New-York tribune., 1906-04-25
Snapshot from the waterfront.
ROAD PLEADS POVERTY.
MAY POSTPONE PAYMENT.
Belmont Says marlborough Earn
ings Don't Justify Decreasing Debt.

August Belmont yesterday sent Controller
Metz letter saying that the Interborough COM
pany, for the fiscal year ended October u last
earned only 1854 per cent on it's capital invest
ment. and that therefore the company was not
compelled as yet TO begin the payment of 1 per
cent a year TO the sinking fund for the ultimate
retirement of the bonds issued by the city to
cover the cost Of the building of the subway.
Controller Metz does not like the system Of
figuring by which Mr.. Belmont arrives at
conclusion OF this sort, and has instructed Cor
poration Counsel Delany to report on whether
the Interborough company is violating its con-
tract in Withholding the l per cent sinking fund
payment
Mr.. Belmont bases his letter on data furnished
him by D. w. McWiIiams, treasurer of the In
terborough company. the salient figures being
as follows:
CaPtai stock 70 acquire subway lease s12
Cost of subway equipment ............... 226769i7
rros Totai I.oaFata capital investment sseoe l52
operating expenses same period 271es95
Less on bonds i$ie9s
Net income SIs14 $50
Controller Metz is surprised that Mr.. Belmont
should figure as capital invested by the com,
pany the interest rental on bonds. and he init
mated yesterday that he would ask the courts
for an Interpretation of the contract to o.,
out whether the company can include as mart Of
its investment an item which the Controller saws
Is palpably for rental Of the system. With this
interest item eliminated. the company's income
makes a showing of about per cent on the
first years business for the subway system
proper
r. Fulton Cutting, at the hearing on the
Elsberg bill at the City Hall last week. said that
the company earned about Il per cent on its
capitalization last year. but probably this in
cluded the profits from the Manhattan COM
pany. controlled by the Interborough.
clause of the contract with the Interborough
company is follows:
The profits shall be determined by deducting
from the gross receipts the operating expenses
as above defined.
Another clause bearing on the computation
Of operating expenses says:
Operating expenses of the road include actual
expenditures for repairs and maintenance and
interest on borrowed money.
II the contention Of President Belmont is sus-
tained there is a grave doubt whether the l per
cent payment to the sinking fund will amortize
in fifty years the debt contracted for the build
ing of the subway. The bond account shows
that the city has expended S42 800 600 on the
subway. II the per cent payment to the sink
ing fund begins with the first year of operation
then. with compound interest II will be enough
10 retire the bonds at the end Of fifty years. But
the contract suspends the payment of this
per cent until the net earnings 10 the tenant
(AIr BelmonO amount 10 per cent If they do
not do this for the first five years then the
Interborough is not compelled TO pay 1 per cent
and for the five years succeeding the first five
years the earnings must amount to more than
51A per cent net the payment OF the l per
cent may be suspended for another five years.
Because Of this stipulation IL is important for
the city TO prove that Mr.. Belmont has no right
10 include part Of the fixed charges the in
terest rental on the bonds This the Controller
viii insist he cannot do. the city furnished the
nrnds