New-York tribune., 1921-12-14
Morgan Expert
Backs Transit
Boards Pla1,
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tccntInusd from page ons)
have n large duty to perform" said
the Morgan partner, "and each OF the
groups helps the other in performing
that duty instead of trying to prove
to the public they are not performing
Self-Sustaining Feature
Touching on the feature of the plan
which has to do with making the citv's
Investment of $500 100000 in the sub
ways self-sustaining, Mr., Shearn
pointed out that there was carried into
tnc bndget. each year $10,000,0OO to
pay interest on this sum.
IF plan could be arranged bv
which tho city could get return i'm
mediately, it would be highlv de-
sirable," said Mr.. Morrow. 1T would
operate to lower the tax rate, which
,s becoming very high in the City of
Mr.. Morrow said ne favored the idea
OF putting the city's money and that
OF OF @ne private investors on parity.
m ne agreed that the consolidation of
all the traction properties @nto one
corporate control would simplify the
financial structure.
me commissions proposal to sim
pity the maze of different grades of
securities by substituting one grade,
Mr.. Morrow said, was a good one. Re
routing of lines in the interest Of
greater fexibility Of service was highly
the belief that it would be necessary
IN dealing with the situation to have
regard for the billion people who use
the surface lines as we'll as those who
use the rapid transit lines.
Needed Security Defined
Mr.. Shsarn inquired of Mr.. Morrow
what he thought would constitute the
consolidated holding company might is
sue. Mr.. Morrow said 1t would be
the city's ability to guarantee pay
ment OF the 5 per cent interest, and
faith on the part of the market in
this ability.
"Understand," he added, ~ am as
suming the contract the plan contem-
plated passes constitutional tests"
The investor is not going to be very
went on. "He is going to find out
what the properties are and what they
are valued at and what chance there
is of their earning enough to take care
of the interest on these bonds after
the earnings are all pooled under a
scent fare. If the surface lines are
in such condition that they will not
will turn to this barometer fund and
make the best estimate he can of what
chance there is of that working and
the flexible fare coming into existence
which will produce per cent on the
bonds he is asked to take"
Financial Correspondence
Mr. Morrow and Mr. Anderson bearing
Mr. Shearn introduced in evidence fur
ther correspondence between J. P.
Morgan & Co. and Lee, Higginson &
Co., another of the security floating
syndicate, and Mr.. Shonts.
GAS bondholders," Mr.. Morrow testi-
fed, eve leaned toward making no dis
tripution except that necessary for
fixed charges until the 'lean' period
had been entered and passed, and
think that is substantially the position
we set forth in our correspondence"
From 1914 forward, Mr.. Morrow said
Morgan & Co. reiterated their views to
officials of the I. r 7.
"On all occasions we counseled pru-
dence and conservatism and never re-
ceded from or changed or position"
Mr.. Morrow testified.
Mr.. Shonts, the witness said. had
argued that he had s10,000,0o0 surplus
that would meet the exigencies of the
lean period.
Mr. Morrow spoke a word in extenua-
tion of the l. R. T. directors.
~ have always felt" he said, "that
they were honestly making up their
judgment with reference to the future
Of the company just as we were. The
fact that we differed was not unnatural,
because we were constantly stressing
the need Of keeping the earnings as far
as possible to make the bonds sure.
sponsibility toward the stockholders.
have no doubt that what Mr.. Belmont
is reported to have said on the witness
stand about the personal losses of the
directors from the collapse that came
Is absolutely true.
Shonts Was Optimistic
"Mr. Shonts was very optimistic
about the future of the property. He
believed the earnings would be great.
We shared this belief, but felt that it
! was better to go through the lean
period before these distributions were
made" :
Mr.. Anderson's testimony was much
along the lines of that of Mr.. Morrow
Referring to the letter of January IL,
1919, introduced at a previous hearing
in which the attention of Mr.. Shonts
was called to the understanding that
the next dividend would not be paid
"unless the fare increase was secured" ="
Mr.. Anderson said he thought this un-
derstanding had preceded the payment
of the dividend Of January 2, 1919. The
letter was in the nature Of reminder
to the l. r. T. that the understanding
had not been lived up to, Mr.. Ander-
son said.
The commission Investigated the
routes of the Eighth Avenue Railroad
Company, through William B. Yere-
ance, general manager and chief en-
gineer of the company, which was
turned back to its owners by the New
York Railways System in August, 1919
Mr.. Yereance testified that the condi-
tion of the routes to-day was much
improved.
Protest by Engineer
Mr.. Ycreance protested against the
petition recently filed with the COM
mission by residents of Central Park
West asking that the company's tracks
be torn up and that the cars be re-
! routed on Columbus Avenue.
wv ouldn't the people walk one block
to get service on the Ninth Avenue
llne" asked Chairman McAneny.
mo, they would take their automo-
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