The Detroit times., 1914-06-02


and just how long Il would take the
commission 10 negotiate" the differ.
ence Is problemstical. but Il Is hardly
possible, judging by past experiences
with the ID. U. X. valuation experts,
that II viii be next year or the year
after
In 1908 the city ordered an apprais-
al handsomely bound copies OF which
are still 20 be found In the city hall
The appraisal. however, did not help
the famous Committee OF Fifty, ap-
polluted by Mayor Philip Breitmeyer,
In n solution OF the street car prob
lem The railway commission will
begin all over again, perhaps hoping
to force a solution In another way.
Mr.. Hutchins' letter follows:
The Honorable the Street Railway
Commission, Detroit Mich.
Gentlemen-Referrin 10 your favor
OF May IA, 1 beg 10 say:
In the nrst meeting In August or the
street railway commission. following
the low fare agreement OF Aug. z, 1913.
under which we are now operating, IL
was agreed that the company would as
soon as possible supply the commits
sion with inventories and our engi-
neers' estimates or reproduction vail
ues OF It's properties In Detroit. This
work was al once entered upon
inventories, PRODUCED al great pains
and much expense, and showing re-
production value or SSi.O2S,9es, were
Med with the commission Dec. 10,
1913. These inventories, as was stated
did not for obvious reasons include
materials and supplies on hand, with
value approNlmating a million dol
lars. nor did they include work under
way, such as new section OF the
Highland Park shop, the construction
OF new 10000 IL. T.. generating unit
In h. Itah
igan Central depot extension. and cars
under construction; nor did they In
clude franchise values. which were
stated by Professor Adams In 1909 10
be worth some four and one-half mill
lions OF dollars Since the ming or
these inventories the company has
continued IT'S development and has eN-
tended some hundreds of thousands OF
dollars. IL Is now progressing with
the junction extension. and with
other works, TO cost many hundreds
the engineers for the city would pro-
coed to check these inventories and
investments, applying proper standards
2t appreciation. 10 determine the value
N SHINE given date of the company's
pr0peCties. But we have latterly been
adyr~ed that the commission, without
reScrting 20 the delays OF such techni-
cal and scientific methods, would like
Tor us To name price at which the
company would sell its properties IN.
Detroit
While anxious 10 meet tne wishes OF
the commission in every way possible,
yironment that any figure we might
ind IL possible 10 name would at once
be criticised as being excessive, TO the
embarrass both OF ourselves and
the commission
Some sixteen years ago Governor
Ptngree believed the railway proper
ties IN Detroit as they then existed,
were worth I7,500,OOO and was will
n m Them
Everyone would concede that these
properties, as the city has grown and
mas absorbed many lines and terri
tories that were then outside. are In
their physical aspects tremendously
more valuable now than then, as the
result Of continuous vast additions
Two years later. after the expenditure
Of much additional capital; that is. in
Dec. 1900 the Detroit United Railway
pald ITS capital stock to the amount OF
$l2'5oV,OOO. subject to Sll.000.Q00 OF
bonds then outstanding. as the pur-
chase price or all Of the railways
then existing In Detroit and It's inn
mediate vicinity, which railways had
been some fifty years In creation Aside
from the value OF the property this
stock covered AZ that time. there has
been invested In the conpany's prop
critics IN undistributed earnings by the
stockholders since this stock was Ia
sued 10 insure it's value, an amount
OF money approximating It's full face
Of $1,000. 900
Had the custom usually pursued by
both public and private .compa niles,
been pursued. this stock would have
been inflated 10 cover these eNpendl-
lures. but as matter OF fact, no addi-
The meantime. the stockholders have
been more or less content 10 receive IN
dividends upon their holdings lower
average returns than they could have
gotten from the use OF their money
from the savings banks.
Subsequent 70 the issuance OF Tins
STOCK, that Is m 1871, the company ~
the payment OF some cash ana the
assumption OF bonus amounting 40 49,
SUO,JOO. acquired the lines outside, now
known as the Pontiac. orchard Lake,
FI1nl and Myandette divisions Janu-
airy l, 1913, the company executed
mortgage OF It's properties inside
anu outside the city, under which Donds
TO the amount OF S2o,OUO,QO0 were is
suable-Sl5, $50 600 SO authorized be-
lng held Dy the trustee 10 pay and re-
tire at maturity the Sl5,SSU.O00 Of un-
derlylng ponds above mentioned, that
is 10 say, ylI0OO.00O In the city and
S4,SS0,0OU OUTSIDE.
Since then $4,000 OUU OF these un-
DERIVING bonds an the city have fallen
due and have Leen paid OF, like
amount OF the S26,OOO,0UO being ISSUED
In their stead. The remainder of this
issue Of SIS, 5000, to-wit: S9,l20, 00U,
under the terms OF the mortgage, were
available at the rate of seventy live
cents In bonds for one dollar eNpend-
Ell LOT DttlelmtnlS ana linDTONem entS,
excepting as TO S3,00O.000 which were
set aside under the mortgage and used
TO pay for Developments previously
made. And under the terms of the
mortgage these bonds were all issued
prior 10 1910, at which time the mort
gage became a closed mortgage; and
Since then the company has issued
and sold two million dollars OF it's two
year notes TO partly pay for add
tional betterments and improvements
In Detroit. The conditions are there
fore land you will certainly appre-
ciate the extreme conservatism OF
the companys financial course as out
lined) that the company's bonds are
now outstanding TO the amount OF
$25,Oo0,o0O five millions OF which In
round figures apply I'm effect against
lines outside OF and $50 900 900 In effect
against Its properties In Detroit
Its properties therefore. In the city
OF Detroit are worth upon an invest
ment basis this twenty millions OF
bonds plus at least sl2.50O.00O OF its
capital stock. and plus $4,000. 900 in
notes. and Oh an investment basis are
additionally worth tie amounts other
wise expected by the stockholders in
excess OF rs capital stock. az indi-
Gated above.
I am sure this recital will assist
OF the equities OF our situation. Mark
YOU, We say these properties are OF
such value upon an investment basis.
But perchanCe IL may be said these
values have been dropping out at the
bottom in depreciation and obsoles-
cence faster than the new capital has
been poured in. This is tho rub. None
been applied To the payment OF ex-
cesstye dividends nor has any OF II