The sun. [volume] (New York [N.Y.]) 1833-1916, 1908-04-21

Twenty-third Street and Broadway Ia
consideration Of its bond and share capital
The traction company then sold the $780,
900 Of bonds 10 the Central Trust Company,
Guaranty Trust Company and Mutual bie
Insurance Company for par and interest
This money was paid into the treasury
OF the traction company and used 10 con-
struot the road. Whatever Of profit or
loss ensued Injured 10 the benefit OF detri-
ment Of all stockholders OF the traction
company, share and share alike.
The q ,000,OO0 OF Lexington Avenue stock
remained In the treasury until the Lexington
Avenue Company was consolidated with
the Metropolitan Street Railway Company
whose entire share capital also was owned
by the traction company II was then
cancelled.
() The same procedure was followed in
connection with the Columbus and Ninth
| Avenue Company, which issued 10 the tTao.
ton company $1,000 600 OF bonds (also sold
at par and i~nterest) and $1,000 900 OF stock,
also exchanged for Metropolitan Street
Railway Company stock,
When the Lexington Avenue Company
o., 100000 capitaD, the Columbus Avenue
Company W9, 900. 900 capitaD and the Metro
pOlitan Crosstown Company (f9OO,OO capl-
tall were merged in the Metropolitan Street
Railway Company all Of the shares OF these
four companies were owned by the traction
company, and the only actual result was the
extinguishment Of the stock OF the three
marged companies and the corresponding
enlargement Of the Metropolitan Street
Railway ~Company's stock to tle,OO,WO,
which continued to remain in the treasury
Of the traction company. In other WORDS,
II was no more than a change OF form IN
stock certificates, which could result IN no
loss or profit to any one, since the complete
ownership was undivided. Whatever ad-
vantage or disadvantage accrued from such
change in form was participated IN by an
Of the stockholders Of the traction COM
pany, share and share alike.
(cl Two old companies held the iranchlSe
rights 10 operate cars on Thirty-fourth
street. Their combined capitalization Was
stock. 81, 800, 600; bonds, 81 ,3OO,C00. Inc
traction company bought these securities
from the original owners in 1891 and con-
solidated them into the Thirty-fourth Street
Crosstown hallway Company, which lssued
81, OOO,OOO stock and 81, 900, OOO bonds, secured
by a mortgage to the Central Trust COM
pany, trustee. The old bonds (Sl 100000
we're placed under this mortgage and are
now 80 held by the Central Trust Company
I The new $1,000. 900 Of bonds were sold Tor
les and interest, and the proceeds went into
! the treasury Of the traction company, Inc
5 ,OOO,ON q Of stock was pledged to the Guar
| tAlNl AANNNN COMPANY IVA Wv hN
mortgage Of the Metropolitan Street Rail
way Company, and Is now held by the Guar
anty Trust Company, trustee.
In the process Of amalgamatiOn there
were many other precisely similar transao-
tons which might be ~recounted in detail
Those described are selected for illustration
because they are the ones that have been
most generally misrepresented.
There was no increase In capitalization
TO the public in any instance, oil OF the issued
shares Of subordinate companies being held
in the treasury Of the Metropolitan com
pany OF pledged under mortgages and
never offered for sale. The t~wenty-Odd
millions Of alleged profits to insiders
therefore never had any existence.
At no time in the history Of the COMPANY
did the combined stock holdings Of MessTs.
Whitney. Ryan, Widener. Elkins and Do!an
amount TO Is per cent. Of the total,
Neither Mr.. Whitney, nor Mr.. Ryan, nor
Mr.. Widener, nor Mr.. Elkins, nor Mr.. Dolan,
nor Mr.. Vreeland ever had a dollar Of interest
in any construction contract OF either the
Metropolitan Traction, Metropolitan Street
Railway or any subsidiary company con-
nected with the system.
s. THE WALL AND C%oRTLASDT ST. EFT FRAN
CHIsE.
As 10 this transaction. the simple truth
is that several hundred thousand dollars
lad been advanced by Measrs. Dolan.
Whitney, Ryan, Widener and Elkins to
cover expenditures which had been made
for the benefit Of the property, The Sill 900
maid 10 each OF them In connection with the
Wall and Cortlandt Street purchase was the
precise amount with interest which each
had advanced.
4. THE REAL CAUSES OF THE PRESENT MIS-
FORTUNES OF THE SURFACE LINES
The failure Of the surface lines was not
due to any of the causes alleged, but 10
conditions which Eere mainly the results Of
State interference Among these are:
/. The extension of the free transfer obli-
CATION by legislative enactment and court
decisions, so that the fare per passenger has
been reduced from five cents TO only a
little more than three cents.
2. Enormous increases in taxes, the spe-
cial franchise tax alone having almost dou-
bled the systems burden Of taxation,
3 The extraordinary congestion of street
traf1c. resulting in greatly increased cost
OF opaTati N and maintenance and also in
an abno. nal burden Of accident claims,
this item alone amounting 10 81 100000 a
year. or about 10 per cent, Of the gross re-
Ceipts.
4. The competition Of subway lines, built
with the aid OF the Clty's credit.
These causes rave reduced the net earn
ings OF the system fully S6,0OO,OOO a year,
or more than l0per cent.upon the %company's
capital stock.
The company was not looted; it was
throttled
HICEG CErT ANN CC