Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-03-29

systems may be operated as a unit, but
financially they must be kept separate,
each system to count as its earnings
whatever cash It receives on It's lines
It may be assumed that the transfers
will balance each other.
sixth. The city may equip as well
as build It's own high-speed lines thus
owning outright its own system COM
plete This provision is not a necessity
IL the company will furnish the equip
ment on fair terms, but II will obviate
any necessity for the company to make
use of the city's guarantee on its
operating results In order to finance the
equipment of the clty's lines. 1t also
makes 1t possible for the city to take
over completely equipped system If
II should decide to recapture its own
system at any time.
Seventh. The company's system of
surface lines shall be financed by the
company and the company must not be
permitted to use the city's credit either
directly or indirectly, but must stand
on its own feet. and stand or fall as
result of its own management ana
acts
Eighth. The city must be left free to
regulate the company's service under
the Public Service Commission
Ninth Change of fare or charge for
transfers to be left to the Public Serv-
ice Commission, but no increase is to
be for the company's benefit until the
city's capital is treated as we'll as the
company's.
Tenth. The contract of 1907 to be
modified as little as necessary to cor
respond with the conditions of this
contract. Payments now due the city
hereunder not to be abated or mod
flied. The company to cancel all claims
on unearned and unpaid dividends
cumulative since 1907, and change date
so that per cent dividends may be
cumulative from date of the contract.
Second. The terms of the contract
snail be fifty years or preferably of in
determinate length, with provisions that
the city may recapture either It's own
system or both systems at any time,
after due notice. on stated terms.
These suggestions aim to prevent the
company from placing on either the
taxes or the fare any burden not due
directly to the city's program and to
prevent the companys using the citys
credit for its private advantage.
Instead of guaranteeing the results
of the company's cooperation and par
ticipation in the city program to an un-
certain extent, as the company's plan
proposes, this plan proposes no guar
antee of any kind to the company. In
stead 1t places a certain definite and
on the company by the city. this burden
representing the company's obligation
to the city in r~turn for its position as
monopoly.
EXPERTS REPORT
The contention of Director Twining tha
the operation Of the proposed system woul'
mean an annual deficit to the city is born
out by the analysis of tho lease made b.
Ford, Bacon & Davis. Based upon thei
own tables, the Ford Bacon & Davis re
port holds that under the company's pro
posal, investment by the city of sS7,3OO,OO
with a five-cent fare and. free transfers will
show after 1921 for the first fifteen year
of complete operation an average deficit o
between s4,o00,OO0 and S5,OO0,OOO per an
mum.
''This large operating deficit" says tn
experts report, 'is caused principally b.
the following:
First. The proposed outlay for trans
portaton facilities Is to be made within
period shorter than that necessary for
proportionate growth Of population an
traffic.
Second. In the early years of opera
tion the new high-speed lines will largel
duplicate the service OF present surfac
lines.
Third. The present revenue from ex
change tickets is abolished.
Under the terms of this proposal an
with a five-cent rate of fare, and assumin
financial results an average between tn
maximum and minimum estimated limits
the city will not begin to receive net in
come to apply to the payment of interes
and sinking fund charges upon city bond
issued for transit development until abou
ten years after the commencement of or
Grafton in 1921 of the transit lines the cit
will receive the full amount of it's interes
and sinking fund charges in about twenty
five years after the commencement of or
GRAFTON in 1921.
AT the end of the fifty-year period c
the contract the indications are that TIL
net deficit, if any, to the city from opera
ton for the entire period would probably b
small in comparison with the value at tina
time of the city-owned rapid transit sys
tenn, which the city would have substar
TALLY paid for through the operation of tn
citys sinking funds"
Ford, Bacon e. Davis make the followin
recommendations for meeting the city
deficit during the early years of operation
"One. An increase in the tax rat
amounting, as a maximum in 1926, to abo,
twenty-five cents per 500 and gradual
disappearing thereafter.
1.-TWO. A charge in 1922 of a six-cer
fare on both high and surface lines. wit
free transfers or an alternate charge
elght-cent Iare on nlgn-Speed lines ar
fve-cent fare on surface lines, with un
versal free transfers.
Another point should not be lost sig
| of. The indications are that at f1ve-ce
| fare the city, for the entire fifty-year leas
would show neither surplus nor deficit
other words. the deficits of early yea
| would be made up by the surpuses towa
| the end of the lease. Consequently
higher than fve-cent fare be charged
early years, lower than a five-cent ia
| could be charged in later years If the lea
permitted.
| THE deficit may be lightened by a nur
ber of other expedients which if made u
| of singly or in combination, might ma,
| rally reduce the amount that will have
be raised by increased taxes or fares, a
likewise shorten the period of deficit Pri
cipal among such expedients are:
| (a) One mill personal property tax,
| surrendered by the State to the city.
] (b) Abnormal increase of assess
n~rts and taxes on real estate dCe to
rapid transit investment.
| (c) Temporary issue of city bonds
to pay deficits in whole or in part
(d) Deferring of construction of GER
| .,in bioh-sneed lines until construcfior