The New York herald., 1921-09-30
TRANSIT COMMISSION AIMS
TO SAVE AND UNITE LINES

tingent reserve or barometer fund.
and shall be put into effect by the board
OF control. During each year Of opera
tion under the plan the rate OF fare
shall be adequate to provide for cost of
operation and interest and sinking fund
upon the bonds and other current obliga-
tions OF the consolidated system. in
cluding provision for the maintenance 1f
the contingent reserve or barometer
fund
This will operate as follows:
After payment OF operating cApanses
and fixed charges fthe fairness OF the
amounts OF which Is insured by the valu-
alton OF the properties by the transit
commission and the control over exncn-
ditures by the board of controD, The
surplus moneys are to be paid into 4
contingent reserve or barometer fund.
II the available surplus keeps this fund
above q specified maximum, The fare IS
To be automatically lowered: IL the
fund falls below a specified minimum the
fare Is to be automatically increased
until the reserve Is restored.
For example Assume that the normal
amount OF the barometer fund is fixed
at $25, 900. 900. II II rises to $4,000. 900.
the fare Is to be decreased /; II II falls TO
$15, 900, 900, the fare is to be Increased.
In short. the purpose OF this is. after
fixing the base of proper valuation and
determining the operating expenses and
fixed charges to make the decision as
to the rate OF fare as automatic as is
humanity possible. Upon the new basis
the public can be assured that all
money expended is properly expended
for necessary cost, and the rate OF
fare. therefore, will reflect the actual
and necessary cost of the tfansporta-
ton that the public gets, unnfluenced
by any opportunity of private gain
based upon stock ownership.
Transfers on all of the lines OF each
of the three operating systems will be
established at proper points as rapidly
as financial conditions will permit.
where Money VIII Go.
Each operating company will pay its
own operating expense and retain It's
own maintenance and depreciation re-
serve as authorized by the terms Of its
lease, and turn over all surplus funds
to "A Company. "a" Company will
pool the moneys 40 received and dis
tribute same as follows:
(a) 1t shall pay to the holders OF
its securities the fixed return pre-
scribed and to the city the interest
upon Its rapid transit investment.
tb) 1t shall pay into an amortiza-
ton fund the specified rate for the
amortization OF It's bonds. and to
the Comptroller Of the city Of New
York q specified rate for the amorti-
zation Of the corporate stock OF the
city issued for rapid transit con-
struction.
tc) It shall make good any deficit
in the cost OF operation In any pre-
ceding year sustained by any one
OF the three operating companies.
(d) It shall out Of the remaining
surplus maintain the above men
toned contingent reserve or barome-
ter fund.
bonus 60 Go to workers.
In order to provide an incentive for
efficient and economical management,
there shall be set aside each year by the
Board of Control out of the surplus
earnings Of the unified system, after the
payment OF all obligations and the main
tenance OF the barometer fund, sum
to be distributed or used for the joint
benefit Of the operating personnel of the
unified system and the holders of tho
Consolidated Company's bonds. This
fund, within the limits of the available
surplus, shall, for the purpose of COM
putting allotmefts prescribed. equal three
per cent. interest on the purchase money
bonds issued by the Consolidated COM
pany. When the amount go available
has been determined by the Board OF
Control 1t shall be allocated, one-half
for the benefit OF the operating per-
sonnel as hereinafter Indicated. and one
half for the payment of additional in
terest upon the outstanding purchase
money bonds, but subject to the condi-
tion that with any increase or decrease
of fare above or below the rate OF five
cents. such fund shall be decreased or
Increased. as the case may be, on the
basis OF one per cent interest on the
bonds with each cent of fare variation.
In similar manner out of the remain
ing one-half of the fund referred to,
there shall be allocated under the con-
tingencies mentioned like amount for
the benefit of the operating personnel OF
the unified system, which allocated sum
shall be expended under the direction of
the Board Of Control for the collective
benefit OF the operating personnel.
If, however, the Board of Control so
determines, the said sum may be ex-
pended under the direction of the Board
OF Control to provide benefits. such as
insurance and pensions. for the operating
personnel and to reward employees who
In various groups have. during tho pre-
ceding year, rendered conspicuously eff
Client service.
There will be included In the contracts
for the transfer of the several lines to
the Consolidated Company provision for
obligations to contract and tart creditors
and to holders OF receivers certificates
OF Indebtedness, employing for this pur-
pose so far as can be agreed upon. the
bonds and short term securities OF the
Consolidated Company, due allowance
therefor being made in the pricea which
the respective properties are TO be- taken
over.
Term of Leases and Amortiznti
The term Of the leases shall be for so
long as Is necessary to aniortize the
valuation as fixed by the Transit Com
mission.
All leases to be subject TO extinguish-
n,ent or recapture by the oity at the end
OF ten years upon payment OF the then
unamortizcd part of the valuation of the
leased properties.
AS the amortization funds will be
managed by the Board of Control, on
which the City will be adequately rep
resented. their proper and conservative
management In the City's interest Will
be- assured. In order, however, to meet
the objections 10 the past management
OF sinking funds. which have generally
been managed through buying securities
for the fund and through the compound
Ing OF interest, providing an amount that
Mt the end of given period will be equal
to the par value OF the securities out
standing. which method keeps large
debt outstanding and offers a constant