Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-12-31
Lease Approved
by Common Council
ontlnued from Page One

Continued from Pnre One
is no justification for passing the lease
at this time. The profits of the y Il. I,
Company, he said, are all paper prChts,
and there is no reason why they should
be guaranteed,
William McCloskey, of the sixteenth
Ward, asserted that much of the COM
panys present PROFITS are derived from
hauling freight, and that the company
does not have to depend solely upon
passenger traffic for its income
In making his motion TO postpone ac-
ton until the lease has been looked over
carefully by the city solicitor. Council
man Conn quoted numerous legal op.r'
ions and decisions to show that the
measure must be referred I" the city
law official before it could b" legally
passed. SO far, he said, NJ. tonnc!IE
has only passed on the form of the pro-
posed contract. and not on the lrgaity
oi any of its provisions.
CoNN's STATEMENT
Conn issued a lengthy statement Eir-
ing his reasons for oppnaing the pas
sage of any lease at hi; time, and at
lacking the revised measure.
THE whole basis of the contract be-
tween the city and the company he
said, ''is that the CarfareS shall he IN
creased from time, to time to any extent
necessary to pay the entire operating
expense. fixed 'charges. including taxes.
etc. of the unified system. and to yield
in addition thereto. 3 per cent return on
the ctys investment and per cent on
the =. Il. r. company's stock.
Before this proposed contract and
lease becomes effective. 1t must be sub
mtted to and approved by the Public
Service Commission Of Pennsylvania.
and the commission having approved
this provision, would thereby appear TO
surrender the power of the State az to
the regulation from time to time of
charges of the T.. u, T. Company.
Under the proposed lease, city Coun-
ellis would not only give up their right
to determine whether and to what eN-
tsnt carfares shall be increased from
time to time. but the Philadelphia Rlpid
Transit Company would he given fulI
authority to increase carfares from
time to time to any extent necessary TO
cover its increasing taxes, operating ex-
pens.s and other charges, and also the
pei cent dividend on its stock.
The serious nature of these provisions
is made apparent by the following facts
The company is experiencing heavy
increases in the costs of operation and
is confronted with the payment of war
taxes. including excess proht taxes on
di, idends Of underlying companies which
exceed per cent on the capital paid IN
by them.
.'rhe excess-proft tax Is levied on the
income Of the underlying companies. nut
owing to special provisions contained IN
many. If not all. of the leases the stock
holders of the underlying companies
claim TO have been relieved from paying
the excess-prOtit tax and maintain that
the Philadelphia Rapid Transit COM
uany has made itself liable to pay the
same.
"lt appears that. after charging street.
car passengers a rate of fare sufficient 10
pay from 10 10 so per cent on the capi-
tai of underlying companies. the Fhla-
dephia Rapid Transit Company. under
the proposed lease. would he authorized
to increase their Carfares for the pur-
pose of paying the eXcess-proht taA on
the excessive dividends which are paid
to the Phi adelpha Rapid Transit Conn
pany's underlying companies
Mayor smith. Transit Director Twin.
ing and william Draper Lewis. the
Mayors special adviser on transit mat
tars. favor the lease. and II is generally
agreed that the Mayor, having the sup
port of the Ware majority in Common
/ III,
fayorably, despite the fact that A. Mer-
rltt Taylor. former Transit Director.
and several business mems organza-
tions have opposed II.
In Select Council there IL some ques-
ton regarding the passage OF the lease.
There. too, the Mayor presumably will
have the support of the Ware Council
men. but since the Ware ma aJority Is so
narrow the lease in order to pass must
be supported by one or more Penross-
/ NcNichol' or independent CUuncilmen.
/ No effort to pass the lease in Select
T Council ia expected to be made before
/ Thursday. and it is said President James
T. Lennon, Of Select Council, will not
then call the measure up until he is
satisfied that the Ware strength is sum-
cient to pass II.
II the lease is adopted the Mayor and
President Mitten, or the Philadelphia
Rapid Transit Company, viii sign 1t. and
II will then go TO the state Public Serv-
ice Commission for its approval