New-York tribune., 1920-02-12
/. r. T. Subwavs
Net Big Profit,
Experts Assert
Testify at an Estimate
Board Hearing That Rev
enue With Five-Cent Fare
Exceeds Gain in Expenses

Expert accountants testified yester-
day at the Board of Estimates hearing
on traction conditions that the Inter
borough Rapid Transit COMPANY il
operating its subways at good margin
OF profit at the present time, and
would continue to do so through the
next year despite increases in wages
and materials.
mo wonder Hedley doesn't want to
give it up" Mayor Hylan commented.
The city had it's inning at yester-
days hearing. Corporation Counsel
Burr produced expert witnesses who
had examined and analysed the finan-
cial affairs Of the Interborough anc
gave testimony which appeared to dis.
credlt the claim of the company thai
IT would be- forced into bankruptc,
unless an increased fare was secured
Economist Testifies
The final count in the citys score
was made by John Bauer. economist,
cal adviser to the Corporation Counsel
in traction matters. Counsel for the
company conceded thai he was ar
expert.
The substance of Mr.. Bauer's testi-
mony was that the Interborough car
ried on its books as assets and I'M
properly claimed as investments in
subway contracts Nos. 1 and 2, be-
tween $40,000,000 and S5O,ooO,OC0. The
witness analyzed the items at length
which made up this large amount of
alleged illegitimate assets. James L..
Quackenbush, counsel for the Inter-
OF the company, listened during most
of the testimony.
Wood o. Loudoun, Deputy Commits
sloner OF Accounts, was the first of
the city's witnesses. He filed a report
with the Corporation Counsel on the
financial operations Of the Inter
borough from October 1, 1904, to
December 81, 1919. He was questioned
at length in regard to the report by
the Corporation Counsel and members
of the Board of Estimate.
An analysis of the accounts of the
1nterborough for the last fifteen fiscal
years, dating from the inception of the
subway operation, showed that the rev.
enue from the subway division for the
entire period was amply sufficient to
nay for not only operating expenses.
put for all taxes, rentals and security
obligations, and leave for the period
a net corporate income of $65,065,414.
Deficits Explained
The Manhattan division (eleyated
lines) showed like condition up to
and including the fiscal year 1917. For
the year 1913 there was a deficit after
the payment of a guaranteed per cent
dividend on it's capitalization of S6O.-
100000 of $771,710, and for the fiscal
%Lo lie
$4,1O2,711. For the Year 1919 the net
corporate income for the subway divi
sion was but $292,371, decrease from
the previous year of $5,142,O98.
This resulted in deficit in the COM
blned Manhattan and :ubway divisions
net income Of $cc,o10,339. The result
of financial operations for the six
months period ended December 81,
1919, presented a deficit in the opera
ton Of the Manhattan division of $2.-
684, ,489, but the subway, as usual,
produced an income amounting to
1864, ,123, leaving net corporate deficit
pariscn with the last six months of
1918 by $570,765.
Mr.. Loudoun said that he had taken
his figures from the general records of
the company. Mayor Hylan was very
much interested in the report of the
witness.
''Now, then. do understand that the
subway is operating at profit ?" asked
the Mayor.
eyes, sir" the witness replied.
Gwen now?" asked the Mayor.
eyes sir, the net income indicates
that the gross revenue of the company
is increasing, Notwithstanding the ,n-
creased cost Of labor and supplies"
said Mr. T.oudour
"No wonder Hedley doesn't want to
give it up said the Mayor.
James w. Reed, an engineer con-
nected with the Board Of Estimate,
followed Mr.. Loudoun on the witness
stand. He testified that he had made
special study of the subway con-
tracts and was familiar with them NIL.
He analyzed the income and operat-
ing expenses of the Interborough Cor
the month Of December. 1919. and de-
clared that they showed revenue had in
creased faster than expenses, in
spite of the wage increase of August,
1919. The same relative decrease in
the percentage Of cost Of operation to
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