New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-02

The 3. r. T. Scandal


With a sigh OF relief the Brooklyn Rapid
Transit Company throws up the sponge
and takes refuge in the bankruptcy
court The straw was a matter OF
S2,O00,000 interest due on ST, T3o 900
of per cent notes. 1t would have been
possible to find this sum, the manage
ment admits, but what with the immova
biity of the rate Of fare and the rise
of labor and materials and the necessity
of having to raise many millions Of adj
ditiona capital this year to finish the
construction work to which the company
is committed it seemed useless to go
on. SO it WAS resolved on New Years
eve to confess insolvency and leave it to
the court.
There are those who Will say that
this is move to dramatze the case OF
the rapid transit companies for higher
fares. Impetus will be impaired 10 that
suspicion by the statement Of Theodore
J.. Shonts, president of the Interborough
Rapid Transit. who says the system he
represents is in the same dilemma as
the Brooklyn Rapid Transit was, and
may be obliged to put in at the same
port of refuge. There are others who
will ascribe all the present difficulties OF
the traction companies to the sins of
their past-Who will say, for instance,
that the Brooklyn Rapid Transit Com
pany was a holding company formed in
1895 to take over the assets of another
bankrupt holding company, and that 1t
has behind it long and anti-social Wall
Street career
But none of these considerations is
now relevant. The Brooklyn Rapid
Transit Company is bankrupt, not on
account of anything that happened in
the days of Ex-Governor Roswell p
Flower, but in consequence of conditions
current. The load that broke the corpo-
rate spine was assumed under the super
vision of the Public Service Commission
in partnership with the city. in contrast
with the capital liabilities incurred and
assumed under present conditions the
whole of its financial burden is unin1-
portant.
And if, as Mr.. Shonts says, the Inter
y.
IS not statement We should have to
accept or reject on what we personally
think Of Mr.. Shonts. 1t is a question
of fact which can be easily and simply
determined by a committee of account
ants This brings US to the point of the
matter.
The bankruptcy of the Brooklyn Rapid
Transit Company is a failure in four
dimensions. There is, first, the failure
of the company. The only commodity
traction concern has to sell is pas
senger transportation. The price of that
commodity has remained fixed, while the
price Of every other commodity in the
world has been rising wildly in the last
four years. Add to this that the COM
pany was caught at such a time in the
midst Of very large construction OUTLAWS,
undertaken in conjunction With the city.
and that very large Investment in
new property is disastfously unproduc-
tive, and you have no mystery left II, the
thing that has happened.
But there are, then, the three other
failures, namely, one, the failure Of the
Guy administration to help IN the solu-
'ion OF practical problem instead Of
falllng at it in bolshevistic manner:
ssco'ld, the failure of the Public Service
commission 10 recognize the great re-
possibilities of regulation, and, iAiyd.
me failure Of the public to care at all.
20 long as the rate of fare was not
changed-at least, 50 long as it was NOT
changed upward
What is far more insolvent than tho
brooklyn Rapid Transit Companv is
regulation without responsibility for the
Welfare of the thing regulated. Make
the Public Service Commission resnon.
sible for the credit, continuity and gen
eral wellbeing of the public service cor
poration. and this kind Of thing will not
continue to happen, or when by chance
1t does, it will be treated as a scandal
and the Public Service Commission for
having allowed it to happen will be in
Vestigated by the State Legislature
Either we shall learn this theory of
regulation or we shall have public owner
ship by default. And that. we susnect
is what this city's present administration
wantg