The New York herald., 1920-01-23
$5,OOO,O0OI.R.T..
DIVIDEND Barred.
Stockholders Paid from slo,.
100000 '''Surplus" Existing
Concurrently with Deficit"
AID EARNS $7S,So5,972
Total Revenues Since 1904 Are
Elicited-s8, ooo,o 900 Loss Is
Ascribed to the War.

Light Of the correlated companies Of
the Interborough Rapid Transit Com
pany, a pretentious list OF them; the
interlocking financial relations of these
maze Of surprising and apparently para
doxical figures in regard TO the values Of
property, bonds and leases. and the
amount Of dividends and profits OF the
rapid transit companies, marked the
progress OF the second hearing yesterday
in the investigation OF the traction situa-
ton by the Board Of Estimate. 1t was a
hearing replete with long explanations by
counsel for the Interborough and futile
attempts on the part of Mayor Hylan.
the Corporation Counsel, Mr.. Burr, aud
other members Of the Board to- obtain
yes" or mo" answers to their questions.
Finally, Mr.. Burr suggested that it would
be a good idea to adjourn for week In
order to give reasonable opportunity to
our experts and examiners TO delve into
these complicated facts"
Edward F. J. Gaynor, auditor of the In
terborough company, occupied the witness
stand during the long session. He was
ably supported by James L. Quacken-
bush. counsel for the company. The Mayor
frequently rebuked the Interborough law
yer for insisting on making long ex-
plantations in answer to questions. The
Mayor sought by long series Of ques-
tons to obtain an admission from Mr..
Gaynor that the SCI, ooo original stock
Of the Interborough and the $40 ooo, 900 OF
outstanding notes were Just velvet" or
in other words. pure water" The wit
ness would not coneede the Mayors point
Revenue to june 80, 1919, s7s,so5,e7c.
The Mayor and Corporation Counsel
succeeded in bringing out that the sub
way had turned over to the Interborough
Company revenues amounting to SIS, ,0s5. Al
in the sixteen years since 1901 and that
the net corporate revenue TO June 90 1919
on the elevated road system was $13, $50, $50
a total of s75, ,972. This led the Mayor
to say
$50 if the city had operated the subway
themselves, and it cost around s4S, 600 0OC
in the sixteen years time, they would
have more than paid for it. because there
was more than s650o0,0O0 turned over
from the subway to the Interborough
Rapid Transit Company in the sixteen
years. So, you see, municipal ownership
and operation would have brought about
a great profit for the city and loES burden
on the taxpayer"
At another point in the examination Cor
poration Counsel Burr struggled to find
out how the Interborough came to pay
out 81. 90, 900 in dividends In 1919. when
there was a deficit during the year. The
witness and counsel sought to explain
this singular circumstance" as Mr.. Burr
called 1t, through the fact that the COM
pany actually had surplus of between
$40 000. 900 and sl2.0p0o0o. In answer to Mr..
Burr's questions Mr.. Gaynor admitted
that the company had paid twenty Per
cent dividend in 1917 and 1918 and seven
teen and a half per cent dividend in 1919.
Now. do you mean TO say that. in sd-
dtion TO the seventeen and half per
cent for the fiscal year 1919, tho twenty
per cent the year before and the twenty
per cent the year before that. there was
still a surplus undist-ibuted?" asked Mr.
Burr.
~ do" Mr.. Gsynor replied.
"Your company must be a Golconda. q
gold mine" said the Corporation Counsel
Surplus Now Put at s1O,OOo,ooo.
Referring TO the subject OF the surplus
Mr. Burr asked II it was $4,000, %,
today. The witness said il was now be
tween 100000 and Sl2.0o0.O00 Mr.. Burr
asked what had become of the s. 900 OO.
Mr.. Gavnor said II had been lost "due to
the war" He explained that it had been
invested in the New York and Queens
Railroad Company.
Mayor Hylan. who sat for a long time
quietly listening 10 Mr.. Burr's examina-
ton of the marlborough auditor and the
long explanations of Mr.. Quackenbush,
toward the end of the hearing asked
us there any chance for me to have
something TO say now
"Oh. YES, always" replied Mr. Quacken-
bush. ''You are the boss of this show"
Borough President Riegelmann, of
Brooklyn, repeated Mr. pnackenbush'
remark that the Mayor was the boss Of
the show. and the latter proceeded TO take
the witness over n few bumps.
"Nr Gavnor. what Is the capital stool;
.of ,bc Manhattan Elevated Railway Com
pany?" asked tho Mayor
sixty million" replied the witness.
what are the mortgages. both first
and second
about SA,co)coo.'
Vow isn't Il a fact that tho $50 900 900
ca n,tal stock assuming that there was no
vvater IN a.. and the mortgages there. was
,ba cost of constructing the Manhattan
Elevated Railroad?" asked the Mayor
Fail. 20 Get Categorical Answers.
The witness said Il was reasonable 60
assume SO. The Mayor solicited the in
formation that in the last sixteen years
the Intertorough company had paid more
than sos. 600. 900 in interest, dividends and
rentals 10 the Manhattan Elevated Com
pany. The Mayor pointed out that this
money paid to the Manhattan company
and tho money paid 10 the city on the
subway lease "all came out OF the nickels
taken in by The lnterborough Rapid Tran
sit Company Mr.. Gaynor explained that
this large sum represented the revenue on
both The elevated and subway lines. The
Mayor could not get the witness to admit
that the s35 900. 600 Of capital stock Of the
Interborough and the s2i0,0C0. 600 Of out
standing notes we're based practically
on the Interborough leases OF the subway