Strike Against Wolfson

Louis Wolfson, who normally loves the spotlight, was busy dodging it. He ducked a senatorial subpoena ordering him to testify in the strike of the Wolfson-controlled Capital Transit Co., which has forced thousands of Washingtonians to hitch rides or walk to work during the past two weeks. Despite the inconvenience, Washingtonians seemed almost solidly against Employer Wolfson and in favor of his employees, striking for a 25-c--an-hour pay hike and other benefits. Crying that Wolfson was an "economic carpetbagger," Oregon's Democratic Senator Wayne Morse introduced a bill to strip Capital Transit of its franchise.

Even Capital Transit agreed that its employees deserved a pay increase, but President J.A.B. Broadwater asked: "Where will the money come from?" Most Washingtonians had no answer for this; they did, however, know where Capital Transit's money had gone. In 1949, when the North American Co. had to sell off Capital Transit under the death-sentence clause of the Public Utility Holding Companies Act. Louis Wolfson and friends bought control (46.5% of the shares) for $2,189,160. Capital Transit was a conservative old company, with a fund of more than $6,000,000 set aside for a rainy day. Since 1942, it had been paying a $2-a-year dividend, but dwindling earnings had forced it to cut its dividend to 50-c-. Wolfson immediately restored the $2 dividend, paying out a total of $480,000 to himself and other stockholders the first year, though the company netted only $332,000. By 1951 the dividend had been doubled to $4, and the stock split four for one. In 1952 alone the dividend per share on the basis of the original stock was a whopping $15.60. In all. in five years, Louis Wolfson and friends collected some $3,600,000 in dividends, a return of almost 170% on their investment. During the period, Capital paid out $8,000,000 in dividends to all stockholders, though its net income was only $5,200,000. By the beginning of 1955, its $6,000,000 surplus had melted to $2,200,000.

For the strike, Capital Transit blamed the District of Columbia Public Utilities Commission, which had refused the company permission for its fourth fare rise since Wolfson took over.

At week's end, as the pressure mounted, Wolfson wired the Senate that he would appear at the hearing this week.

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