Evening star., 1934-06-15
MAyFL0WER PLAN
BENEFITS CITED
J. c. Folger Believes Reor-
ganization Would Aid
Stockholders.

Belief that the proposed reorgani-
Zation of the Mayhower Hotel would
benefit bonoholders through increased.
earnings was expressed today by ]. C..
Folger, chairman Of the so-called
Washington Bondholders' Protective
Committee, during hearing before
the Senate District subcommittee in
vestigating the financing Of the
property. ..
Folger declared If the contemplated
foreclosure sale could be held now
and the property bought in by the
Bondholders' Committee, it would
earn about twice the present interest
on the bonds.
Through a series of questions by
Chairman Kean and Elwood H. Seal,
assistant corporation counsel acting
as special counsel for the subcommit-
tee, Folger admitted the present re-
ceiverskip Is expensive. He also ad-
mitted the bonds under the present
reorganization plan could not be sold
at par value, but he declined to quote
figure at which he believed they
could be sold. q,
Explains OhuCEcnCeBs
Folger explained the differences
that at one time existed between the
Washington Bondholders' Committee
and the so-called New York Cemmit-
tee. These differences, he said, grew
out Of the desire of the Washington
committee to place control of the
property in a local bank, and were
adjusted when the American Security
l. Trust Co. was designated to handle
the funds. He declared the commit
tee favored this bank because 1t had
done good job on the. Hamilton
Hote" and was reported to be strong.
Before Folger took the stand Paul
E. Lesh, counsel for the Majority
Bondholders' Committee, was recalled
to complete his testimony in connec-
ton with the proposed reorganization
plan.
Lesh explained that when the plan
is put into effect 1t will be submitted
to- the District Supreme Court for
ratification unless the hotel is pur-
chased by an outside bidder. When
the court enters a decree confirming
the sale, he said, its supervision would
automatically end.
$2,5oo,o00 Bid Suggested. !
1t was developed through question
ing OF Lesh that he suggested to the
court $2,500,000 minimum bid at
the foreclosure sale, but explained
he placed the figure low enough to
avoid disSents from the reorganiza-
ton plan. The court fixed the min
imum bid at $2,800,000. The re-
ceivers suggested a minimum price
Of about $4,00O,o 900, which Lesh de-
clared was high enough to block the
possibility of reorganization.
At the conclusion of his testimony
Lesh appealed to the subcommittee
members to guard themselves against
misquotation with respect to the re-
organization plan. He declared any
propaganda that would have the
weight of the investigating subcom-
mittee behind it might be serious
to proposed reorganization.
Harry Wardman then was called to
the stand and asked by Seal about
an appraisement of the value of the
Mayhower made number of years
ago. Wardman said the appraisement
was actually made by James Hobbs.
who had been associated with him.
Wardman said he saw 1t and his rec
objection was that he signed the ap-.
praisement, but that he went over it
only in a casual way. pointing out
that he knew Mr.. Hobbs and re-
garded his work as competent.
Testified at Pittsburgh.
Seal told Chairman Kean he was
going to ask the subcommittee to
subpoena Hobbs Wardman said he
had talked with Hobbs about the
matter Monday and that Hobbs told
him he had testified on the subject
on a previous occasion in Pittsburgh,
had left the papers with the Depart
ment Of Justice and that the subcom-
mittee could get the information it
wanted from the department..
John L. Weaver also was called TO
the stand today to give information
about appraisements, and he told the
subcommittee that he had only ap-
praised the land and had never ap-
praised the hotel itself. He said his
recollection was that in 1928 the ap-
praisement of the land was $33 a
square foot. making round sum for
the value of the site. of $4,000, 900. In
response to questions by Chairman
Kean, Weaver said the guiding factor
followed in making such appraise-
ments is the earning value Of the