The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-02-01
Experts Quoted to Show
Bankruptcy Stares
Roads in Face.
CITY'S CREDIT Is FROZEN
Railway Head Would Cause
City's Investment in Sub
ways to Be Productive.
Municipal rapid transit is stievously

Whatever may have been the cause
or causes of the ailment, whatever
course Of remedial treatment may be
prescribed ultimately. they contend
there can be no harm In giving 10 the
public an Intelligent understanding OF
the perfectly obvious symptoms.
The patients friends argue that he
is suffering from acute malnutrition,
that there 10 an insufficient quota OF
red corpuscles. and that he must sink
into chronic invalidism unless he re-
ceives q generous infusion OF Increased
income or new capital.
His critics insist that his condition
is and for years has been. dropsicai.
I'VE must squeeze out the water be.
fore he can become healthy" they
shout.
without engaging In theoretic con-
troversy. what are the concrete condi-
tons which any Intelligent layman
may detect without the use either OF
clinical thermometer. kaleidoscope or
x-ray photography?
| The whole great B. r. r. system. a.
everybody knows, IL bankrupt ana In
the hands OF a receiver. So Is the New
the major part of Afanhattan's surface
rail transit faSlities. And the Inter-
! borough Rapid Transit Company Is
drifting rapidly toward the same goal
The figures which are herewith APP
pended In support OF that assertion were
furnished yesterday to TIE NEW YORK
HERALD by Frank Hedley. pres'dcnt and
general manager OF the Irtcrborough.
and J. l.. Quackenbush, it's general coun-
l.
fled to the Public Service Commission
| OF the State a. accurate.
His Dencit IN Preferenttals.
The Interborough'a fiscal year ends on
June 80. On that date OF 1890 the audit
sheets showed that the company. m
| Guiding both the Subway division and
the Manhattan division, the latter being
! the old Manhattan elevated railroad syn
tenn had Jointly failed by the sum OF
S14.l07,Bs2 TO earn It's company and city
prefercntials. OF that deficit the Sub
way vision was charged with 1851
ss2, and the Manhattan division Of the
system with $s.5zs.Se0.
A survey for the six months that
have interviewed since the Ming OF the
1920 report---namely. from June 30. 1920.
| down to December 81. 1s30--shows that
| in THE respect there has been no I'M
provement In conditions. The amount
by which the Interboroush during that
six months period has failed TO earn
and meet its prcferentiais Is &s.630.Sss.
! should the same ratio be maintained for
the current six months period down 70
! next Juno. therefore. the shortage, VIII
have mounted to more than $4,000. 600.
! Taking tho month OF December. 1920.
alone. the most recent available figures
suggest that the disproportion between
! Interborough income and outgo 10 becom-
! ing more accentunted. The audit sheet
| for that month shows. as compared with
| the corresponding period OF the pre-
vious year, a decrease in net operating
revenue amounting to sss.0ss.37. Here
| is the explanation Though the month
showed an increase OF s,750.s13 In the
number OF passengers carried as com.
pared with December. 1919. and an In
| crease In gross operating revenue
amounting to S3li.8o3ss. the system
operating expenses for the same month
! OF 1920 had increased by s579.s03.35.
thus cutting down the, net operating
revenue to a ngure 3ss.oss.a7 less than
that for December. 1913.
In DefsuIt Of Taxes el,0BO 900.
At the present time tho Intcrborough.
7 -
ing enough to meet Its operating costs,
maintenance and taxes. to say nothing
of amortization. interest on Its out
standing s35,0o0.o0o OF capital stock.
sinking fund and city preferential re-
nuircmcnts On November Is last. Mr..
! Hedley admits the company was In de-
/ fault for taxes In the sum Of sf.050.o0
Taking the Manhattan division alone
as a separate entity. It appears that the
elevated system In falling short by about
$4,000. 900 annually OF receipts sufficient
TO enable II to meet Its operating ex-
penses. maintenante. interest. taxes, &C.
The New York Railways system. now
In reccivership. according to a recent
statement by It's accounting department
to Job Hedges. receiver. II running be-
hind. In dcfaulted interest upon its bonds
and other charges. at a rate Of more
than 100000 year Its accrued la
bility for taxes. paving and tax penalties
on December 81 last Amounted 10
s3.22s.00i.i5. The surface roads. accord
ing n Mr.. Hedley. are now taking IN Just
about sufficient receipts 10 meet actual
operating costs and current taxes and to
provide an imperfect maintenance
In his annual report OF the INTERIOR
year ending June 80 last Mr.. Hcdley
said
The operations Of the last nsrai year
Demonstrate that even the subway e.
sclf. with Az Of tie congestion. cannot
ca Ave cent fare earn the interest and
sinking fund on the bonds and notes
Issued for It's construction and equip
nicnt. while the net corporate income
during the last yrar was s2.s3n. g53T6
In excess % fxed charges. " would have
70 be moro than double this amount 10
nay interest ana sinking nird on other
money. invested, including approximate
~ 500 900 200 by the city. The iatter's
total debt for new subways amounts n
between s20o.0oo.ooo and 1850, 900. 900
and II constantly increasing NJ
interest n being received on this vast
sum. although n could easily be earned
and taxes be lessencd by between si2..
200, 600 and $4,000. 900 per nnnum by
advancing the rate of fare Sufficiently TO
cover the actual cost ~ service. There
II 70 warrant for putting THE added
burden on the taxpayer andsthere In M
Justification for assuming that the fare.
payer Is unwilling to pay the actual cost
OF ride.