New-York tribune., 1912-01-25
jUBNAY GOING TO COURT
init to Determine City'S Right to
Make Preferential Payments.
PETERBOROUGH is CAUTIOUS
monts TO Make Sure That Bonds
Would Be Legal Before
Closing Deal.

-, the terms of the proposed agreement
,.,woen the Interborough Rapid Transit
romnanv and the city had not been made
.'b,ic was that counsel for the banking
so,se of ]. F. Morgan & Co and for the
prbIic Service Commission were preparing
,ne form of a suit to determine whether or
-, the city could pledge a preferential
rovment TO the Interborough.
Tbo bankers, it was said, would not agree
A. enance the project until they had the
sord of the courts that the bonds could be
hose5 on firm legal grounds. The suit would
ba a friendly one and every effort would be
made TO push it through. If it had to go
,broreh the Court Of Appeals 1t was said
,ha+ II might take six months. but If the
,nneIIate Division should decide in favor of
,ba city II might not be considered neces-
oo-,, 10 carry the case further. 1t was said
,ast night II might be possible TO carry the
Question directly to the Appellate Division
IN an agreed state of facts.
1rs, how the suit will be brought is not
a,tsrmined. II may be, however, that the
rronosition will be brought before the
Roard of Estimate for approval, after
,,bicb some Injunction will be brought TO
restrain the city officials from signing any
contracts TO carry the proposition into
operation.
II Is believed that it will not be neces-
sarv 10 place the lines completing the "H"
up TO public bidding for an operator, as
thew can be constructed as extensions OF
the present subway system.
Doubt on PreferentiaIs.
II seems that there has been a great diff
ference Of orinion between lawyers eminent
at the bar as TO whether or not even
rreferential can be granted by the city.
They are generally agreed that a guaran-
tee could not be granted under the section
of the constitution which prohibits the city
from pledging its credit to any private cor
poratlon 1T is a great question as TO
whether q preferential would not be pro-
bibited TOO" said city official last night
would the constitution allow the city to
t;e up its money without any hope OF re-
turn until private capital got a return"
Francis Lynde Stetson, counsel for the
Morgan firm, and George S. Coleman.
counsel for the Public Service Commits
sion. were at work almost all day yester-
dav on the subway problem. 1t was said
that they also were engaged in drawing
up contracts which might be presented for
1t was hoped that there could be an
other conference to-day between the citys
representatives including President Nc
Aneny, Controller Prendergast and Chair
man Wilcox of the Public Service Com"
mission. and Samuel Rea. Of the Pennsyl-
vania Railroad, and II. p. Dawson, Of the
Morgan firm, this afternoon 1t was said
last night, however, that things were not
profitable.
The weekly meeting of the directors OF
the Interborough was held yesterday, but
II was said that the subway question was
only briefly mentioned, as their reply had
already been sent to the city officials.
The Brooklyn Rapid Transit Company's
officials continue to get more and more
perturbed over the turn things have taken. |
They hear that some of the city officials
are now holding that the proposition to
guarantee that company its income on the
elevated lines that II would throw into the
proposed subway system is clearly uncon-
stitutional They believe the whole aim
Of the Interborough from the start was
to prevent the city from entering into
any contract with the Brooklyn Rapid
Transit Company that would bring the
latter into Manhattan.
3. r. T. Grows Anxious.
Colonel Williams would not say yester-
day what action his company would take
II the city entered into any contract with
the Interborough, but he intimated that
his company would consider IT as a breach
Of faith, to say the least, on the part Of
the city officials If they took away any Of
the lines tentatively promised 10 1t in
July.
1t is learned that the plan the Inter
borough has agreed TO accept would per-
nit the city first to deduct the interest
on its bonds issued to build the present
subway the ! per cent sinking fund on
those bonds and the rental now paid by
the Interborough. After that the Inter
borough would start taking out its S.76
preferential payment. After that the city
would get the interest and sinking fund
on the money ii would put into the new
subways-approxima s55,00O,000.
The division of the 8.76 InterbOrough
preferential. which is equivalent to S1O,
terday as follows:
Five per cent interest on SI25 900 600 So $50 ono
One per cent for sinking fund ....... /, go 900
276 profit on $4,000. 900. ............. 3,4J0 900
Other deductions were as follows:
Charges against interest and sinking
ART EXHIBITIONS AND SALES.