New-York tribune., 1919-01-09
Appraisal of Lines
To Protect City, Is
Demand OF Hervey

Financial loss to the city and fur
ther complications in the transit stu
alton would follow ratification of the
, tentative agreement for municipal
ownership reached by representatives
of the operating companies and Of
Mayor Hylan, in the opinion OF Charles
S. Hervey, Public Service Commits
sioner.
81 am unprepared to discuss the So
called protocol" said Commissioner
Hervey yesterday, "but it is plain to
for the city to assume the bonded in
debtedness of any transit company
without first making thorough ap-
pralsal OF the company's property. 1t
must be remembered that the original
fiotations made by the transit COM
panies in this city were made without
public control Certain reissues of Sc
curities have been subject to the ap-
proval Of the Public Service Commits
sion and have been denied, except in
cases where the proceeds of such bond
sales were to go into tangible better
ments. But in the early days flotations
were made without restriction for the
purposes of acquiring franchises, pay
ing operating expenses or interest on
previous bond issues. Large issues by
the rapid transit companies for extern
sion of lines have been approved by the
ommssion and they represent actual
capital invested, but, after all, such ap-
proved issues make small part of the
total capitalization of the lines.
Boston Case Different
"The city of Boston took over all the
outstanding securities OF the transit
companies when it acquired the control
of the lines in that city, it is true but
the case of Boston IS different from
that of New York. All the securities
taken over by the Boston authorities
had been issued subject only to the ap-
proval of the state commission. and
they represented capital invested, or at
least indicated it as nearly as anything
could
"Much of the capitalization of the
transit companies in this city represents
little or nothing of value to +he citv
The city, then, would be making the
most injudicious move and courting
great financial loss if it should assume
the outstanding indebtedness of the
BY the terms of the "protocol"
drawn up by James L. Quackenbush.
counsel of the Interborough Rapid
Transit Company. following protracted
negotiations with representatives of
the Mayor. the city is TO pay the cost
of service" which includes interest on
all the funded Indebtedness of the vari-
Gus lines.
Travis H. Whitney, acting chairman
of the Public Service Commission. said
the commission would reserve decision
on the practicabiity of the protocol"
until after official action had ibeen
taken on the applications of several
transit companies for an increase in
fare.
eve were kept in the dark about the
protocol throughout the hearings.
none of the evidence disclosing it's ex~
istence or anything about it," he said
desire to keep the commission unin-
formed"
That he had drawn Mayor Hylan's
attention to a plan whereby the transit
lines might be controlled and owned bv
the city under the existing law was
+ stated by Commissioner Hervey.
Heryey Suggests Plan
81 sent a detailed statement of tho
plan to tho Mayor several weeks age. j."
the commissioner said, but apart from
receiving brief acknowled dgment of
ITS receipt, have heard nothing from
him. The only objection to the plan.
so far as can see, is that raised bv tho
companies, which find that the scheme
provides for the reservation of ali
; profits to the public
COMMISSIONER Hcrvey's plan provides
for the valuation of all PROPERTY in
public use by each Of the lines bv tho
Public Service Commission, and, if
such valuation is disputed, for tho
reference of the matter to board of
arbitration to be designated by the
Appellate Division of the sunreme