Evening star., 1932-05-15
CAPPER TOPRESS
/ TRANSIT MERGER
SAFEGUARDF|GH
Criticizes Control of Local
Gas Firm by Outsiders in
Radio Address.
INVESTMENT TRUSTS
DESCRIBED AS EVASION
Financing Is Described as Dizzy"
Utilities Board Given Praise for
Probing Situation.

Sharply criticizing the part taken by
outside financial interests in the affairs
of the Washington Gas Light Co. in
recent years, Chairman Capper of the
Senate District Committee told a radio
audience last night he will continue to
advocate placing safeguards around the
local transportation system in the pend
ing street railway merger resolution.
Speaking from Station WMAL, Sena-
tor Capper said he has no intention of
abandoning views expressed in the mi
nority report on the railway merger. and
that one of his reasons Is "the danger
to the public and to local utilities from
the control Of interests that are foreign
to the District Of Columbia"
1T is no secret" said Senator Capper,
that the Washington Railway and
Electric Co. is controlled by the North
American Co.. a holding corporation
with headquarters in New York The
treasurer Of the North American Co. Is,
according to the 1881 report Of the
Capital Traction Co.. the largest indi-
vidual stockholder in that company.
Shining Example Here.
"A director of the North American
Co. owns the vast majority of the
stock of the Washington Rapid Transit
Co., the bus company, while the treas
urer of the North American Co. owns
a comparatively small block Of the bus
company's stock.
Before we turn over our local trans
portation system to the control of a
foreign holding corporation, I think it
fe vxrt~ 80 49,
tation system as many safeguards as
possible-not only for the public, but
for the companies themselves. think,
too, that we ought to acquaint ourselves
with the way these holding companies
operate. We have a fine opportunity
to get this information, for we have a
shining example right here in Wash
ington.
you may have noticed in the news
papers lately that the Public Utilities
Commission is trying to break the grip
Of powerful utility holding combina-
ton on the local gas companies"
The Senator said that until a short
time ago the Washington Gas Light Co.
was local enterprise, locally owned.
Under the law, he said, District utility
companies cannot legally be controlled
by corporations outside, special ex-
Of the street car companies to enable
them to perfect a merger.
Loophole Is Explained.
After describing how outside groups
began a few years ago to acquire stock
in the local gas company, Senator Cap
per continued:
Now, how could they hold this stock.
controlling the gas company, and still
not run afoul of the letter of the law
forbidding such control to foreign cor
porations? This is the answer:
The Central Public Service Co. and
other corporations connected by vari-
GUS means with the Chase National
Bank, formed what was called the Sea-
board Investment Trust of Massachu
sets.
There is nothing in the law regard
ing investment trusts owning local util-
tiles. This Seaboard concern was
formed by foreign holding corporations
as their creature for the purpose Of
holding the gas company's stock. The
stock was held in the name OF the
trustees of the Seaboard concern.
The Seaboard Investment Trust has
now been succeeded by new corpora
ton known as the Washington & Sub
urban Cos. The trustees of the new
corporation are employees in the Boston
office of the Chase, Harris, Forbes Cor
poration. which controls the Central
Public Service Corporation.
THE situation now Is that "a per
cent of the gas company's stock is
pledged to secure payment OF the S.
500 900 worth of bonds of the Wash
ington and Suburban companies.
"Dizzy Financing"
Those bonds are being used to pay
off a debt of the Washington and Sub
urban companies to the Southern Cities
Public Service Co. The Southern Cities
Co. is transferring these bonds to the
Chase Harris Forbes Corporation, which
is marketing them. This is dizzy financ-
ing"
Senator Capper praised the Utilities
Commission for the inquiries 1t has
made into the gas company situation.
Passing from earlier to more recent
developments, the Senator said:
In short, the Central Public Service
Corporation, with its afdliates and sub
sidiaries, completely controls the gas
company. The Public Utilities Com
mission has now ordered the owners OF
the gas company to obey the law, and
has forbidden them to vote the COM
pany's stock Nevertheless, the gas
company directors met Monday and
ousted Mr.. Wood as president. There
will undoubtedly be further interesting
developments"