway COM
peny was recorded IN the North Ameri-
can books at S375 q share, figure ar
rived at, he explained, by placing a
value of s75 a share on its own stock.
At that time, he declared, the North
American stock was selling in the open
market at $185 a share, so that the
corporation would have been justified
in recording the railway company stock
received in exchange for its own stock
at higher figure than 1915.
Mr.. Lundvall also testified that the
North American carries on its con-
solidated balance sheet a value OF
SIS. 1886 1922 for the street railway COM
pany stock, but pointed out that the
consolidated earnings in relation to the
investment decreased annually in the
four years from 1925 to 1929, inclusive
In 1925 the earnings amounted to 81 5
per cent, in 1926 to 233 per cent. IN
1927 to 20.3 per cent, in 1923 to l9.l
per cent and in 1929 to 1863 per cent.
The average for the four years was 20l
per cent.
witness Outlines Invasion.
The North Americans invasion into
the Washington utility field was out
lined by Mr. Lundvall when he took
the witness stand yesterday afternoon.
Control of the street car company, he
said, was first undertaken through or
ganization of a syndicate in 1922, man
aged by Edwin Gruhl, vice president
and general manager OF the North
American, and j. c. Matlack, president
of the Central State Corporation.
At this time, Mr.. Lundvall explained,
the North American took a ntne-tenths
interest in the stock and one-tenth was
acquired by the New Empire Corpora
ton. The net income of the syndicate
up to May, 1925, when 1t was dissolved,
was $7o,24220.
Mr. Elndvall said that up TO the end
of 1929 the North American owned
62,03S15 shares Of the SIS 900 common
shares outstanding Of the street rail-
way company, and 20,567 OF the IS 600
shares of preferred stock outstanding.
The corporation, he declared, carries
the common stock on its books at a
ledger value of $12,072 $50, an average
OF $170.5o per share, and the preferred
stock at q value of $2,0l6,4O4.
The report of Mr. Lundvall showed
that the North American paid prices
ranging from $62.50 to 1929 a share
to acquire control of the railway COM
pany stock. It also showed that the
corporation carries on its books an item
Of $l2l,882 as the cost of transporta-
ton trafilc survey in Washington.