The New York herald., 1921-09-30

return for the stability the plan would
give to real investment. the Commission
again seeks to cut out whatever has be-
come unstable or artificial in transit
finance. Preferential allowances held
to be fair and necessary when the Dua'
Contracts were negotiated ten years ago
are not fair under the conditions of to-
day. II the subway operators argue
that their preferentials should be con-
tinued, and that a fare should be fixed
sufficient to cover them, they would
claim in effect that they alone are en-
titled to hundred per cent. protection
against the losses and shrinlages of the
War. while the City. the private i'm
vestors and every other party to the
old agreements have been required TO
carry very substantial losses, direct and
indirect.
The elimination OF intercompany
leases will put an end to another form
of abuse in transit finance and avoid
the continuance OF undue favor to any
particular class of security holders. I'M
der the plan ell such leases would be dis
continued and the lines OF lessor COM
panies merged with the unified system
upon the same terms as to the recogni-
tion of actual value and the allotment
Of interest bearing securities that APP
ply to all others.
Com m issfOn'a Plan.
In accordance with the foregoing find
ings the commission submits the follow
ing general outline of it's plan and of the
mechanism through which 1t is to be put
into effect:
The plan provides for tie valuation.
consolidation and municipal ownership
of all transportation facilities deemed by
the Transit Commission to be useful and
essential. Such facilities are to be ac-
quired without cost to the city by amor
tizing out of earnings the valuations
fixed by the Transit Commission. All
existing corporations and their fran
chises, interleases and securities arc
gradually to be eliminated or extin-
guished. except such underlying liens
carrying low rate Of interest as tho
commission deems it advisable not to
disturb. Existing securities. with such
exceptions, are to be replaced by an is
sue Of bonds of a consolidated company
representing a fair and honest valuation
of the properties. Payment OF these
bonds with interest. and sinking fund
charge sufficient to retire them within
reasonable period. which will be less
than the term Of the present subway
leases. to be ssecured by purchase
Of fare based on cost. automatically do.
termined by the condition OF contin-
gent reserve or barometer fund.
Valuations according to existing Sc
cur'ty issues and present capitalization
will be disregardcd and the entire flran-
cial structure OF the Consolidated
Company will be based upon new val
uation. which. under the Rapic Transit
legislation of this year, Is rapidly be-
ing completed. BY this means tho IVA
ter" in present financing and capisa,iza-
tion will be eliminated and the new
valuation will represent the real vaues
In the transportation properties.
Municipal Ownership.
In view Of the large Investment OF
the City in and its ownership OF the
existing subway lines. the benefits OF a
unified system can best bc occurred
through tho immediate municipal own
ership OF all transportation facilities
deemed useful and essential n a COM
prehensive system. and their operation.
under effective public control by con-
pany agencies 20 DO created FOR the pu--
pose. If tho City authorities shall Or
pose immediate municipal ownership OF
the transit system. with It's present op-
portunity to reform completely tho ex-
listing situation. .:lo Commissions Ia pro-
pared to consider The alternative course
OF vcsting title 70 all properties no,
now owned by tho City, including the
Company, with provision for deferred