The sun., 1919-09-19
=
REPORT OF I.R. 7. is
HIGHER FARE PLEA
Declares With Available Cash
Surplus Gone Receivership
Is Imminent.
CITES INCREASED WAGES
Must Pay $5,072,325 Interest
and Dividends on Janu-
airy First.
CITES INCREASED WAGES

available caSh surplus cannot etavc on
a receivership much longer. 1t was stated
oficially yesterday, unless its rate of
fars Is permitted to be Increased. The
infninence Of receivership for the
company, which operates the subway
md elevated lines In Manhattan and
elsewhere, Is disclosed in the second in
stalment Of its annual report for the
fiscal year ended on June 80. made pub
llo Yesterday. The profit and loss sur
Mus Of June 80 last stood at s1o.t52,0s2,
but the report points out that this sur
pius represents no cash and no other
quick assets.
Provided that there is no increase in
fare TO meet the cost of furnishing
ride on the subway or in the elevated
train, the report makes II clear that
with the recent 20 per cent. increase In
wages the company cannot meet much
longer its operating expenses. Should
Il be able to weather the stress Of oper-
ating costs the company win meet on
January 1 the staggering blow Of $4.-
O22,s25 maturing interest on first and
refunding mortgage per, cent gold
bonds and $1,050.00o dividend on Man
haitian Railway Company capital stock.
which 1t guarantees. The dark outlook
for the company under present condi-
tons is described as follows In the Of
fetal statement issued by the company
yesterday:
at is pointed out that owing to In
creased costs of materials and supplies,
increased wages and other expenses of
operation the company has used up all
its available cash surplus and unless
the rate Of fare is permitted TO be In
creased the company cannot much longer
avoid receivership.
az 20 Inn
year shows a deficit Of S3.s1o.33s.s2.
AS the same item for last year was q
favorable balance of 1852, 1882, the
decrease in net corporate income for the
year is SS,473,0es.S4. The net operating
revenue of $16,973.SS3.43 is a decrease
from last year of $4,410.B0S.S9, for
while the gross operating revenue (s43.-
2o7,20e.S3) increased S2.70s,4S1.65 the
operating expenses (s26,233.326.40) in
creased s7.119,990.04.
THE subway division showed an in
crease in operating revenue of 1913 per
cent. and the elevated division a de-
crease OF "a per cent. The operating
expenses increased 37.25 per cent.
''The profit and loss surplus, exclusive
OF accruals due the company under con-
tract and related certificates. payable
from future earnings, and aggregating
as of June 30. 1919, S1o,457,47Sl2
stands at $1o.152.os2.53. a decrease Of
s5,55s,476,s9. This. however. represents
no cash or other quick assets available
for current use. the quick assets being
more than offset by amounts due for
supplies, taxes, &C.
During the year the company's avail
able quick assets have been exhausted
in meeting the increased costs Of opera
ton and maintenance. These costs will
DO still further increased in the current
fscal year by the recent rs per cent. in
crease IN wages. amounting to approx
mately 100000 a year.
During the year Stone & Webster.
engineers, made an exhaustive investi-
CATION and analysis OF the Interborough
properties. for bondholders' protective
committees The preliminary report,
Just issued. sets out the following table
of their estimates of probable deficits
for the fiscal years 1920 to 1924 inclu-
sive as a result OF continued operation
on cent fare and the present prices
Of materials and supplies, together with
the present wage scale, which was re-
Gently increased 20 per cent. In rates.
sswn 81 ds sssne On pTSS waF' rsDoI
IN iSsi; si.sOs'Soo in isss; ssis.OoO in
1923; $4,000 In 1924 fsurpius).
Estimated additional expenses resuitini
from rs per cent. increase In wages; ~
5000 !. is,S az $4,000 AZ ~ s ~ 4
.Total estimated denelt by years On new
'fi , if'ls ,s sSs'Ss IL s' sissssoS e
ls2a; N.7s6.ooo In 1894.
stone & webster Report.
"The stone & Webster report adds
We estimate, therefore. that the COM
pany will require before July I, 1924
under the new wage scale now in force
in addition 10 about $1,000. 900 needed to
cover additional expenditures for capital
purposes, S35,3s0 900 for deficits. making
total cash requirement for that period
in addition TO earnings of si:.73e.ooc
This amount may be reduced. possibly tc
the extent OF $4,000, 900. by savings from
the construction fund.
SIT is clear that IL the present fares
wages, cost Of materials and supple;
and other operating expenditures con
tlnue in force the company will not b.
able to earn It's fixed charges for many
years after 1924
THE Stone & Webster report alsS
says: We ind the management of thu
marlborough Rapid Transit Company Il
capable and efficient,
The condition of the properties Il
excellent We shall point out, however
that while expenditures for curren
maintenance seem to be adequate the re
serves for depreciation and adolescence
heretofore accumulated. have been ex
hausted and no new reserves for thai
account are being made.
" In order TO enable II adequately u
sever its territory and attain the esti
mated earnings, we believe II will b.
necessary for the company to max
additional expenditures for capital pur
poses. chiefly equipment. amounting 4
approximately $7,400.000 during tn
next hve years the carrying charges oil
which are included In our estimates
rms amount may be reduced. possibly
70 the extent Of about $4,000, 600, b,
savings from the construction fund,
IL Is manifest that cent far,
tals far short of providing the cos
or furnishing a ride.
The cost Of service during the pas
year, including interest and sinking
tund on the money invested In tn
property actually under operation, ex
oeeded the net revenue by over $1,000.
gov the loss being about equally divide,
between your company and the city