New-York tribune., 1919-08-14
Say Nickel Is Not
Enough to Pay the
Cost of |. r. T. Ride
Engineers, After Investiga-
ton, Report TO Bondhold-
crs Increase Is Essential:
management Is Efficient

a nickel fare is inadequate to pay
the cost of ride on the subway and
elevated lines in this city operated by
the lnterborough Rapid Transit Com
pany, according to a preliminary re-
port made yesterday to the protective
committee representing holders of the
lnterborough Metropolitan collateral
trust Az per cent bonds at the Guar
anty Trust Company Building.
The report was submitted by Stone
& Webster, Of 120 Broadway, who car
RED on the investigation of the lines
IN cooperation with Price. Waterhouse
Co., certified public accountants. A
similar Investigation of the surface
lines of the New York Railways Com
pany is now being made, but will not
be completed for several weeks.
Earnings Inadequate
The earnings Of the subway and cle-
waited lines during the fiscal year just
ended fell short of fixed charges by
$3,8lO,000, and, according to the esti-
mate of Stone G. Webster, earnings
under existing conditions will fall
short OF fixed charges by $10,054,00
during the four years ended June 30,
1928, and there will be required before
July |, 1924, $7,400,O00 with which to
make additional expenditures for capl-
tai purposes, chiefly equipment. thus
making total cash requirement. in
addition to earnings. for the coming
five years of SIT, ,454 900, of which it
ha{
later be obtained from existing con
struction funds.
or the general traction situation the
report to the bondholders' committee
says:
"We find that the management of
Interborough Rapid Transit Company
is able and efficient. The condition of
the properties is excellent They have
been thoroughly maintained and are in
first class operating condition and
there is practically no deferred main
tenance. We should point out how
ever, that while expenditures for cur
rent maintenance seem to be ade-
quate, the reserves for depreciation and
obsolescence heretofore accumulated
have been exhausted, and no reserves
tor that account are being made and
none are provided for in the estimates
of earnings given below"
The investigators remark that of
the 1910 miles Of track covered by
the contract of March 10, 1918, ap-
proNimately ll0.7l miles have been
completed BY the city, equipped by the
company, and put into operation, and
that practically the entire system
should be in operation by the summer
| Of 1920.
Continuing the report says;
1.-The company has set aside for the
purpose Of paying for it's share OF the
expenditures called for by the con-
tracts with the city funds, which after
careful check we find should be am
pie to enable the company to fulfil
its obligations under the contracts.
Additional Capital Needed
'In order to enable it adequately
TO serve its territory and attain the
estimated earnings hereinafter set
forth, We believe it will be necessary
TOR the company to make additional
expenditures for capital purposes,
chiefly equipment. amounting to ap-
proXimately 81 400, 900 during the next
five years. This amount may be re-
duced, possibly to the extent Of about
S3,OO0O00, by savings from the con-
struction fund
1--WE have estimated the earnings.
expenses, etc. of Interborough Rapid
Transit Company for the next five
years on the basis OF present fares.
wages, cost of materials and supplies
and other operating expenditures and
on the assumption that every pro
vision necessary for a continuance of
the present standards Of safety in op-
Grafton will be maintained. but that
the strictest economy will be observed
IN all departments.
Ut is manifest that iive-cent fare
falls far short Of providing the cost of
furnishing ride, and that very
considerable increase in fares is neces-
sary to provide for fixed charges and
the payments to the city and the con-
pany contemplated by the contracts
between them. In our opinion nothing
short OF an eighteen. fare on both
elevated and subway lines will accom-
plish this purpose.
"The financial condition OF this com
pany is not unique. Traction proper
ties throughout the country are faced
by similar conditions, due to the great
increase in the cost of labor and ma
, terlal as the result OF the War.
New York Railways Earnings
"While we have not completed our
examination OF the surface lines Of
New York Railways Company, our OK
animation has progressed far enough
to enable us 20 state that during the
last year the company has been cavn-
ing nothing toward the interest on
its first real estate and refundng bonds
after paying underlying charges, anl
rentals, and. in our Judgment, unless
/ there is substantial increase in tn :
rate of fare, these lines cannot earn
! their fixed charges certainly for
many years TO come. The recent
granting by the Public Service Com
mission Of charge for transfers VIII
not, in our opinion, WELD sufficient