Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-01-17
THE ONLY TRANSIT SOLUTION

lHt ONL1 1RANSll SOLI lio>
VNIIE sins OF traction jobbery in the past
are finding the z. r. r. Company out.
The refusal Of the State Public Service
Commission to approve The proposed lease
Of the Citys high-speed lines to that con-
Germ arises oLt of the scand&lous watering
of the dnderlyn companies. The other
objections concerning the order or pay
ments out e earnings and the powers of
the supervisory board might be overcome.
But the objection to the excessive rentals
paid to the subsdarie. is fundamental
and cannot be met except by tearing the
whole rotten fabric of the street railway
organization to pieces and rebuilding from
the foundation.
This attitude of the commission is not
surprising after the disclosures made by
the r. r. r. itself in it's suit to shift the
burden Of Federal war taxes to the under
lying companies. AS long ago June 13
last. i'll discussing this suit, we pointed
ont that dividends ranging as high as 10
per cent paid in the form Of rentals. would
hardly pass muster before the commission,
and added:
It is the abundant water in these under
living companies which has proved the chief
barrier to a solution of Philadclphia's tran
sit problems. If the Public Service Com
mission has the right TO determine what
is q fair rate Of revenue for the p. r. y,
Company 10 demand of the car riders it
would only be logical TO assume that the
commission has the power TO determine
what is fair profit or dividend 10 pay to
the underlying stockholders the basis
Of actual capital invested instead of hypo-
thetical values set by a gang Of promoters
who fattencd off stock jobbng deals long
/ Years ago. At any rate the idea is alluring
! and might be worth giving Il trial in the
! form of an action or complaint II the pres
"u' attempt to invade the "saHctity' of
| the lease covenants shal! succeed
! Since the =. r. r. demanded as 4 pre-
requisite to the lease that the city con.
! firm all these fixed charges as guaranteed
! 10y the contract Of 1907, and also confirm
, lie waiver OF its rights to take over the
Underlying companies al actual cost under
.ae act Of 1854, it seems impossible TO ar
! range another lease that will not force
| tho water out of the subsidiaries.
/ Ba, IS it possible that the owners Of
| traction stocks Will NOT now see the light
| and approach the subject in a more rea.
! sonaOle mood" Can they persist in a
! course which will not only halt develop.
/ meut Of a modern transi, .ervice in this
/ city and hold it back a generation but may
/ result in their losing the present invest
mentS through fnancia, d Saater to the
operating company? Il is unthnkable that
/ the transit omelet can be unscrambled
and returned to the Old unit system Of
operation and management, yet that is the
{ possibility facing the ,eased companies if
/ the r. r. n snail he forced to keep on
/ paying these gouge rentals. Would it
not be better TO come 10 some compromise
that would meet the approval OF the PUB
/ lie Service Commission and still pay the
! stockholders a fair dividend rental on the
actual cash invested?
! Examination Of the last annual report
. Of the p. r. r. shows that about one
7 quarter Of tho gross passe2 ger earnings
| Of the company goes TO pay these fixed
/ charges. In other words, every time q
/ rider pays nickel for a ride one end q
quarter cents goes into the pockets OF the
! underlying stockholders. whose companies
We're thus described by Ellis Ames Bal.
lard ,5unse, Of the COMPANY IN his brief
to Congress last summer:
The underlying companies have TO rep
resentative boards Of directors The boards
are really paper boards elected by proxies
from year 20 year. II is difficult to get
enough proxies 10 hold an annual meeting
| The companies are really dead companies
The only interest that the stockholders
have Is receiving semianuuaily a distri-
button by way Of dividend Of the guaran-
teed rentals received
There seems 10 he only one solution left
for the problem. The whole corporate or
ganization of the transit pexus must be
reshlped whether the stockholders like
Il or not, 1t is either that or stagnatior
for Philadelphla's transportation growth
and the latter alternative is not to be
| tolerated.