Evening star., 1935-11-03

the voting power In the railway COM
pany.
The railway company in turn owns
all Of the common stock of the power
company and 81 per cent of the tran
sit company. The railway company,
therefore, is only holding company,
but since its holdings are confined to
two utilities in the same area, which
constitute an integrated system within
the meaning of the holding act. it does
not have to change its relationship to
those two companies.
In order to divest itself of control
in Washington, the North American
offers to exchange its 62,197 shares of
common stock for 1,554,925 partici-
pating certificates, at the ratio Of Is
certificates for each share of common
stock deposited. 1t would then offer
these certificates for sale to the gen.
eral public at price as yet unan-
nounced.
If the North American succeeds in
this move, it would leave itself with
its preferred stock representing only
812 per cent of the total voting power
Other holders of the common stock of
the railway company also would be
offered the opportunity Of exchanging
one share Of common for IS certif-
Gates.
Four Keep Directorships.
designations Of Ham, Fleming and
Callahan as members of the board
leave four remaining members who
constitute a majority. They are DR..
Mcclellan, A. G. Neal, vice president
and general manager of the railway
company; Eugene e. Thompson of
Washington and F. w. Doolittle of
New York. who is also vice president
of the North American. These four,
according to DR.. Mcclellan, are sup
porting the proposed transaction and
do not intend to resign.
Ham, in explaining why he had re-
signed both as president and a director
of the railway company. said
THE securities act of 1888 as
amended provides certain civil liabili-
ties against every person who signs a
registration statement, and against
every officer and director named in o
registration statement.
Because of the severe and unusual
liabilities and penalties involved on
the part of any director or officer
signing such registration statement or
taking any other act in connection
Herewith, I could not feel like expos-
ing myself to such onerous liabilities
and penalties and would not care to be
called upon to defend any suits under
the provisions Of the said act.
II have lately voluntarily retired
from some of my former activities, but
am remaining as director and chair
man of the board of directors of the
Potomac Electric Power Co. and of the
Capital Transit Co.
ment will show that it has been pre-
pared with the utmost care, and there
fore there might be only a remote
chance of any liability hereunder on
the part of any officer or director
signing the same, but Notwithstanding
this. as above stated, do not care to
assume that liability"
Fleming Hits Requirements.
Fleming declared his resignation
was due to the stringent requirements
of law in connection with the filing of
the registration certificate with the
Securities Exchange Commission which
was necessary in this transaction" I"
He also explained he believed all
matters In connection with the trans
action were being prepared and han
died win the greatest care" but that
the detailed information required in
filing the registration certificate was
Of such q nature it would be inpos-
sible for him in his judgment to pass
upon it in a manner which to his mind
he was charged with doing under the
law.
Moreover. Fleming said. he did not
want his resignation to be viewed as
q reflection on the transaction.
Callahan was reached at an Allan
tic City hotel and admitted he had
resigned, but declined to make any
comment.
DR.. Mcclellan explained that the
three vacancies caused by the resigna-
ton would not Immediately be filled.
He said it would be unfair to ask
prominent business men who had not
been directors in the past and were now
unfamiliar with the company to as
sumo the new responsibility required
by strict regulations of the securi-
ties act.
Roberts Plans Conferences.
Soon after the North American re-
vealed its plan to the securities COM
mission the Public Utilities Commis-
sion, as well as Roberts, started an
inquiry to determine the ultimate
effect Of the plan. Roberts also con-
fered with DR.. Mcclellan, and tomor-
row he will discuss the proposal with
members Of the securities commission.
A cursory study OF the plan has con-
vfnced Roberts, however, that the
North American Is anxious to get out
of the Washington field at this time
because Of good securities market.
He said he was convinced, too, that
North American obviously feared the
invasion Of the Associated.
Plans had been made by Chairman
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