Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-03-17

equipment twice. 1t doesn't even pay for
1t once. The company makes no profit on
the equipment. 1t would have made n
profit of l per cent per annum on the cost
OF equipment under the 1914 contract but
mat Is one of the things Mr.. Taylor cook
away from us. Tho exact facts are: The
company must provide the money to buy
this equipment. 1t is permitted to borrow
this money at the best rate of interest pos
sible, and any saving in interest rate goes
into the general fund and the city gets
nine-tenths of It,
Now there will be paid out of the cur.
rent earnings of the property interest on
these bonds until they are paid Off, and an
amortization fund of one per cent a year
which the city has calculated will fully
pay Off the bonds during the life of the
contract, and In addition the equipment
will be kept in good order and condition
out of the earnings of the property, so
that at the end Of the contract the city
VIII get the equipment in first-class shape
wihout the payment of single dollar
The company will make no profit what
ever out of the furnishing the equip
ment and 1t will come to the city at the
end of the term without its having cost
1t anything. And yet the false and ma.
licious statement has been heralded about
this town on the stump, and now in this
circular. that we are making the city pay
for this twice, and the impression has been
created, to quote Mr.. Hancock that there
was q niger in the woodpile--that we had
tried to put something over but had been
caught with the goods.
Third 1t is charged that the company
will get SAL, 100000 for exchange tickets.
This is not correct. While the company
will be relieved for the term of the contract
from the charge of street paving and the
tax on dividends and will postpone for ten
years payments into the sinking fund
(Which 1t must then resume and make up),
,te rnll laf Tod
three considerations: First and directly, for
abolshng exchange tickets, which hive a
gross value at the present time of 100000.
Secondly, SO to strengthen the credit of the
company that 1t would be enabled to bCr-
row the $4,000. 900 which it will have to
borrow to carry out the terms of this con-
tract Thirdly, to so establish the net re-
ceipts of the unified system as to make It
certain that the company would not need
the transfer charge provided for in the fare
section unless there was some great and
unlooked-for calamity. But call it what
you WILL the company does not get it.
The company can get nothing from the
city except its S1,500,000 and one.tenth of
any surplus from joint operation. Any saw
ing in payments all receipts from every
source whatever. go into the common pot,
Of which the city gets nine-tenths after
payment of the five per cent dividend to the
company. Let me illustrate this by ana
lying a years operation under this con-
tract, and for greater certainty we will
| take this fiscal years figures. Our year
| ends June 80. Eight months are behind
US.
AT the present rate of earnings the COM
| pany will show surplus for the year OF
| over s2,7Oo.00O, Now IL this contract had
| been effecti.e last July we would have been
| saved the $735,000 of payment we are
making to the city (paving $500. 900. tax
| on dividend $ll5,O00, sinking fund $780,
| OO0). Adding this saving would make our
| earnings in round figures $3.500.00O But
| II has been estimated that the exchange
| ticket Is of a net value to us OF two-thirds
| of it's gross-say 5000, 900, for il is be-
| lieyed there will be a pickup on business
| from the reduced fare equivalent to the
| difference. This we must deduct, leav-
ing $2,900.000 as our earnings for the cur
| rent year If the contract had been in effect.
What would become Of the money? The
company would get its five per cent divi-
| dend-$1 SOC, 0,00U-leaving S1,400.000 for
| division of which the city would get
$1,260,000, or nearly twice the exchange
| rebate
But Mr. Twining may say I have
neglected to provide interest on equipment.
| / answer: The Frankford line will not be
! operated. according to his own estimates.
until 1919. We do not have to begin to
meet interest on equipment until 1920, and
| by that time our receipts will be much
greater. But assuming that our net
| ceipts in that year are only what they are
! in this It only takes S150,000 to pay the
| interest on the money that 1t will cost to
| equip Frankford, and so recasting these
| figures the city would still get $1,125.00O.
which is 100000 more than the abatement
| on account of exchange tickets, and that
| S390,000 is four per cent interest on S9,750,-
900. approximately the entire cost of the
| FrankfordAine.
Fourth. But Mr. Fluck says our stock
| Is watered and that II we did not have to
| pay dividends on our leased lines there
| would be plenty of money for everybody.
| Fine sentiment. Mutt and jeff would call
| II staling the rent Let us see about the
water First. There Is no water In Rapid
| Transit stock 1t is paid up in full in cash,
| and the stockholders have lost in the fifteen
years since 1902 s20.0Q0,000 in interest.
| That is gone But you say look at Union
| Traction and the big guarantees on
Philadelphia Traction stock and F. and p. As
| which represent the old Electric Traction
| and Peoples Traction stock. Now / will
make a statement of fact. I haven't time
to elaborate It or give you details, but
| II any one wants details come to my office
and / will give them. Starting with the
formation of the Philadelphia Traction Com
| pany in 1888 before which time all the
| lines were separately operated for a six
| cent fare and a nine-cent exchange ticket.
| there has been paid In cash on the stocks
| of the five traction companies Philadelphia.
Electric. Peoples Union and Rapid Transit
| -S74.7T9.005
1.-THE total OF all dividends paid to Janu-
| ary 1. 1917. equals exactly 64679 per cent
| per annum calculated upon all this money
| from the time 1t was paid In. Less than
ga per cent. Not SO very wet, Is 1t? And
| IL included money raised on bonds at low
| rates Of interest, 1t would increase the in
vestment to over 500, 100000 and bring
the interest down TO about per cent.
| Fifth. All the rest of this talk about
| the size of the deficit and whether 1t will
have to be met. as Mr.. Ryan thinks. by a
| seventy -fve-cent increase in tax rate. or, as
Colonel Potter recommends. by a seven-cent
| fare on high-speed lines, can best be treated
| together.
i II have already shown you what you
can expect from the first year in which the
city and the company have to meet interest
| on the cost Of construction and equipment