Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-10-06
CHANGE IN TRANSIT
LEASE Is CERTAIN
Revision of Smith-Mitten
Pact Indicated at Citi-
zens' Hearings
sUBsTANTIAL ALTERATION


hird public hearing on the lease before
Councils Joint Finance and street Rail
ways Committee yesterday brought the ad-
mission from all factions that the lease
IN its present shape is so defective that It
must be altered substantially before Coun.
ellis will give their approval to the docu.
ment.
The fundamental defects in the draft first
pointed out by former Transit Director
A. Merritt Taylor and later emphasized by
ak prominent lawyers. will be corrected
by series Of amendments to be worked out
at conferences between Mr.. Taylor and his
supporters on one side and william Draper
Lewis aud Transit Director Twining on the
ether.
The skeleton framework Of tho Smith
Mitten lease win be used, Of course, as the
basis for the changes. but many defects
have been found and differences Of opinion
eXist upon so many provisions Of the lease
that il Is certain that the revised lease
viii bear little resemblance to the present
document
One point upon which the two factions
are expected to split wide is the determiua-
tion OF how the deficit during the early
years OF operation shall be met. Director
Twining has advocated covering this deficit
by an increase in the fare. The eN-Director
on the other hand favors meeting the deficit
out OF the City Treasury Which OF the
two courses will be followed probably will
be left TO the decision Of Councils COM
mittee
Discussing the two methods before the
committee yesterday. MIR, Taylor said:
During the early years Of operation there
VII necessarily be deficit either to the
city or the ?. r. 7. Company. II tho city,s
interest and sinking fund charges come
FIRST there win be deficit in the p. r. T.
1rs. 11,vidend II the p r. T. dividend comes
deficits, which will ocrur only during the
early years Of operation. must either he
met by an Increase OF car fares. or out of
the citys current revenue.
INCREASE IN FARES PREDICTED
IL the deficit is in the payment Of a
tss ttsess9pable return to the stockholders of
ne in position to Immediately apply to
the Public Service Commission for an in
crease of fares, and the city pledges itself
70 join with the company in such Applca-
ton, in order to enable a dividend of
per cent TO be paid from the inception Of
the lease and, the very arrangements con-
tsined IN the lease would make such i'm
large and immediate increase in street
car fares
on the other hand if return were paid
70 stockholders OF the T. II. r Company
nrst. the deficit in the city's interest and
the city Treasury. and the company would
oe N no position to ask for an increase of
The Smith lease proposes the former plan
with the result that the car riders would
thereunder pay for the hgh-speed lines in
dends to the stockholders Of the p r, r
Company, and be required to submit to a
This plan which the Smith lease would
adopt is not reasonable or fair The high
riders would be owned by the city IT is
rot Just that a selected class of the city
should pay, through excessive carfares for
great public Improvement which belongs
70 every one. The object of installing the
ae peope nes ho is ws sSt N meTey rely to
to develop the city and TO stimulate It's
many activities. One important effect would
ne 70 increase real estate values. especially
IN the outlying sections.
ALL TO SHARE BENEFIT
These advantages would he shared bv
az Inhabitants Of the city. They would GER
ride on The street cars Thc car riiIors I,9
are OF the class Of people least able TO pay
Tor an Improvement Of this kind through
excessive carfares during the early years
OF operation and much of the benefit would
, not accrue TO- them People, Of wealth and
as a rule, persons who habitualy use the
street cars. They have their own means
Of conveyance. or use the train. These are
the very persons. however whose property
would be increased In value by the install
the plan Of tho Smith lease. would be paid
for by the car riders exclusively. Such in
crease in property values would also result
IN increased revenue to the city.
II seems to me grossly unjust to require
2 great city Improvement such this to
from the poc1Sets OF people Of moderate
means during the early wears Of operation
They are compelled to use this method OF
conveyance for themselves and in order that
their children may attend the public
the higher 'grades) located at a distance
from their homes This is especially unfair
~ view Of the fact that the improvement
erty. thus increasing the revenue from tax
alton and beneftnG persons. Of large means.
who contribute little or nothing 10 the rev
enue of the street-car system.
My Judgment Is that the other method
q he
should be assured of a reasonable return
on rs stock. i'm order that it may not he
the new lines Thereafter a great bulk of
the revenue should come to the city BY
ursl Increase in population and use Of the
lines, and will be Increasingly able, as the
and interest charges out of its proportion
OF revenue. Meanwhile the city should be
na and ea2y ocs
therefrom by provision that would enable
II 10 apply to the Public Service Commits
sion for increased rates Of fare, as ] orig
inally suggested.
Every one who has studied the problem
and free transfers should paw the citv's
full interest and sinking fund charges the
companys dividends and yield the city
vast. profit, after returning the citys invest
1t is only during the early years Of
operation that shortage in current net
income IL expected II would be unsound
business policy to start this great business
enterprise, which promises great direct and
indirect returns to the city. on a basis
which will require its customers to paw an
excessive price for service during the early
years OF operation. while the business is
being built up to a self-sustaining and
profitable basis.
CITY CAN MEET DEFICIT
The deficit during the early years can
be met out of the city treasury-in part
from the increased revenue from taxation
resulting from the increased value of prom
erty due to the construction OF the lines
and In part from the subsidy granted the
city by the State I'm aid OF transit develop
ment This provision for such deficit
would give the p. n. r, Company no excuse
for demanding an increase OF fares be-
cause under the terms OF the lease II would
have been receiving fair return on its
capital and the city would not be bound
40 join Ia any such demand.
II would also avoid excessive carfares
during the early years OF operation.
In answer TO the question. whether def
icita IN the revenue necessary to meet in
tereat and sinking fund charges and 6 per
cent dividends. during the early years of
operation Of the unified system, shall be
met out OF taxation, or BY the car riders
through increased fares / am unqualihedly
IN favor OF the former, and against the lat
ter. for the reasons which have given.
believe no Increase In the tax rate would
~. rad