New-York tribune., 1921-12-15
Kahn Indorses
Transit Plan as
Benefit to City
81
tcoutlnued from pnas enc,

the detriment Of the, service, which
officials of the company admitted was
inadequate. Mr.. Shearn's requcst was
taken under advisement by the commits
sion.
Mr.. Kahn's comment was to an ap-
preciablc extent in the nature Of sug-
gestion. Taking up his first reserva-
tion. the banker said that the attitude
Of the investor must necessarily re-
main In allegiance until the valuations
ware fixed and It became known just
dollars and cents as available to the
security holder.
The various classes of present hold
ers Of traction securities, Mr.. Kahn
said, would hesitate to come in unless
assured their gilt-edged investment
could be exchanged for it's equivalent
in new securities, "ear-marked" under
the law, guaranteeing them retention
Of title and leaving no possible way to
force them to make REIMBURSEMENT. If
this primary requisite were ccmented
he had no doubt the plan would be a
success.
"In order to carry out this plan it
Will be necessary to do one, Of two
things" said Mr.. Kahn. EITHER make
these new bonds so absolutely good
tion (and do not see how you can
make them good except by actual ex-
perience) or leave the various princi-
pal priorities undisturbed and go on
with your plan. The security holder
will be from Missouri and will want to
be shown"
Mr.. Kahn was in complete accord
with the commissions aim to eliminate
stock speculation in traction, but he did
not agree with Mr.. Shearn that new
bonds be issued to owners of equity.
Equity ought to be represented, he said,
by something which does not mean
accomplished in operating the prop
erty..
There were two methods of providing
new money, Mr.. Kahn said. One was to
use the city's credit, "a means which
the commission probably would be re-
!luctant to take" and the second to
leave to existing security holders the
raising Of working capital.
Provision for New Money
"Inasmuch as the new money under
be quite reasonably sure of yielding
fair return" Mr.. Kahn continued, #
think it is plausible that the existing
security holders should find ways and
means Of raising new money, with the
proviso that they must be assured
that this is the end Of the period of
strife and distress and Of disturbance
and of speculative uncertainty"
The banker was unable to see how
politics could influence the working of
the plan. Public authorities, he said,
should have added responsibility in
joining with the problem. To be afraid
Of this, Mr.. Kahn added, would be to
be afraid Of democratic government.
Mayor Hylan's suggestion to scrap
the sur ace lines received another jolt
in the course of Mr.. Cobb's observa-
tions. Mr.. Shearn asked him if he had
acterization Of the surface lines as
"mere junk"
"In my opinion it is so absurd as to
scarcely require an answer said the
representative Of the New York Rail-
ways security holders. "The surface
lines Of New York are an essential pub
lie service. They cannot be disturbed
without vitality injuring the city"
Mr.. Cobb blamed the Legislature for
the present transit difficulties.
II think the New York Legislature
laws under which transit properties
can be controlled as these have been
I feel very strongly that the Legisla-
ture is responsible for the results when
it provides laws which make it legally
possible to RUN the traction system of
this city through shoestring equities
and holding companies and to capital
ize prospects, profits and contracts"
1t was during the testimony Of
Ronald E. McDougall. general manager
of the New York & Harlem Railroad
Company, that Mr.. Shearn appealed to
the commission to take action to have
the company show cause why it should
not release cars from the barns. Mr..
McDougall admitted that the company
had idle cars that were held in the
barns during rush hours.
Controlling stock in the New York
& Harlem Company, it was brought
cut, was held by the New York Cen.
tral and Hudson River Railroad Com
pany. Mr. McDougall said that When
the lines were turned back by the New
York Railways Company in February,
1920, the cars and roadway were in