The sun., 1919-07-21
GET TRANSFER DATA,
HEDGES TELLS BURR
Street Car Receiver Says Oh
jections to 2 Cent Charge
Have False Basis.
NO RENTS IN ESTIMATES
Income Of System for Six
Months Under Per Cent. Of
S5O,OOO,OOO Valuation.

Job E. Hedges, receiver for the New
York Railways Company, sene to Cor
poration Counsel William r. Burr yes
terday a letter in which he says that
Mr.. Burrs objection to cent transfers
10 based on a false analysis OF the
street railways situation. He refers TO
Mr.. Burr's recent criticism OF Public
Service Commissioner Nixons decision
in the 2 cent transfer case. Mr.. Burr
had asserted that Mr.. Nixon based his
order upon an incorrect estimate OF OPP
Grating expenses of the New York Rail-
ways Company.
mo rental, small or big. swollen or
otherwise, was counted in figuring the
operating expenses of the system,
writes Mr.. Hedges. ION the contrary.
rentals were excluded to avoid all pos
sbility OF controversial criticism.
'"These appraisals show that at pres
emit prices the actual reproduction cost
of the actual value of the actual prop
erty OF the New York Railways Com
pany system in use for the public was
considerably over $100,O0O,000 Tho
estimate of Ford, Bacon and Davis made
II S12s.e5S,701 even in 1917, when prices
were lower than at present The esti-
mate of Stone and Webster. not yet COM
plete. corroborated, so far as 1t went,
Ford, Bacon and Davis.
These appraisals showed that even at
pre-war prices and making allowance
for every possible depreciation which
critical ingenuity could suggest, the
value of the property was well over
$5o,ooo.ooo. This value was substan-
TALLY corroborated even by Prof Denis,
the expert produced by you.
Fails to Pay on Mortgages.
I'VE further showed that during the
six months ended March 81. 1919, the
system earned in operating income above
operating expenses and taxes only s201,-
2S5. This was wholly exclusive not
only of rents, but the interest on any
OF its mortgages. During those six
months the railroad system not only
completely failed to pay its rentals, but
failed to pay the interest on the small
underlying mortgages on the railroads
actually owned by It by over $4,000
This resulted during a winter free
from snowstorms, which in ordinary
experience would have added an eXpen-
diture OF. say. 100000. Further. 1t was
shown that the system during those Elk
months produced income at the rate Of
less than l per cent on even this ultra
conservative appraisal OF $4,000, 900 OF
property used by the public.
This was without counting any re-
serves Cor necessary contingencies al
lowed by law and which every railroad
man knows should be made and with
out allowing one single cent for fixed
charges like mortgage interest or rentals
on leased lines or depreciation. What
advantage is there in discussing at this
juncture alleged excessive rentals when
the receipts are not meeting operating
expenses without paying any rentals
whatever?
,,tr toI haf tie
sioner Nixon that although the month
OF April. the last month for which the
accounts were available, showed slight
increase in passenger revenues, this
was more than Offset by the falling off
in physical condition of the road, which
had been starved by the absence of suf-
1icient money for repairs, maintenance
and accident reserves. 1t was further
demonstrated, taking the gross passenger
revenues of the system during the last
six years and comparing similar months
in each Of these years with eacl other
that the earnings of the system rs a
whole had remained stationary.
At Limit of Income Growth.
I'm fact the earnings for the year
1918 were larger than for any succeed
ing year, indicating when compared with
other street railroad companies of tie
Manhattan Island have reached a point
Of saturation when no substantia
growth Of income can reasonably be ex
pected from a growth of population ir
that borough.
TT was shown that during these six
years, as you and and every one knows
the cost OF labor and supplies had in
creased by over 100 per cent that dur
ing the year 1918 additions were made
10 the wage scale of the New York rail
ways system which, IL operated nor
mally, would mean an increase of abou
$4,000, 900. With the revenue stationary
the cost of labor and supplies increa SEE
by over 100 per cent, even the city's ex
psrts were compelled to admit that som'
xelief was necessary
Commissioner Nixon responded Il
the logic Of facts and figures, and Il
have done otherwise would, in my judg
1nent, have stulufied his Intelligence ant
his duty to the public.
Gan any fair mind claim that a re
turn OF less than l per cent upon thu
lowest valuation OF the property OF thi
company is sufficient out OF which to pa!
for its reserves for contingencies, IL
mortgage interest, rental of its lease
lines. even II reduced to your valuation
Of them, and of dividends to It's stock
holders, which highest court authorit!
states they are entitled to receive?
You know and l know that none o
these charges are being paid to-day
And In the interest of justice and fair
ness to the public I am compelled I,
make direct issue with you on thu
facts.
without relief, temporarily or finall.
adequate, your position requires that th
roads should continue to be run by tn,
expenditure of capital. You apparently
IN your published articles. deem It s
moral derelIction for a receiver by Fed
eraI appointment of a public utility I,
try to protect that property and tn
capital involved against waste even 4
the extent OF critcising a public servic
commissioner for performing a public
duty In a manner demanded by his in
Ieiligence and justified in his conscience
Whatever views you and may have OF
theories OF Government the Relationship
OF municipalities to public utilities ant
whatever result the city authorities ar
trying to effect while property may b
sweeping on to destruction we cannot II
conscience avoid the facts.
MT. Hedges Makes a Parallel.
Your attitude. as read II. places tn
city in the position of a physician pre-
scribing for a patient who y anxious t
Yacoyer 80 that he may be assured of