Evening star., 1934-03-10
d. c. Merger Reviewed.

The only change of Importance af-
feCting the corporate relationships
within the North American group dur
ing the year resulted from the unfit
cation of street railway and motor bus
transportation systems in Washing
ton, the report continues. Under au-
thority of a Joint resolution Of Con-
gress, the transportation properties of
Washington Railway & Electric Co..
subsidiary of the North American Co,
and the properties OF the Capital
Traction Co. were transferred on De-
cember /, 1888 to Capital Transit Co,
new company organized for the
purpose of unifying the competing IA
cilltles
Under the terms of the uniflcation
agreement there were transferred by
Washington Railway & Electric Co. to
Capital Transit Co, in addition to its
physical transportation properties, net
current assets in an amount equlVa-
lent to the net current assets of the
Capital Traction Co. at the date of
transfer. and Capital Transit Co. as
sumed the obligations Of Washington
Railway e. Electric Co., with respect
to S8.6O7O00 of funded Indebtedness,
as to S4,455 900 of which Washington
Railway & Electric Co. remains con-
tingently liable.
Capital Transit Co, assumed all OF
the indebtedness of the Capital Trac-
ton Co. The common stock OF Capt.
tai Transit Co. was divided equally
between washington Railway & Elec-
tric Co. and the Capital Traction Co.
Higher Taxes Explained
The principal reason for the rela-
lively greater tax burden was spe-
cial tax of per cent which the Fed
eral Government levied upon sales OF
electricity by privately operated utlll-
ties to commercial and residential
customers. Effective September /,
1888. our subsidiaries were themselves
required to pay this tax. which had
previously been paid by their CUSTOM
ers in the same manner as sales taxes
in other industries which are added
directly to or included in the price
This tax, therefore, is reflected in the
1888 statement for only four months
On the basis of the 1888 volume OF
taxable sales. it is estimated that this
100000 for a full year.
Another additional tax was that
imposed on capital stock of this COM
pany and subsidiaries at the rate OF
81 per 81 900 of declared capital on
account of the retroactive character
of this tax, provision for the amount
paid on August 81, 1888, for the IL
months ended June 30, 1888, was
made in large part from existing re-
serves. Provision for one-half of the
amount payable for the II months
ending June 80, 1894, has been made
by charges to income for 1888.
It should be noted that these ad-
ditional taxes and other large taxes
imposed upon utility companies such
are not paid by utilities operated by
municipalities or other political SUD-
divisions, the report adds.
Gain in Customers.
Including II months tranSporta-
ton operations of Washington Rail
way & Electric Co. prior to the until
cation already referred to, the elec-
trio railway and motor bus systems
of subsidiaries carried 1872, 2,882,622
revenue passengers in 1888. de-
crease of 5.66 per cent compared with
1882.
Total customers receiving electric
service numbered 1,07l $40 at the end
of 1888, an increase of 14,246, or 1.35
per cent over the number at the end
of 1882 and only 4,342 less than the
peak figure which was reached dur
Ing 1881. The number of residential
customers had been declining for a
year and half prior to May. 1888,
but since that time has been steadily
increasing and by the end OF the year
most of the ground lost since the peak
had been regained.
After S1,820,034 dividends on pre-
ferred stock of the North American
Co., the consolidated balance was
equivalent to Sl.22 per share on the
average number of shares of North
American common stock outstanding
during 1888, as compared with S2.0l
per share for 1882.