Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-08-26
Transit Boards Letter
Omitting Dividend

OuHsA0ssS
The Board OF Directors of the
Capital Transit Co. yesterday
decided not to declare the usual
quarterly dividend.
: In Q letter TO stockholders,
made public yesterday, it said
the dividend could have been
paid out Of earnings and surplus.
But it said the directors felt the
7 company's resources should be
retained and paid as part Of q
liquidating dividend after August
ID, 1856. when the company is
scheduled to go out Of business.
The text Of the letter follows:
To all stockholders: Your
Board Of Directors at the regular
meeting held on Thursday, Au-
gust 25. 1855, considered 1t
prudent. and In your interest. to
pass the regular third-quarter
dividend usually paid at this
time. Dividends Of 80 cents each
were paid In the first two quar-
ters OF the year.
The affairs Of your company
over the past few months have
received national publicity. AS
you have probably read in your
newspapers. the union employees
Of Capital Transit Co. went on
strike July l. 1855. for higher
wages and pensions and working
conditions which. In the opinion
Of your board and its officers,
were impossible 10 grant without
contemplating deficits.
The union was In no mood to
make any kind OF reasonable
compromise. The resultant COM
munity emotions were consum-
mated In the last hours Of the
past session Of Congress with the
passing of Public Law $50 which
cancelled the franchise OF your
company. The law was fash
toned to ''punish" your company
for its refusal to bend 70 the
viii Of political demagoglIes IN
tent on destroying your invest
ment.
Says Unien Was Backed
The union had the full back
ing Of the District Of Columbia
Commissioners and the District
Of Columbia Public Utilities
Commission. The union en-
ployes returned to work on Au-
gust 20. 1855. after 50 days Of
strike under a contract ne
gotiated by the District Of Co
lumbia Board Of Commissioners.
The history Of the events lead
ing up to the passage OF Public
Law 389 win make interesting
but sorry reading for those who
are believers in the free enter
prise system but it undoubtedly
will provide q blueprint for So
cialistic thinkers. However, Con-
gress did. in the final stages Of
drafting the legislation. take out
the passages which would have
provided for seizure Of the prop
erty and substituted instead leg
islative language which gave the
company one year from the date
the law was signed-AuguSt IA,
1955-to wind up its transit OPP
Grating affairs.
In passing the current divi-
dend at this time. your direc-
tors took fun cognizance Of the
present status Of your company.
While the dividend could have
been paid out Of earnings and
surplus, the directors felt that
company resources should be
retained and paid out as part
Of a liquidating dividend after
August Il, 1856. In this manner
the dividend, and any SUISSE
quent liquidating dividends. viii
be subject to capital gains tax
rather than regular income tax.
Promises Efficiency
Over the next year, your COM
pany win continue to operate
its transit lines as efficiently as
possible. In the process, your
officials win do their utmost to
harbor company resources and
earn money On them, II 1t is at
all possible to do 90, by stringent
economies IN order that one year
hence. when Capital Transit
winds up its affairs, the prop
erty viii produce more in hcui-
dation than the current market
value Of the stock as reflected
on the American Stock Ex-
change. We have no doubt Of
this, and we consider it prudent
for that reason for you to retain
your stockholdings through the
liquidating period.
With no further responsibility
TO provide public transportation
In Washington and adjacent
Maryland after August II, 1856,
your company is looking forward
to the process Of instituting liqui-
dation in an orderly manner
best suited to produce as much
for you as possible. This means
that. before the year is up, we
will begin to place on sale the
assets Of your property for de-
livery on and after the liqui-
dalton date, In this way, there
should be available shortly after
next August IA q capital gains
dividend Of some Importance to
you.
While it may have been q re-
Election Of your wishes, and the
board Of directors to have con-
tinued in the business of pro-
viding public transportation on
a profitable basis in the Ma
tion's Capital, the atmosphere
conducive to such continuation
was lacking.
The District of Columbia
Public Utilities Commission
particularly as reflected in the
attitude Of two members prior to
June 2, Robert E. Mclaughlin
and Robert Weston, was intent,
in one manner or another. on