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

tT0Quire the company to give
N or security for faithful perform
4 Of the contract.
l1fht. It eliminates the main sub
my of the company-the Union
16tion Company--as a party to the
ttract and lease
Nine The city is not given the right
x ~ recapture Of its own lines with buy
nc the entire stock of the Philadel-
70 ~ Rapid Transit Company
Ten. The provision that the city
Gu have the right to purchase all
~ capital stock Of the lessee at any
1ho during the term of the contract
~ doubtful avail to the city.
11Ieventh. Satisfactory control of
& 1rvfce is not provided, as all refer
ynces TO control apply either directly or
'endirectly to the high-speed lines or
uresent system only.
Twelfth. The terms regarding the
y title. payments for and financing OF
cost Of equipment are such that at the
4 SEPARATION Of the contract the city will
Y Mutually have paid twice for that part
- the equipment amortized at that
time.
Thirteenth. The proposed method of
Gnancing the equipment might be very
llsadvantageous to the city.
1st fourteenth. The company should not
bo allowed to obtain new capital by
Assessment on the stock of the Union
/ Traction Company on a per cent basis
without the city's approval at the time
such capital Is raised.
Fifteenth. No provision for amorti-
Il nAtion of the new investment by the
'k oompany In surface lines or extensions
has been Incorporated in this draft.
x Definite provision should be made for
" the amortization of new capital invested
\ 1n the company's system.
ff Sixteenth. The clause covering pro-
posed surface extensions is imprac-
\ 9icable, since interpreted literally it
might bar the construction of extern
oions by the company or city.
/, Seventeenth Charges necessary for
X the city's depreciation reserve fund
SHOULD come before the company's 10
\ per cent reduction from net income.
Eighteenth The depreciation re-
serve fund for the lessee's system
: passes to the lessee at the expiration
Of the contract, and the charges to it,
y therefore, should not be left for deter
mination by the Director and company
enly
Nineteenth. Proper consideration is
n not given to the equipment and opera
tion Of the company's lines outside the
city limits.
Twentieth. Any war tax or other un-
y expected form of taxation in the future
would be saddled on the city alone to
the immunity of the company.
Twenty-frst The proposed Nine
teenth street station on the Market
street high-speed lines is inadvisable.
Twenty-second The proposal in
\ fAvor Of the proposed equipment bonds
\ TO be floated by the company would
0ebar the city from placing any lien
On the company's structure.
Twenty-third. Minor defects, such as
wording and phraseology.
THE SUMMARY
The Director. at the beginning of his r
Dort. summarized his findings as follows:
The departments study of the company
Droposal shows it to be wrong in prncipl
unfair and costly to the city. and vel
faulty in detail. Short of complex techn
oalities, the proposal aims not to lease Il
01ty's property to the company but to lea
the company's property to the city at
0xed rental of $1,500,000 a year, the cor
pany remaining in charge Of operation wit
ont proper degree of responsibility
This rental, carrying with it an insu
on&e Of all underlying rentals and oblig
lions of the Philadelphia street railwi
nFntem, protected by the reverson to 4
oompany's treasury of about $500, 900 p
year now paid to the city. is positive
guaranteed by an automatic charge f
1rAnsfers. Thus. for fifty years, the col
pAny would be relieved of all the risks l
1erent in the street railway business I
city would be called on to supply the great
part of the fresh capital needed to keep
With the growth of population; and {
atty would be saddled with the risks of I
business in so far as return to it's own
vostment Is concerned.
a The company, being a monopoly, is u
4er obligation to provide adequate lot
tyanoportation service. Thus 1t faces
the one hand the future demands for &C
ntruction funds under the risks usual
tho business, or, on the other hand, col
petition. In the face of these alternatiy
Il must expect to make concessions, a
this is the cooperation to which the ci
~ entitled
CITY WOULD CONCEDE
ssThere is nothing to prevent the G.
from leasing it's lines to an independe
operator, in which case financial returns
tie city would be greater than the city C
expect to obtain by any arrangement w
The Philadelphia Rapid Transit Compal
The city is aiming, however, to obtain I
koGf possible transportatio service for
'o1ktxens, and as combined operation of hi
hpoed and surface lines is necessary to II
md, the city in its part can afford to ma
Iooncessions.
"The principal concession purported
he made by the. company is that 1t is
oopting fixed rental of 81 10000 per We
whereas in the current fiscal year it's cal
lngs are estimated to be over $780, o
The city should not treat this as a conc
l0ion until 1t has confirmed the compan
GtAtement by accepted standards of serv
and maintenance.
4 'Moreover. caution should be exerci:
IN basing rental on the results of t
year Of unexampled activity in all lines
business. In the proposal the city's int
ests are subordinated to the company's
1erests in every particular. Although
city would be supplying rs per cent of
capital required for the development
tyaordinary protection and reference are ,