Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-08-21

trating on ways to- get the
Wolfson, out of the Washingt
Consequently the way was not
cleared for a settlement until the
President signed a special transit
bill last Sunday. The measure gave
the District Commissioners power
to negotiate a wage agreement be-
tween the company and union, Or
dered Capital Transit to give up its
franchise in one year, authorized
streamlining Of are-increase pro-
cedure and directed the city, under
certain conditions, to underwrite
operating losses in the coming year.
After bill was signed. these moves
became necessary:
. The company had to look for q
way to hquidate its holdings-spe-
cifically to find q buyer for the
Washington transit system as a
package, or for its properties piece
meal.
. The city had to find wage
settlement agreeable to company
and union.
Price: $l4.4 Million
Mr.. Wolfson got right to work.
He announced his price for Capital
Transit during an exclusive inter-
view In New York with The Star.
He wanted $14.4 million, or SIS
share. Shares we're selling at about
$40 when he made the announce
ment. He expected 1t to climb to
$15--and it did go promptly to
$1150.
Persons who can't stand to see
Mr.. Wolfson make any more money
on Capital Transit could ponder
these figures: He bought control OF
the company for IS a share tcon-
verting all figures to the present.
post-stock-split. equivalents) and
has made a net profit after taxes
(he's in the 80 per cent bracket)
of SITS. If he gets his price. he
will net after taxes-an additional
$l2 q share.
That means total profit after
taxes Of around $13.75 on IS
investment roughly IT'S per cent
return in six years.
Mr.. Wolfson and his close asso-
ciates own more than 300. 900 shares
of Capital Transit stock.
He found no takers last week at
his price. Louis Burman, WASH
ington real estate man, said he
represented syndicate ready to
buy the company. If the price were
right. If Mr.. Burman or some
other buyer doesn't come through.
then Mr.. Wolfson says he is ready
to liquidate the company, bus by
bus, building by building, at the
end Of his year. He claims he can
still make roughly the same profit
maybe even a little more.
Wage Formula
Meanwhile, the District Commits
sioners found q meeting Of minds
with the union. The two parties
agreed on a package which will
cost the company an estimated
$1.2 million during the coming
year. The men would Immediately
get a Demonstrations increase
(to So, and another scent raise
July /, 1856. Pension benefits
would go up $50 a month from the
present $40. There were myriad
other adjustments Of overtime prob
lens, vacations, seniority, sick leave
and so forth.
The union accepted slightly less
than tentative contract negotiated
between the company and repre-
sentatives of the international
transit workers union two weeks
ago-a proposal rejected by the
local union because it was con-
tingent on the Presidents vetoing
the transit bill. The agreement
was a nickle an hour on wages and
SIS a month on pensions better
than the company's original offer
a month ago.
Transit workers would need about
three and one-half years to make
UP, under the proposed settlement,
what they had lost in take-home
pay during the strike.
Union members overwhelmingly
voted to accept the Commissioners
proposal.
Then it was up to the company.
Tronsit's Course
Capital Transit had these courses
of action to choose from:
First alternative: Accept the pay
raise, sign q contract with the
union, request a fare increase to
cover the pay raise and ask for
another fare increase to give the
company its legal "fair and reason
able" profit. The fare increases
would have to come from a bitterly
hostile Public Utilities Commission.
however, and there was q risk the
company would fail to break even.
There was one attraction to the
plan, however, It would permit the
company 10 Operate WltlOut any
more than the usual interference
by the city government.
Second alternative: Accept the
pay raise, sign contract, with the
union, also sign an agreement with
the District. This would oblige the
District Commissioners to give, on
recommendation of the p. U. c., q
fare increase to cover the cost OF the
wage raise and would obligate the
city to pay Capital Transit for any
operating losses due to increased
labor costs-but not for losses from
a drop in patronage. There would
be no obligation for fare boost
to cover a fair and reasonable
profit.
The company expects 10 to 30
per cent decrease in patronage to
follow the strike. It expects fur
ther decrease to follow fare hike.
Which of the two alternatives
would best guarantee against q net
operating loss in the coming year?