New-York tribune., 1907-11-12
THE EISBERG LAW.

The hearing before the Public Service Com
mission yesterday on the desirabllity Of amend
ing the Elsberg rapid transit act was most
important 1t has been apparent ever since
bidders failed TO appear for the subway routes
in Manhattan and Brooklyn which were offered
last spring that u twenty years lease was un-
attractive TO capital When the present com
mission reconsidered the project Of municipal
construction of the Fourth avenue line IN Brook
lyn that restriction made 1t hesitate about 90
ing on with the plans and led two of the com
mSsioners finally to vote against doing So Care
full estimates appeared to show that no com
pany could operate a subway profitably through
so undeveloped a section as that Of the Fourth
avenue route if its lease ran for only twenty
years There would be an inevitable loss at
first, and only in the latter part OF the period
when rapid transit had developed the region,
would there be fair chance Of profit. With
the lease extended TO thirty or forty years cap
tal would be interested and the likelihood of
obtaining bidders would be strong.
Thus ii is apparent from the considerations
that entered into the case of the Brooklyn sub
way that the twcnty-year clause Of the Elsberg
law threatens 10 defeat one of the purposes of
subway bulldng-namely. the providing Of quick
transit from the undeveOped parts of the city
TO the business section. and so of opening up
new areas for home building and relieving the
congestion in the lower parts of the city. The
same limitation doubtless had some influence in
preventing bids for the East and West side
routes laid out in Manhattan. OF course there
were other factors in that case, especially the
dsinclination of the Interborough- Metropolitan
TO build new lines which would to a large extent
compete with its existing system and reduce its
profits. Indeed, the Llsberg law was probably
originally favored by some in the belief that the
existing system would be practically sure to OBJ
tain future subway contracts and with the de
sire 10 be severe upon the trust" as possible.
But if the merger. as Mr.. J. B. Mcdonald testi-
fed recently. effected in order TO end sub
way building the law by its strictness Simply
played into the mergers hands. The less desir-
able the terms offered to attract capital 20 sub
way construction the less the existing concern
has TO fear from competition
AS the law stands il is a check 10 subway
building whether by competitors OF the present
company or by that company itself. The au-
thOrities can make the terms as severe as they
please, but they cannot compel capital 10 accept
them. The experiment Of shortening franchises
for public utilities TO twenty years or less has
been extensively made in England, and the in
evitable result has been to discourage enterprise
and check the development of the municipalities
that have tried it, 1t has been one Of the fac
tors in bringing about municipal ownership and
operation in England. Here the Elsberg twenty
year clause has already resulted In municipal
rather than In private construction OF the sub
way loop connecting the bridges and the Fourth
avenue subway in Brooklyn, and we do not now
know whether any one will bid for the operation
Of these two Subways when they have been con-
structed.
We have Public Service Commission In
whose efforts to improve rapid transit facilities
there is general confidence. Give 1t free hand.
The twentyyear clause imposes upon It an al
most impossible condition.