Evening star., 1939-04-20
Parent Firm S
Stand on Gas
Merger Told
Hopes to Dispose Of
Holdings at Once,
Banker Testifies
BY DON S. WARREN.

their sale to the Washington Gas
Light Co-which it also controls
were voiced by an official of the
trust today as he testified before the
Public Utilities Commission.
The witness, j. D. Whittemore, a
vice president of the Chase National
Bank, one of the controlling bank
ing interests, declined to state
whether the trust would accept more
common stock in the Washington
company instead of preferred stock
in payment for the suburban COM
panies', securities. He did say he felt
preferred stock would be more
nearly the equivalent of a cash pay
mentE
The ownership trust, which has
invested roughly $l,000,000 in the
Alexandria company, paid the Vir-
ginia municipality some $75O,0OO to
obtain the plant about eight years
ago. Under questioning by Com
mission Vice Chairman Richmond
B. Keech, the witness agreed this
was a pretty high price"
Hopes to Drop Holdings.
The sincere hope of the owner
ship trust, Mr.. Whittemore said in
answer to questions by Commission
Chairman Riley E. Elgen, is to dis
pose completely of its holdings in
the Washington company (84 per
cent OF the common stock "as soon
as posSible-so long as we can real
1ze fair price for the stock"
The pending proposal is for the
washington company to issue to the
trust 1925 shares of preferred
stock. valued at some $1,25O, 900, in
payment for the securities, includ-
Ing the debts. of the two suburban
concerns. Two previous offers have
Tailed to win the commissions ap-
proval, one being denied on the
ground the price was too high, and
the other being withdrawn.
Mr.. Whittemore, as did pfeyious
company witnesses, declared the
ppposed price was fair to the WASH
angton company and its customers
rs well as to the ownership trust.
ana he predicted increasing gas
business in the Washington metro
polttan area. He explained that
the Chase bank holds about a per
cent of the shares of beneficial in
terest in the trust and that the other
ownership interests included the
ContinentalxI Illinois National Bank
& Trust CO., Chicago; the Harris
Trust Co., Chicago; the Public Ma
tQnal Bank of New York and the
Reconstruction Finance Corp.
Interference Denied,
Mr.. Keech suggested during one
exchange relating to the control the
trust holds over the Washington
company as well as the suburban
concerns: What you are doing is
proposing to deal with yourself"
Mr.. Whittemore denied this, al
though later agreeing that the pro-
posed deal was one not exactly at
"arm's length"
The witness, however, insisted
that the trust had never interfered
- with the management of the WASH
1ngton company, declaring that its
board of directors was completely
Independent"
Mr.. Keech asked if he meant that
Marcy L. Sperry, president of the
Washington company, and Robert c.
Overs and E. j. Boothby, vice presl-
dents, held their positions without
regard to the authority that you
(the trust) have to leave them in or
take them out?"
Absolutely" answered Mr.. Whit
temore. THE election and employ
ment of the officers is at the dis
cretlon of the Board of Directors
Mr.. Keech then wanted to know
who decided who the directors would
be. who do you suspect partici-
pates in the selection of the direc.
torso" he asked.
Testifies About Dividend.
Mr.. Whittemore insisted again
that the trust does not dominate
affairs of the Washington company,
but he said he supposed" that the
owners of large block of stock
proper persons were elected to the
Board of Directors.
Under further questioning by Mr..
Keech, Mr.. Whittemore agreed that
q modest" dividend had been paid
BY the Washington company on its
common stock and the commission
vice chairman asked him if 18 per
ho 4f
old $40 par value was modest"
Mr.. Whittemore said the question
Of par had no great significance.
It was brought out that the trust
had paid some $127 share in buy
ing up the common stock of the
Washington company. In recent
years this stock was split one into
three so that it would appear that
the book value now Is around $42
for the divided share.
The witness emphasized that he
felt there was no way of determin-
ing what the common stock would
bring in the sale of large blocks Of
shares and that this was reason
why he could not say that the trust
would accept payment in common
shares instead of preferred stock.
Elgen States the Case.
Chairman Elgen put it this way:
You are attempting to nquidate the
trust and get rid Of your holdings
IN the Washington company and
get out of the utilities business
You have some $4,000 pieces of
paper, representing common stock
In the Washington company, and you
don't want to take on ownership
OF more physical properties or more
pieces of paper of the same kind you
have in payment for the suburban
concerns securities" To this the
witness agreed.
Meanwhile, the Utilities Commits
hon considered possibilities that de-
mands may be made for reduction of