New-York tribune., 1918-07-15
Bankruptcy Near,
Says Shonts, as He
Asks Fare Raise
Head of New York Rail.
ways Declares Relief
Must Come at Once

Theodore P. Shonts made public yes-
terday copy of letter he had sent
to the New York Chamber of Com
merce, informing that body that the
New York Railways Company had pc
tltioned the Board of Estimate to per
nit the Public Service Commission to
authorize streetcar fare increase as
war emergency measure, and sug-
gesting that the chamber, in concert
with other public, civic and commercial
organizations, appoint a committee to
consider the matter.
The fare increase is sought only to
meet an acute emergency, the letter
states, and should the Board of Esti-
mate grant the petition, Mr. Shonts as
scrts that the city would not thereby
lose or abrogate any cf it's rights under
the provisions of the various railway
franchises. The letter reads in part:
"The emergency confronting this
company is extreme. 1t threatens carly
bankruptcy. 1t is matter of the deep
est concern to every civic and business
body and to every business man and
resident of the City of New York. We
believe that when the public knows the
Can't Pay Interest
"Here are two important facts:
81. We have been able to pay no
interest on our second mortgage since
June 80, 1916.
"2. We arc not at the present time
earning even the interest on our first
mortgage.
"Not only are we not earning the
n q cf ~ h,,%
January i, 1918, we had an actual
deficit Of s1,144,731. But that is not
the most ominous fact The trend is
downward. By May 81 that deficit had
been increased $303.632.
"The basic principle around which
the Public Service Commissions law of
New York State is written is that the
public utility is entitled to "a fair re-
turn upon the fair value of the prop
erty used in the public service. For
more than fifty years the New York
State law said that such a return
should be not less than 10 per cent
"But the stockholders of this COM
pany have never had any dividends
whatsoever.
"As to capital. this company arose
from the ruins Of the Metropolitan and
the New York City Railways companies,
which were in the hands of receivers
There can be no charges made of over
capitalization.
"Thc reorganization reduced the cap
ital SAL 1888, ,894.50, and the Public Ser
vice Commission, specifically basing its
action upon decision by the Court of
Appeals, approved the capitalization as
then fixed The sum total of stock,
bonds and convertible scrip, underlying
bonds or other mortgage indebtedness
is $76,044, ,234.97.
Capitalized Below Value
"The capitalization of the company
is less than the value of its property
To-day, at actual prices, it would
cost $131, 100000 to reproduce the
property now used and useful in the
public service. This not only ex-
franchises (although these alone are
taxed by the state on the value of
$4,000, 10000, but it also excludes any
going value.
AT normal average prices the value
Of the companys property invested in
the public service, exclusive of
franchise and good will value, is at
the lowest estimates $92,00O,000. At
the time Of the reorganization the Pub
lie Service Commission fixed the valua-
ton OF the company's property, for the
issuance of securities, at S85,801,00O.
This does not include franchise or go
ing value, either Of which would have
brought this value up to more than
500, 100000. And more than $3,199,-
600 has since been expended in ad-
ditions and betterments.
"The company has to pay the security
holders of leased lines for rentals
about TO per cent of the par value of
Of
outstanding.
"Owing to wartime increases in our
expenses for labor, taxes, all sorts of
materials and supplies, expenses have
increased so rapidly as to more than
eat up increases in receipts. We are
furnishing street car rides at less than
cost. The New York Railways Com
pany must have additional income.
"Our purpose is to protect the SER
vice of the public of this city and to
that end we ask the cooperation of