The New York herald., 1921-10-14
UNTERMYER PLANS CI7Y'S
PROTECTION IN TRANSIT

that amount at The tima the poHus are
issued for the other subway properties.
Who knows whether the city may not
IN the future want to sell or hypothecate
these bonds without regard 10 its debt
limit?
An Outrage ON the City.
"Does not the city's money, REPRESENT
ing it's construction investment, kpok as
good as the private money that wa s put
in at the same time? True. II now
stands subordinated, which was an gut
rage, but we are now making n<sw
deal in which the commission proposes
to put 10 alongside. And yet the plan
goes only part of the way In carrying
out its own proposals in that respect
AT page 10 Of its report the commits
sion calls attention to. the fact that the
effect of this sliding scale will be 20
relieve the debt limit to the extent OF
the $233, 000, 900 present investment that
will thus be assured its interest and
amortization and so pave tho way for
the necessary future investments for ex-
tensions. all OF which is true.
But at what a sacrifice IL 1t involves
Increasing fares! II 1t does not and II
these charges can be met by i've cent
fare, as the commission expresses the
opinion at page Q OF its report and as
/ believe that they can, this item will
thereby be relieved from the debt Limits.
IT Is difficult to imagine q more unsound
or e-+ravagant form of financing than
this would be. If the commissions
opinion proves to be justified. there will
be no deficits for the city to finance
under the plan suggested by me.
III the commission proves to be
wrong the securing Of the city's new
money by a prior lien bond (Which
renders certain the payment of its in
terest no matter what may temporarily
happen to the interest payments on the
purchase money bonds) will relieve that
$3.50. 600. 900 from the debt limit instead
of relieving the s2S3.0o0.00 of present
Investment. 1t would be In that respect
q case between tweedledum and tweedle-
dee except for the outstanding fact that
the 5 cent fare will have been preserved
without increasing the debt limit beyond
that contemplated by an increased fare
and nothing will have been gained In
the direction Of the debt limit by this.
vicious provision for sliding scale fare.
Il do not object to laying aside and
appropriating, when earned over and
above per cent. interest on the bonds.
an annual sum based on economy and
efficiency Of operation not to exceed
III per cent. of the bond issue, as
means of assuring the most efficient
management. 1t is a wise suggestion.
provided all OF it Is to be actually
distributed among the operating per-
sonnel and that none of II Is to go
to the bondholders as such. I do, how
ever. most strenuously protest against
an additional 1h per annum over their
S per cent. interest going to the bond
holders In any event And that, too,
presumably to the exclusion of the
bonds that the city Is to or should re-
g. hn y11a ic
silent on that point but the plain In
! ference Is that the city's debt Is ex-
cluded from participation In this bonus.
Why? Surely, the $4,000 investors
scattered all over the world can add
nothing by way of efficiency except
through their elected boards of direc-
tors and officers for the encouragement
Of whose efficiency provision Is wisely
and separately made. II these bonuses
can be earned out Of five cent fare.
well and good. But II fares are to
be boosted there should at least be no
bonuses whatever to anybody IT any
conditions.
''I object to the provisions for control
of "A company (the holding company
and of b. &C. and d companies (the
operating companies). Under the plan
the Mayor Is to appoint three and the
security holders three of the seven d.
rectors of "A company. and these six
| directors together to choose the seventh.
| All the directors of the operating COM
panies are to be chosen by their security
holders except that even where, as in
'B' company, the city's money invest
ment will doubtless be greater than that
| Of all the bondholders. 1t Is to have no
voice IN that company except such care
! fully restricted and indirect representa-
ton as II may secure through the hold
ing company.
my contention Is that the city should
have four Of the seven directors. equal
to a clear control Of the holding COM
pany, and that It should at least have
substantial representation on the boards
of the operating companies so as to be
able to protect the city's vast interests
in the regulation OF the action of these
vital organs of the corporate life OF
which the holding company Is the mere
shell and outer semblance. The city Is
given the shell while the security hold
ers get away with the substance
my proposal does not mean munici-
pal operation. To that am opposed. 1t
means private operation with the city's
money but with municipal participation
and cooperation
cit Is q small part OF that to which
the city would be entitled and which II
est. ar d II Is entirely workable.
Tho idea of permitting the old trac-
ton interests, with their long, Shiny trail
of corruption and stock jobblng and
their record OF financial disaster and
inefficient service. to continue to oper-
ate this system and to hand over tn
them. besides. on long term leases the
subways that are 70 be constructed with
new city money without so much as
city representation on the directorates
of the operating companies Is unthink-
able The tnsistence on any such con-
dition will be and should be in and Of
itself sufficient reason to wreck any
plan that the commission may present.
If there Is no other remedy by way Of
protest the aroused force OF public in
dignation will prevent any such dispo-
sition of these properties.
There should h not only a clear ma
jority OF city nominees In the holding