Word: chalks
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Dates: during 1970-1979
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When Financial Impresario O. Roy Chalk purchased the D.C. Transit System in 1956, streetcars still rumbled through the nation's capital, passengers sweltered or froze in antiquated buses and the books were in chaos. Chalk promised a new deal, then set about proving that he was as adept at running an essential public service into the ground as the man he bought it from, Wheeler-Dealer Louis Wolfson. Things did get better for a time before they got worse, but today Washington's transit system is a shambles, threatened with financial crisis, a crippling drivers' strike...
...Chalk's problems stem from what Senator George Murphy terms "some new type of financial legerdemain," but what might more accurately be attributed to, as Senator John J. Williams puts it, "a case of having milked the company dry of its assets." Chalk started out well enough. He replaced old streetcars with spiffy new air-conditioned buses, and demanded prompt, courteous service from his drivers. Longstanding union grievances were eased by increasing drivers' wages to the point that they were the fourth best in the country for city transport workers. Within two years, however, Chalk began paying dividends...
...nearly half of the record-high profit of $1.3 million went into dividends; two years later the company paid $500,000 in dividends despite losses of $124,000. By 1967, when the dividends stopped because of the increasing financial difficulties, Chalk had paid out $4,390,000 to stockholders...
...aroused Senate two weeks ago passed a bill calling for Government takeover and operation of the transit system. Last week drivers threatened to strike over inadequate payments to their pension fund; the walkout was averted when Chalk obtained a federal court injunction. Through it all, Chalk, who as president, general counsel and chairman of the board is salaried at $65,000, hotly denied any mismanagement or payment of too much in dividends. But last year's losses were $397,500, and outstanding debts reached $27 million, a 24-1 debt-equity ratio compared to the 4-1 that existed...
...House goes along with the Senate in voting a Government seizure, Chalk will probably reap one final windfall. He owns real estate that he pulled away from B.C. Transit and incorporated separately. The price for the company, excluding the real estate, he has set somewhere between $40 million and $50 million. "That," noted Senator Williams, "is absurd"; but the Government will nonetheless have to pay a good price to rescue B.C. Transit from its present owners...