New-York tribune., 1921-10-25

The subWayS are now earning sub
stantially the interest on the COM
pany's bonds, and the present Difficult
ties of the company are due principally
to the fact that the Manhattan Ele-
vated lines, which were leased by the
Interborough company at a rental Of
7 per cent on the Manhattan company's s
stock, do not earn this rental; but it
is possible that before long operating
costs may be reduced sufficiently to
enable the company to earn all its
charges, including the rental on the
elevated lines.
BondhoIders' Recourse
The great majority of the people of
the city want the fare to be kept at
five cents, and neither the stockholders
nor the bondholders of the Inter
borough company are entitled to an in
crease Of the fare. If the stockholders
are unwilling or unable to furnish
the money necessary to carry the COM
pany through its present difficulties,
in the hope that it's earnings will in
crease, the bondholders will become
entitled to foreclose their lien upon
the lease from the city and to cut
off the improbable lease of the Man
haitian Elevated lines. The bondhold-
ers then will become the owners of
the lease of the subways and probably
will soon be able to earn their full in
terest and sinking fund by operation
of the subways at the five-cent fare,
according to the terms of the lease
If the bondholders of the Inter
borough company should foreclose their
mortgage and reject the present lease
of the Manhattan Elevated lines the
Manhattan company would resume the
operation Of its properties as before
the execution Of the lease Though the
Manhattan company then may legally
be entitled to charge on it's lines "a
fare sufficient to yield a reasonable
return on the cost Of it's property, vet,
as a practical matter, the company
could rot charge more than the five
cent fare in force on the subway lines.
because if it attempted to do so q con-
siderable amount of its traffic would
undoubtedly go to the subway COM
pany. Under tho fve-cent fare the
Manhattan company would earn the
interest on its bonds, but it would not
earn the present per cent dividend
paid to its stockholders by the Inter-
borough company.
The Surface Lines
Few, if any, of the surface lines are
earning the interest on their bonds un-
DER the five-cent fare, and many Of them
are not earning operating expenses. So
long as the fare on the subways and
elevated lines is kept at five cents.
rev, II any, of the surface lines could
profitably charge more than five cents,
even if permitted to do so. Some of
the surface lines are valueless to their
owners under any practicable rate of
fare. Some of them are not needed to
serve the public and should be aban-
doned, but others should be kept in
operation, even though this may be un-
profitable.
In dealing with the transit problem
the following additional facts must be
taken into considerations:
THE city has no power to termi
nate Or to alter the lease of the sub
ways so long as the present INTERIOR
ough company, or its successor, does
not default in its obligations under the
lease-and there is no chance of such
q default. The city would not ACQUIRE
any right to terminate or to alter the
lease because of default of the In
terborough company in the payment
Of it's own debts. In case of default
under the mortgage securing the COM (
pany's bonds the bondholders would
acquire the lease and would operate
the subways for their own profit freed
from the unsecured obligations in
Cured by the Interborough COMPANY
the city has no power to
take over the elevated lines or to i'm
pair the right of the Manhattan COM
'any to operate its own properties.
Future Sub,oays
2-Additional subway lines are ur-
gently needed to meet the growing re-
luirements of the city, but additional
lines cannot be obtained unless the
.ity constructs them nv neans ne oon;