Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-05-25

~ csnr LUMBER OF speakers Chairman CAnnev
~ councils Finance Conmittee ,,bo 80
s,ueu' suggested that the next bearinv %
q, @ @meu friday, June /. be devoted entirely
=" Hearlng the Director
In building UP his two mai, or,,,.,..
.l' nr' Lewis offered suggestions as 10 how
oiog ig Snou'd be met Regarding the fare
.ause' ne asserted that only temporarv
ioae Oh rare should be inserted in the
nIS' and that the Public Service Comnis-
6viro CIearly given the power over the
"N,ns OF reasonable rates Of fare.
as TO the recapture proyision. no said.
o,,e ne iease should contain recapture
S.ause, The, city In recapturinR its pron
80 '.VuIu pay the company the amount
optSI Dy the company on equipment or
- improvements and any loss sustained
~ IN operating the city's system but the
Guy should not be OBLIGED TO purchase
'le lessee's property"
ATTACKS PRINCIPLE
., Aiter asserting that It is wrong in principle
W attempt In the lease TO fix the minimum
I"le OF rare for the next fifty years. Mr.
Lewis continued;
hve-cent fare today may be a rea-
Sohabte rate Of fare in a few years II NAV
De unreasonable either too high or too low.
40 one can foretell what will be a reason
| abIe rate Of fare thirty, forty or fifty years
rom now. No one can even make an edu-
Gated guess on tho subject The establish
meht ny the Federal Government by our
state government and by the State gov.
ernments Of nearly every other state OF
Public Service Commissions to regulate
from time TO time the rates of fare charged
by public utilities Is a recognition of the
fact that what Is n reasonable rate Of fare
is subject to change with changing condi-
tions.
Under the Public Service Company law
the duty is imposed upon the Public Service
Commission to establish reasonable rates Of
fare. This proposed lease attempts to de-
prive the commission Of that right for the
next fifty years. 4 contract with such
provision would never be ratified by the
commission. They could not ratify it. They
nave no power to deprive themselves OF
power Any attempted ratification by the
commission would, therefore, have no legal
effect
POWER GIVEN COMPANY
AS has been before pointed out. under
the provisions Of the proposed lease the city
or the Public Service Commission has no
power to reduce the rate Of fare, although
the rate established in the lease may long
before the end Of the lease give exorbitant
dividends to the stockholders of the com
pany. The company. however. Is given the
right to impose transfer charges without
the permission Of the city or the Public
Service Commission II the gross revenue Is
not sufficient to pay all prior charges and a
; per cent dividend to the stockholders.
This Is grossly nequitable The funda-
mental thing to grasp however, is not so
much the unfairness of the provision, but
rather that the attempt to determine rates
for L. long series Of years by contract is not
only economically unsound, but also clearly
beyond the legal power Of the city and the
company.
ANY negotiations with tine p. r. T. OF
other company for the operation Of part or
all of the citys system should proceed on
the fundamental principle that, while tenn
porary rates of fare can be inserted in the
contract the Public Service Commission
as representing the police power of the
Commonwealth over the rates of public
service corporations should not and can
not be deprived Of power to establish from
! time to time reasonable rates Of fare"
AS TO RECAPTURE
/ Opening his attack upon the recapturC
clause Mr.. Lewis said
The lease gives the p. r. r. absolute
| control for the next fifty years of the lines
constructed by the city. There is no rea
reCapture clause
True there is what is designated a re
| capture clause; but this clause is drafted
on the assumption that the city should no
| take back its property without at the sam,
| time buying the property of the =. r. 7
| This Is fundamentally wrong The righ
| Of the city to reCapture its own propert,
! should not be saddled with the condition
| that the city take over all the property o
| the lessee. The i. r. T. has monopol!
| of the street railway business In Philadel
| phia. 1t has not the money to provid
! transit facilities needed by the people. Th
| city is willing to pledge its own credit L
| borrow the money necessary to construc
| these facilities If it wishes to hire tn
| p, r. T. to operate the citys high-speet
| lines, II should retain the right to terminate
| the contract and take back its property a
| "a ny nf ,1n TO fha
| pany
CALLS IT 0NSOUND
!The recapture clause as drawn would b
| unsound, therefore even If 1t provided tina
| the city should buy, when 1t desired to re
| capture its own property, the facilities opeT
] ated by the p. II. r., and it would still b
! unsound even II the constituc,~- al provisio
! limiting the borrowing Capaaty of the cit
did not make it impossible fo- the city eve
to have enough borrowing capacity to exer
| else its right of recapture. AS a matter O
J fact, however under the lease as drawn:
"(a) The city. after paying to the p. II. 7
| the amount paid in on the stock Of til
| company, acquires only the right to operat
| the p. II T. system after paying the annus
| fixed charges Of the company that is. In
| terest on Indebtedness and rentals to sub
| sidiary companies In 1916 this interes
| amounted to $2,3OS.779.69. and the rental
TO $685. ,432. .36-S4, 100000 of which wa
| paid on water.
"(b) On recapturing the property tn
| city would have to borrow the money {
pay the p. r. T. the amount paid in on II
stock and also assume or pay all due an
! accruing liabilities of the lessee Thi
means that the city would have to hav
borrowing capacity sufficient to:
| (a(-Pay the =. II. r. an amount
| equal to the amount paid in
| on the stock. less sinking
| fund. under 1907 contract 1928, 770, 90
| (b)-Assumc the bonds, mortgages.
! etc, Of the p r. T. and
underlying companies where
bonds have been guaranteed
by the p. X. T.,.........,... SO, 800, 90
"' citys lines by company -. 24.773 90
Total ...............S...... s43. 90
II use the figures for the year 1926
They would vary slightly from year t
year.
WHAT COMPANY PAYS
THE company pays rentals In addition
| to it's guarantee Of bonds Of subsidiar
h. Of N