Evening star., 1933-06-17
MAJOR STEP TAKEN
TO MERGE DISTRICT
STREET RAILWAYS.
Two Companies Will Submit
Plan to Stockholders
on July 3.
AGREEMENT ON FINANCE
SET-UP is POSTPONED
Officials Believed Committed to
Principals of Consolidation
as Approved by Congress.


A major step toward merger OF the
Washington Railway g. Electric Co. and
the Capital Traction Co. was taken
today when officials of the street car
companies announced they would sub
NIT to their stockholders for approval
on July the consolidation plan as
authorized by Congress last Winter.
The presidents of the two companies
both declared publicly for the first time
they believed unification Of the systems
would be effected finally prior to end
of the 2-year limit set by Congress, or
January, 1885.
1t was revealed, however, the Merger
Committees of the companies as yet
have not reached agreement on the
vital matters of the financial set-up
OF the merged companies, including the
division of stock and the amount of
the bonded Indebtedness to be assumed
Negotiations on these matters will
be continued when stockholders have
approved the legislative merger con-
ditions, which go into considerable
detail.
Decision Hailed as Important.
The merger as approved by Congress
is being submitted to the stockholders
early next month in order to comply
with provisions of the enabling act
which requires that the plan be laid
before stockholders for action within
six months after passage of the joint
resolution. That would be July 10.
This decision by the companies Is
regarded in public utility circles as of
great Importance since it Is interpreted
as having committed the street car COM
pany officials to the principles of
merger as approved by Congress.
Announcement Of the call for the
meetings Of stockholders was made
jointly by William F. Ham, president
OF the Washington Railway & Electric
Co, and John H. Hanna, president of
the Capital Traction Co.
Committees Appointed.
The statement, in part, follows:
The resolution left for negotiation
between the companies the number of
shares OF capital stock in the new COM
pany to be issued to the respective COM
panieS, the amount of bonded indebted
ness to be assumed, and other impor-
tant details.
Promptly after the passage of the
joint resolution the board of directors
OF each company appointed a commit
tee from its membership, which COM
mittees have been continuously in ne
gotiation with respect to these matters,
but it has not yet been possible to ar
rive at final determination by reason
OF the many points to be considered
and the present complicated economic
conditions.
Following the approval by the stock
"a fxxy4
form OF agreement to be submitted to
them on July 3, every effort will be
made to arrive at an early understands
ing on the points now unsettled. Such
final agreement will then be submitted
to the stockholders for their approval
at another special meeting and must
be approved by the Public Utilities
Commission.
The joint resolution provides that
the unif1cation Of the transit companies
must be finally effected not later than
January, 1885, and 1t is hoped this will
be accomplished considerably before
that time"
Huge Savings Estimated.
During congressional study Of the
proposed merger 1t was estimated con-
solidation would result in economies
which would effect huge savings in
operation to the street car companies.
This. and the continued decline in
operating revenues and profits of both
companies in recent years, which wer
accentuated this year, are regarded
as among the most compelling reasons
Tor the merger. Consolidation. In
short, is regarded in public utility cir
cles as providing salvation for the
companies
The loss in revenue passengers by
both companies during recent years re-
veals trend which would be disastrous
II continued
The Washington Railway & Electric
Co. carried 7l,52l,4 revenue passen-
gers in 1929. This dropped to 51,918,-
352 In 1882, loss of approximately q
per cent
The Capital Traction Co., carried
66,9Sl ,32l revenue passengers in 1923
and this had dropped to 39,oo7, $50 in
1892, loss Of approximately 81 per
cent.
Income Takes Drop.
The net operating income of the
w. r. g. E. declined from 81 ,032, ,314 in
1929 to 1888, ,941 in 1882, or 81 per cent
and that of the Capital Traction Co.
from s901, ,943 in 1929 to S410,670 in
4SoE, OI d loss OF ABOUT o4 per cent.
Capital fractions common stock
holders received dividends OF 7 per cent
from 1921 through 1923, but this was
reduced to 6.75 per cent in 1929, to
4.50 per cent in 1880, to 35 per cent
In 1881 and finally to three-quarters
OF l per cent in 1882.
The w. r. & E. from 1921 through
1882 paid a per cent dividend on its
preferred stock. this amounting to an
outlay annually of S425,000.
Due in large measure to the earnings
OF its stock in the Potomac Electric
Power Co, the w. R. e. E. has been
able TO pay its common stockholders divi-
dends ranging from 3.25 per cent, in
1928, 10 per cent for the years 1928
through 1882.
That the power company earnings
largely have maintained operation OF
the w. r. & E, however, is seen in
reports showing that 81 $50 900 of the
Sl,7l4804 net income of the railway
IN 1882 came from power company
stockholding Of the railway.