New-York tribune., 1920-01-23
Gross Income of Subway
and Elevated Lines for
Period 1903 to 1919
Is Put at Sl42,713.O92
''Cold Mine,'' Says Burr
Witness Admits Dividends
We're Paid Despite Def
cit; Clashes With Mayor

vestigation conducted by the Board of
Estimate that the Interborough had a
surplus at present of more than S1O.-
100000.
James l.. Quackenbush, counsel for
the lnterborough, told newspaper men
after the hearing that the amount was
not IN cash. Corporation Counsel vii
liam p. Burr said during the session
that a large part of the sum consisted
or money advanced to lines on the
verge of insolvency, and that its re-
turn was problematcal.
Mayor Hylan, who presided at the IN
curry, charged that the $35 1000 900 of
lnterborough stock and the S2l 900 ,0OC
OF bonds issued are "velvet.r or water
as the company had received in income
more than enough to pay for all con-
structlon and operation costs.
Gross Income Put at S142,713,092
Mr Gaynor, who was on the stand,
admitted that the net corporate income
OF the company during its history from
1903 to 1919 was SIS, ,895,973. consisting
OF 5.065, Ala from the subway and
Sl3,s30,559 from the elevated division.
With the $66,O00,0 900 paid to the Man
haitian Elevated Railway Company for
ITS lease the gross income Of the com
bined system, il was shown. amounted
to Sl42, 713 ,O92.
Mr.. Quackcnbush declared that. al
though the city had valued the subway
properties at $4S,0000 600 in 1918, the
investment was really 100000. TAX
ing the lesser figures, Mayor Hylan
said:
IF the city had operated the sub
way itself and it cost around $48, ,0OO,-
600. in the sixteen years time. that
would have more than paid for it, be
cause there was more than S65,000, 900
turned over from the subway to the
Interborough Rapid Transit Company
in the period. So, you see, municipal
ownership and operation would have
brought about q great profit for the
city and less burden on the taxpayer"
Mayor Hylan first questioned Gaynor
about the Manhattan Elevated leases,
which oblgate the lnterborough to pay
per cent on $6Q000,0OO of stock The
auditor said this rental aggregated
$65 100000, but that other rentals had
brought the Interborough's disburse-
ments to the Manhattan up to S95.00O,-
900.
The Mayor brought out that although
the lnterborough paid interest charges
on bonds and mortgages of a half dozen
subsidiaries, and even dividends in
some cases. all out Of the income Of
the subway and elevated lines, it re-
celved only 100000 from all these sub
salaries combined in the last year.
Gaynor refused repeatedly to answer
directly the question put to him by
Mayor Hylan and Corporation Counsel
Burr, who wanted to know whether the
S245,O0O,Ooo of Interborough stock and
bonds outstanding aye not based en-
tirely on the leases of the subway and
elevated lines. Finally, the Mayor said:
The cost OF operation and the re
turn on the large volume of stock Of
the Manhattan Elevated Railway and
the bonds of the Manhattan, and the
cost Of construction Of the subway
that is all paid?"
at is paid for yes. sir" replied the
witness.
Mayor Insists IL Is "Water"
"Then really this stock, the stock
and bonds of the Interborough Rapid
Transit, is nothing more than water,
isn't that right?" the Mayor persisted.
"Thc bonds Of the company repre-
sent cash and property" said the wit
ness.
Oo0?"
THAT is real cash"
cor 'velvet'-they call it velvet
sometimes.' Hylan retorted.
When the Mayor asked Gaynor, lit
tie later. to admit that the outstanding
bond and stock issue were "velvet." the
witness said "I would be doing my
self and yourself a very gross injus-
tice if admitted it."
Corporation Counsel Burr then ex-
amined the witness on the Inter
borough issue of securities a year ago.
"To float those bonds and securities
at that time, did not your company
represent that it had surplus of SlS,-
900, ,000?' asked Burr.
at did" replied the witness.
"Have you surplus Of $4,000, 600
to-day?"
"No, sir"
"What is your surplus to-day %
about slO,00O,00 or $l2,000,000."
What became Of the other SS,00O,-
O0O'
Lost $8.O0O,O0O in Operation
"Lost it in operation"
'Tsn't it q fact that two-thirds Of
that surplus which you held yourself
out as owning when you were floating
U
represented by advances to subsidiary
companies, chiefly the trolley lines in
the Borough of Queens Burr asked.
Gaynor admitted this and also that
the return of these funds was "con-
tingcnt upon eventualities." He testi-
fed that the Peterborough had invested
in addition, $20,000,000 in these same
companies.
Corporation Counsel Burr got the
witness to admit that although the
leases acquired by the Interborough
had run for some years, and were de-
creasing in value, no sum was set aside
to cover this shrnkage until the sink
ing fund, which was compelled by the
city. was established in 1913.
Gaynor gave figures showing that the
nterborough paid out So 100000 in divi-
dends during the fiscal year of 1919, al
though there was a deficit that year
and other dividends Mt the rate of 20
per cent in 1915 and 1916
"Your company must be Il Golconda, q
gold mine!" Burr exclaimed when these
statistics were read.
Mayor Hylan showed irritation, first
at the apparent retcence and then Mt
the volubility Of the traction officials.
At one point, when Gaynor had repeat
ed "I don't know" to several of Mr..
Hvlan's queries, the Mayor shouted:
"What do you mean, you don't
know?"
After Mr.. Quackcnbush had jumped
to his feet half dozen times with ex-