New-York tribune., 1908-07-18
WON'T o. K. MORTGAGES
Public Se,vice Commission Denies
Requests of &. X. T. Subsidiaries.

= The Public Service Commission refused yesterday
to approve the application of the broohiSn ohion
Elevated Railroad Company for proposed mort
gage of so 900, ,o00 and at the same tifne uenieo
the request of the Nassau Electric Railroad Com
pany for approval of similar mortgage ior
100000 Both companies part OF the brooklyn
Rapid Transit system
The action of the commission was taken upon the
recommendation of Commissioner McCarrol Ine
companies proposed to sell the demand ccruhcates
to be obtained by the mortgage issue to the Brook
lyn Rapid Transit Company at any time within
period or ten years. The demand certincates were
then to be turned over to the Central trust COM
pany In return for the Authorization and delivery
to the BROOKLYN Rapid Transit Of 1oo-year bonds,
secured by It's s1500O000 mortgage executed TO the
trust company under date of July l. 1SH
Commissioner McCarro pointed out in his re
port that under the Public Service commissions
law the control of the commission did not extend
to the issuing of notes evidences OF Indebtedness
payable at periods of more than twelve months
after their date. seems to me-. he said, that
the issuing of demand certificates. If secured by
the mortgages above mentioned. and the pledging
OF such certificates as security for the issuing OF
1oO-year bonds of the Brooklyn Rapid Transit
Company. is evasion OF the provisions OF sec
lion 30 OF the Public Service commissions law, ahu
that as 1t is the duty Of the commission to carry
out the provisions of that law, according to their
true intent, and to supervise the capitalization OF
all public service corporations subtec. to Its 1urs-
diction. the commission should refuse to consent
street railroad to demand certificates and
pledging the for long time bonds may easily
be availed of to nullify or seriously impair the
power of the commission to supervise the capital
ization Of public service corporations.
Both mortgages to date OF March %,
1907. and were executed to the Central Trust Com
pany trustee. The proceeds of the demand GER
tifcates, which were to bear per cent interest.
were to be applied In the of the Nassau COM
paE to the improvement of its property and in that
of the Brooklyn Union Elevated to the Improvement
of its property and payment Of its debts Both petit
tions were presented to the old State Railroad
Commission, and when 1t superseded by the
Public Service Commission up for considera-
ton by the latter body
statement given out at the Office of the
Brooklyn Rapid Transit Company following the
decision, in which it was said.
We have not seen copy OF the commissions
based not on any doubt as the propriety of
the expenditures heretofore made or proposed to
nor Upon ~ any question m involving the
but solely. upon the consideration that the GER
ufcates of Indebtedness which the mortgages are
proposed to should not be PAYABLE on de-
mand but should run for term of years The
significance of this is that II the certificates of
indebtedness did run for more than year they
Would come under the direct and specific iuriSdic-
ton Of the Public Service Commission for the 1st
District from month to month they issued.
approve a method of financing unusually conserva-
tive in the safeguards which it established against
the issue of obligations for less than par. for
any capital expenditures other than purely
struction purposes and it chosen to discour
age that method for reasons which may be salts
factory to it, but will hardly be satisfactory
investors and the public The best evidence that
the method devised not intended as an evasion
of the Public Service Commissions law is the fact
sideratfon several years before that law
enacted or even suggested.