New-York tribune., 1918-10-28
Railways Must Go
Into Bankruptcy,
Shonts Declares
Receivership Is One Solu-
ton for Traction Com
panies, President Asserts

If the original manuscript of Theo-
dore P. Shonts's annual report to the
stockholders of the New York Railways
| Company is not tear-stalned docu-
ment then it must decorate the archives
! of the surface lines as an unim-
peachable testimonial of the wonderful
self-control of President Shonts. He
/ tells why this is fact in the report,
copies of which were distributed for
publication in to-day's newspapers.
Mr.. Shonts declares plainly that a
receivershp is inevitable unless the
city transportation lines are given per-
mission to extract something more than
a cent fare from strap hangers.
Materials, Mr.. Shonts says, have ad-
vanced in price until they exceed by
from 100 to 800 per cent the pre-war
prices. Increased pay and bonuses to
employees represent an annual outlay
cf S80O,0O0. This sum, with further in
creases made effective on June 80, 1918,
means, con the basis of complement
Of employees necessary to give adequate
service" as Mr.. Shonts phrases it, an
increase in the annual payroll of
So 400 900.
Experienced Employees Leave
Experienced employees are being lost
continually to the draft and the lure
of high wages in various war indus
tries. Moreover, travel is decreasing on
the streetcar lines. But Mr.. Shonts
doesn't believe people have become so
discouraged with his service that they
are walking. He says the decrease is
due to the discontinuance of building
and other active trades in the city and
the shifting of the population so en-
ployed to war industrial centres.
The result, says Mr.. Shonts, is that
during the year ended June 80. 1918,
the companys income was $153,634
less than the sum required to pay it's
operating expenses, rentals and inter-
est on its per cent first mortgage
bonds.
In other words, it lacked by that
amount sufficient to pay the interest
on its first real estate and refunding
per cent bonds and paid no interest
whatever on its $30,609, ,487 per cent
adjustment bonds. Neither did the
stock. which under the reorganization
was reduced from $52.000,0O0 to ST.
$4,000, receive anything. The COM
pany has no surplus to draw upon to
make good these losses In fact, it had
a deficit on June 80, 1918, of $1,355 $3.50
Bankruptcy Is in Sight
"The result is inevitable Reserves
have been depleted and available funds
from all other sources are being used
up in an endeavor to maintain the ser
vice until an increased fare can be had
Unless this is speedily forthcoming a
receiversh1p cannot be avoided, with its
attendant losses and probable disrup-
tion of service, as under a receivership
large portion of the service now rem.
dered by the company would be dis
continued.
The report also explains that during
the year the engineering firm of Ford
Bacon e. Davis made an independent
valuation of the company's property
which shows the reproduction cost OF
the physical property of the company
based on normal average prices, less
depreciation, to be approximatelv
$7O00o,000. Mr.. Shonts appends this
statement:
"A fair return on this amount wou)d
enable the company to continue and to
improve its service, pay interest on its
ponds and small dividend on its