The sun., 1919-08-29
SAYL.R.T. SCALEOP
PAY MEANS DEFICIT
Engineers Declare Wages Now
in Force Will Cause Loss
Of S35,39O,O00.
CONSIDER s5 P. c. ADVANCE
Stone & Webster Report Lines
Cannot Pay Fixed Charges
Long After 1924.

That the new wage scale in force on the
tines OF the marlborough Rapid Transit
company will mean n deficit of S2b $780,
600 by July /. 1894, and the increased
wage scale will make impossible the
oompany's earning its nxed charges for
many years after that date Is the con-
clusion of Stone & Webster, engineers,
who have been conducting an investiga-
ton Of the company's properties for the
1nterborough- Metropolitan AZ per cent.
collateral trust bondholders' protective
committee That committee, OF which
Grayson NJ. p. Murphy is chairman and
John McHugh, Charles A. Peabody,
Charles s. Sargent, Jr.. James A Still
man and Frederick Strauss are members,
notified yesterday the company's bond
holders OF the great seriousness of the
changed situation In a circular letter
mailed last night.
The investigation carried on by Stone
& Webster, in cooperation with Price,
Warehouse & Co. certified public ac-
countAnts, covered the city owned sub
ways operated by the Interborough and
the elevated lines operated by that COM
pany under It's own franchises and its
lease from the Manhattan Railway Com
many. The first preliminary report.
dated August IL and made public ON
August IS, showed that q deicit would
exist under the old wnge scale UP TO
1874. when for the FIRST time a slight
surplus would be shown. The report on
which the present letter is based takes
into consideration the 20 per cent In
crease granted after the recent strike.
The letter, which Is addressed to the
holders of Electromagnetic Metropolitan
Company collateral trust IA per cent
gold bonds, reads:
TN the circular OF August Is the
committee pointed out that the estimate
OF Stone & Webster as to the probable
deficits Of the marlborough Rapid Tran
Sit Company for 1899 to 1924 inclusive
was based upon the scale of wages now
prevailing in New York city and the
present prices for materials and sup
plies
since that circular was Issued. as
the result OF conditions respecting which
the bondholders have been Informed
through the public press, the company
has granted a 20 per cent increase in
wages to a large proportion of its en-
ployees and has agreed TO submit TO
arbitration various questions of differ
epce between the company and its en-
ployees affecting wages. hours and con-
ditions Of work. &C.
"stone & Webster advise us that the
Is per cent. increase in wages. II con-
tinued. supposing other conditions to
continue as at present will result IN IN
creasing their estimates OF probable def
cts in accordance with the table given
below, and that these estimates are in
substantial accord with the figures OF
the officers Of the company"
The table shows that although under
the old wage scale the deficit would de-
crease progressively yearly. and thus in
1924 a surplus Of ss64,o00 would be
shown. the IS per cent. increase in wages
would show the following annual deficits:
1890. ss.77S,o00; 1921. sS.67s, 900; 1922.
'7.l55.OOo: 1928, s5,ss3.o0O; 1924, s4.-
$4,000.
The letter continues: "Stone & Web
ster estimate, therefore. that the vum-
pany will require before July l, 1924,
under the new wage scale in force in
addition to about s7,400, 900 needed for
capital purposes, SIS, $40, 900 for deficits,
making cash requirement for that period
in addition to earnings S42,7so, 900"
The engineers point out that although
present wages, cost of materials and
supplies and other operating expendi-
lures continue, and the cent fare is in
force, the company will not be able to
earn It's fixed charges for many years
after 1924. They state also that the in
creased wage scale Just granted TO the
employees Of the New York Railways
Company will make II impossible for the
surface lines TO earn their operating ex-
psnses and taxes without a substantial
increase in gross earnings
The committee offers to bondholders
the opportunity to deposit their bonds
without penalty up to September Is,
1919