The sun. [volume] (New York [N.Y.]) 1833-1916, 1912-01-05
SUBWAY PROFITS A
POINT IN DISPUTE
Another Stumbling Block in
the Conferences With the
Intrborough.
EIGHT YEARS GAIN PUZZLE
Bonds Will Amortize in Forty
one Years. but They Will
Run for Forty-nine.
EIGHT YEARS GAIN PUZZLE

The matters in dispute now being con-
sidered at the conferences between the
city's representatives and those of the
lnterhorough company on the transit
situation have got down to details II
has been agreed by the city confcrces
tlat whatever arrangement is provided
for the extension by the lntcrborough
company of the existing subway. tn"
comrany shall have guarantee from the
oity that it's profits on the present subway
shall be continued
That is only fair" one Of the city's
officials said yesterday, "becausc while
il n true that the company is making IA
large profit from the subway the company
is making that profit from contract IT
has already made with the city"
1t was learned yesterday from Borough
President McAneny of Manhattan that
Chairman Wilcox of the Public Service
Commission has raised two other point.
on which the Tnterhoruugh men have
asked time to consider
IL the Interborough obtains contracts
for the construction and operation ui the
ines it il seeking the lcas" would bc for
forty y-nine years, 40 that the leases of the
old and new lines should cXpir" at the
same time. The cost of these new lines
is estimated at $50 OOO, 900. one-haf of
which is to he borne by the city and one"
half by the company. The proposal il
that after the preferential payment has
been made to the company there shall be
deducted from the net profits an amount
sufficient to pay per cent. interest on
the construction bonds to bc issued 10y
both sides and also to pay per cent. for "A
sinking fund for the redemption of th"
bonds making q per cent. in all.
The company, according to Mr.. Me
Aneny. asks that this deduction should
continue for the entire forty-nine years
lease. but Mr.. McAnenv admitted ycstcr-
day that it was brought ont at the con
ference at the Union League club on
Wednesday night that tia" bonds would
amortiae at the end of forty-onc years.
This. according to the city Confereos,
would mean that if the company was
allowed to deduct its bonded interest and
sinking fund charges for eight wears
after forty-one years there would be 4 loss
of about 500 O,OO1 if the basis should
be that of the old and new investment
of the company, or of about sij. 900 ,ODD
put into the new subways
Chairman Wilcox discovered the ad-
vantage that the lnterborough company
would obtain from the amortization.
He submitted the problem to the ac-
countants OF the commission. who figured
out the excess profit. This phase of the
question was the cause of the adjourn
ment of "Wednesday night : meeting
without result
Another point brought up is that before
| there is any division between the city
and the company of the profits there shall
| he laid aside sufficient sum for the
maintenance of the equipment of the
roads This would mean that out of the
city's profits there would he charges
for the renewal of the equipment not only
of the new roads but Of the present
| subway. The contract with the Inter
| borough company provides that at the
! end of the lease the city snail buy back
| the equipment at its initial cost to the
! company. In round figures this first
outlay would he about S25 .OOO. 900. The
I city conferees say that If the company
| has its way il will insist on the city ~har-
! ing the expense of keeping up the rolling
stock and adding Ia II ont of the city :
oEe-half of the surplus profits and then
EXPECT the city 10 buy back the equip
ment at the original cost al the end of the
| lease term.
! One of the city conferees said ycster-
| day
| "We have been discussing so many
/ details that II will he al least two or thrc"
! weeks more before il can he determined
! whether or not we can reach an under
| standing with the lntcrburough com
| pany.