The New York herald., 1921-09-18
S46,74S,OO0 WATER
IN RT,SAD EXPERT
Transit Commission Will Solve
Problem on Which Hylan
Got Only Data.
FIGURES NOT CONCEDED
Results of Hylan's Inquiry Are
Useful to Show Enormous
Task Of Reorganizers.
FIGURES NOT CONCEDED

HdliHS pIOCcSS WHICH Will idHu tIie
companies on fair valuation basis
for the purpose of fixing a reasonable
rate of fare, was regarded yesterday
by persons familiar with the transit
situation as the most stupendous un-
dertaking ever ventured in connection
with the city's transportation facili-
ties. The negotiation of the dual con-
tracts with the city was pointed TO as
a comparatively minor undertaking.
Just what the process of getting the
companies valuations down to rock
bottom would involve in dollars and
cents. it was impossible to learn yes
terday with accuracy, since the Tran
sit Commission declined to make pub
lie any of Its data on that subject
| pending the publication of its report
next week.
Investigations OF the Transit Commits
sion, the only recent effort to arrive at
the amount Of overcapitalization and
other infiations of transit companies
which has been made was the investi-
cation conducted last year by the
Board of Estimate. The figures then
produced were regarded at the time
as being to the maximum degree un-
favorable to the companies because
of the political animus lying back of
the inquiry, but. at the same time,
were looked upon as sufficiently ap-
proximate to indicate an unsavory
financial condition-a condition which
persons close to the work of the Tran
sit Commission have indicated the
commission believes still to exist.
would Clean Up Entire Mess.
1t was stated to THE New York
HERALD, in fact, that the commission
proposes to clean up the entire "finan-
cial mess which has resulted from
fifty years of wild financial dealings"
A glance at the figures revealed by
the Board of Estimate examination will
suffice 70 show something Of the prob
lem which the Transit Commission pro-
poses to tackle.
serve to show the conditions Of which
the Hylan administration has COM
planned. but which 1t has made no ef-
fort to solve or correct. 1t is expected
that the efforts OF the Transit Commits
sion in the direction of eliminating so
useful a source OF political capital will
not be more pleasing to Mayor Hylan
than the possibility that the commission
may not, as he has charged. inaugurate
an eight cent fare.
1 One OF the biggest or such problems
| with which the commission Will have
to deal will be the surface lines. doz-
ems of which have been discarded as
unprofitable. and the dlsintegration of
which has caused the present additional
4 fare burden by the elimination Of free
transfer points.
/ Testimony was to the effect that in
Brooklyn. where the increased fare
I problem has been most pressing. the
\ amount of "watered' stock In some OF
4 ths companies amounted to as much
as 1000 per cent. That condition was
said to be true of the Brooklyn City
lines. sixteen of which were chopped
off at one stroke by Receiver Lindley
NJ Garrison as being Improbable.
Striking Cases In Brooklyn.
Based on apDraisals OF June 30. 1919.
II was stated that the cost new OF the
Brooklyn City Railroad lines, less de-
probation. woulG be s405.sS7 against
which were outstanding securities
amounting to s10.403. 207. or more than
1000 per cent. In excess OF valuation.
For the Brooklyn. Queens County and
Suburban was SHOWN cost new valua-
ton OF s5,600.000. with outstanding Sc
curlties amounting to s10.475.000. re-
nectins. II was charged, condition Of
100 per cent. water
The Coney Island and Brooklyn Rail-
road Company was said also TO contain
about 100 per cent water, with a valua-
ton Of s4.650,000 and securities amount
ing to s9.266.000.
In the case of the Coney Island and
I Gravesend the water percentage junnped
TO 900. on basis OF s3il.o00 present
valuation and s2?s7oco in outstanding
securities.
The Nassau Eletric lines were evalu-
\ ated Tor the Board OF Estimate at
100000. with outstanding securities Of
! 600; water 37s per cent
The South Brooklyn Railway. which
completes the list of Brooklyn surface
lines, was evaluated at s3,232.ooo. with
outstanding securities amounting to
-, $4,000. or 60 por cent of water.
In other words. according to the
Board Of Estimate figures. the cost
new. less depreciation. OF the Brooklyn
surface car system was approximately
si5,0o0,o0o while outstanding securities
amounted to s91.7i50Oo. condition, IL
was contended. which showed 100 per
cent water.
The foregoing figures. OF course. were
\ protested by the companies as being
unfair, as were nearly all OF the other
figures presented at that inquiry and
as, II Is expected viii be also the fig
ures which the Transit Commission may
present.
AS for the 1nterborough Rapid Transit
Company. II was charged before the
Board of Estimate that the company's
s35, ,0o0, 600 stock and s2i0 900 900 bonds out
standing were pure velvet" or ap-
proximately water, and that question:
able financial dealings which could be
laid at the door of the Interborougn
could be counted by the dozens and in
volved unnumbered millions of dollars.
Helped Cause It's own Flight.
II was charged, for. instance, that tha
Interborough In the seventeen years
prior to 1920 paid 1874 per cent. in
dividends. In a number OF years paying
dividends in excess o. actual earnings.
so that Mt length tt LpIned ~ tnat ,voxy