New-York tribune., 1919-12-17
Judge Mayer Files Report
Showing marlborough
Deficit of $8,778,OOO
at End of Fiscal Year
Increase Provides
No Fund for CITY
Disintegration of Surface
Lines Declared 1nevi-
table on Present Basis


summary Of the completed report by
Stone & Webster, railroad experts,
on the rapid transit and surface lines
of the lnterborough Consolidated sys-
tenn. The conclusions of the report
are:
The subway and elevated lines of
the system during the fiscal year end
ing june 80, 1920, will fail to earn
their fixed charges by $S,77S,0OO, as
against surplus for 1917 of $685.
$50.
Without an increased fare the
rapid transit lines will earn only a
small part Of the charges upon the
bonds and notes, aggrcgating S1A7,-
ooO,00O, which represent fresh CAPT
tai invested or TO be invested under
Public Service Commission super
vision.
No Surplus for City
Even an Scent fare will not, prior
to 1922, provide any substantial sur
plus over the company preferentials,
and even in 1922 such fare will pro-
vide little more than half Of the city
preferential
Unless there is an immediate in
NANt'.'O iA' .NiSoy tHc luIJHcI UlSlutt-
grafton of the surface system in
Manhattan is inevitable, and the op-
Grafton of many Of the lines will
have to be discontinued because of
their failure to earn operating eX-
penses and taxes.
Nothing less than an Scent fare.
with a charge of 2 cents for trans
fers. will provide sufficient margin
above mere operating expenses and
taxes to permit of the operation of
the surface lines of the system, with
reasonable provision for upkeep.
Even an Scent fare with 2-cent
charge for transfers will not yield a
fair return upon the actual invest
their reproduction value. For that
purpose a higher fare will be ncccs-
sary.
Experts Review Situation
Summarizing the findings the ex-
perts say:
"Neitner the rapid transit lines nor
the surface lines can be permanentlv
maintained and developed by the
operating companies without An assur-
ance OF sufficient earnings to justify
the investment OF the additional CAPT
tai that will from time to time nee
essarily be required to keep up with
the increasing demands Of the traffic
Of the city"
The earnings Of the entire system
for the present fiscal year above oper-
atlng expenses and taxes. according to
the report, VIII be only s10445, 900.
This is said to be on the entire IN
vestment of $500. 0.44S, 1851 Of securitie 5
IN the hands Of the public. which is
owned, the report says. by 2l .442 wom-
EN-, estates and trustees, 1874 savings
banks and charitable institutions and
26.714 other holders, the average hold
ing being S9125.
The net income, the report says. is
about 81 per cent on the outstanding
obligations, and about 81 per cent on
all the outstanding securities Other
than the common stock Of the Inter
borough Consolidated Corporation. the
holding company of both the rapid
transit and surface systems.
Surplus Earned in 1917
The decrease in earnings resulting
from the changes due to the war. the
report says, is shown by the fact that
in 1917 the rapid transit and surtac,
lines together earned. above operating
expenses and taxes. S2A, CPS, which
left surplus of SO, ,72o after paying
all fixed charges.
The report explains that. under Con-
tract No. 9 entered into between the
Interborough and the city in 1913, the
company receives the sum Of S6,335,
600 annually, together with certain
other varying amounts, in advance Of
the city's receiving anything. The city
then receives S.76 per cent on its in
vestments in the subways, and after
this is paid the city and company share
alike in the remaining earnings.
"On the basis Of a tive-cent fare
under the present contract, the subway
lines will fail to earn the company
preferentials BY $5,564000 and the
city preferential by $l3,044,00O," says
the report. "With seven or eight
cent fare the company preferentials
from the subway would be earned, but
no substantial contribution would be
made to the city preferential on q
seven-cent fare, and less than half OF
its preferential would be earned on an
eight-cent fare.
Deficits on Nickel Fare Estimated
Furthermore, at five-cent fare
the deficit in the company preferen-
tials from the operations Of both sub
way and elevated lines would be
$13.945.000. and in the city preferen-
tial, $21, ,425,0 ,000."
The report contains tables of statis-
tics showing that the combined system
will be able to meet it's fixed charges
on an eight-cent fare by 1922, but will
be unable to earn more than half of
the city preferential by that time. The
earnings are brought up by the fact
that the 1nterborough-C Consolidated d
owns $1,011,970 of the stock Of the
New York Transportation Company
(Fifth Avenue Coach Company, which
is highly remunerative.
In 1922, under fve-cent fare, accord
ing to Stone & Webster, the subway
division will suffer deficit of $13,597,-
900, the elevated, $7,990.000 and the
combined rapid transit system, $21 ,5S7, :
900. Under seven-cent fare. the sub
way deficit would be cut down to S..
10000. the elevated to S3,399,o 900 and
the combined system to s10,175,o0o