New-York tribune., 1919-11-24
Report to the Bondholders
Puts Earnings Far Below
Fixed Charges if the
Nickel Fare Is Maintained
Need S5,OOO,OOO Jan. l
Despite Big Passenger In
crease, Wages and Supply
Osts Cannot Be Met

The Interborough Rapid Transit Com
pany will fall short of earning its fixed
charges for the fiscal year ended June
80, 1920, by ss,so0.O0O if the scent
fare is continued to that period and
wages, materials and supplies are main
tanned on the present levels. according
to a report on the company's affairs
just completed by Day & Zimmerman
engineers, for the bondholders and the
notehoders, the latter being repre-
sented by committee headed by ]. P.
Morgan. This will occur in spite of an
increase of 104 430815 more passengers
carried last year over the previous
year.
1t is further stated by the engineers
that on December 81 of this year the
cash position of the 1nterborough will
be such that approximately $5,O00,O00
will have to be provided from some
source other than operating income to
enable the company to meet IFS rentals
and fixed charges payable on January
l next.
The report includes estimates up to
and through the year ending June 80,
1924, all of which are based on the
continuation of the nickel fare and
present costs of materials and supplies
1t is indicated that even with the g.
cent fare in operation, provided unit
operation costs prior to the wage In
crease granted in August had remained
the same through the next five years,
the company could have earned in 1924
its fixed charges, excluding, however,
any return on the $4,000 900 invested
by the city under the so-called Contract
No. 8.
Changed by Wage Increase
"The wage increase of August II,
1919, however, has changed the stua-
tion completely" say the engineers.
This increase adds approximately
S5,0OO,0 900 annually to the operating ex
penses. Through the five-year period
ending June 80. 1924, it is estima ed
that the accumulated deficit rs the re.
suit of the conditions mentioned above,
would amount to about $4,000, 600"
During the year ended, June 80, 1918.
the engineers point out that the com
pany was experiencing the increasing
costs generally prevailing owing to
conditions growing out of the war, but
it was not until the following year
that these increases became serious.
"1n the early part of 1919," the re-
port adds, "a wage increase. separate
from and prior to the 25 per cent in
crease made in August, 1919, was
granted. amounting to approximately
$4,000, 900 annually. The effect of this
increase, together with the increased
costs of materials and supplies, not
withstanding the fact that gross earn
ings for the year ended June 80. 1919
increased S2,700,0 900 over the year 1913
resulted in a decrease in net earnings
after the payment of operating ex-
penses and taxes from $1S,219 900 to
$14,447 900, loss of nearly $4,000 900
also, during this year the interest
and sinking fund on the 5 per cent
bonds and per cent notes chargeable
to income amounted to 1921 5 900, an
increase Of almost S4,5O0.O0O the re-
suit of the opening of the Seventh Ave
nuc and Lexington Avenue subways
and other extensions. The deficit in
this year of $3.Sl0OOO was the direct
result of the foregoing conditions"
Property in Good Condition
The engineers report showed that
the physical property of the Inter
borough system is in good condition
and we'll maintained, in spite of the
difficulties which the management has
encountered through and subsequent
to the wa The operating ratio, it
is stated, Increased from 45.5 per cent
in 1916 to 679 per cent in 1919, equiv
alent to approximately $1O,000,000. OF
this amount S6,00O,000 was accounted
for directly by wage advances and 3d.
100000 by the increased cost of coal
and other supplies.
The report purports to show that if
1916 unit costs had remained in effect
the InteyNo. 1:.sh company would have
passed successfully through the re-
manning period of construction as es-
timated when the contract with the
Gaynor administration was negotiated.
More than 1000 000, 900 passengers
rode on the elevated, subway and
trolley lines of New York City in
the last fiscal year. On the basis
of one fare collected, representing one
passenger carried. 2,079 9l2 GOA were
transported or 104, ,430,S15 more than
in the fiscal year 1918, according to
estimates prepared by the Public Serv-
ice Comm sion from the compilations
of Dr.. A. F. Weber. chief of the com
missions bureau Of statistics and ac-
counts.
Big Gain in Traffic
The almost unprecedented growth in
traffic for 1919 was in spite of the in
fuenza epidemic in the autumn months
October alone of more than l2 ,000, 900
fares and for the period July to No
vepber inclusive, 1918, of 1900 900
fares.
In December, 1918, however, traffic
showed an increase of 8500000 Each
month since there has been greater
increase, as follows:
December, $500, 900; January. 49,
100000; February, 13,200,000; March
15,S00, 900; April, 20,60o,000; May
23,l00, 900; June, 25,600,000; total, l22 ;
100000
The total increase of 104, ,43O,Sl5 was
divided 9S,T5l.6lS to the rapid transit
lines and 5,679,197 to the surface rail
road lines. The percentage of increase
for all lines was 5.29
The largest percentage Of gain was
on the B. r. T. elevated and subway
lines whore a growth of nearly 20 per
cent occurred. The heaviest traffic on
any single system was on the Inter
borough subway lines, where 46l,147.-
0oS more passengers were carried,
which was 1928 per cent more than
in 1918 Traffic on the Interborough
elevated lines showed decrease Of
l27 per cent from 1918. The elevated
lines transported 34S,1SS,600 passen-
gers. Although its gross figures were
far below those of the other great
operating systems. the Hudson and
Manhattan tube traffic showed an APP