The New York herald., 1921-10-13

$25 000, 900 mortgage lien on their prop
critics, release from which would be- 'tli-
most criminal"
The Comptroller charges that the
Transit Commissions assertion that It's
valuation plan will squeeze the water
out OF securities Is contrary to the
fact" and adds: The water Is Que
now. The Transit Conmission's plan
VIII let 1t in again." In substantial rion
he quotes the present market prices cf
transit securities, showing that the
bottom has dropped out of their values.
and declares that "a speculative value
will result from their initiation for
which the public will have to pay"
The commissions valuations, Mr..
Craig AYERS. will be fixed by the secur-
ity holders" since, while the Legisa-
ture attempted to give the Transit Com
mission authority to compel the city OF
New York to comply with its determine
tions, no such attempt was made in the
case of the traction corporations"
1.-THE effect OF this" Mr.. Craig ex-
plains, us that while the valuation will
be proposed by the Transit Commits
sion. it will be fixed by the holders Of
securities well organized in groups and
committees Of skillful hnanciers. For
the sum thus fixed as the real values
guaranteed 5 per cent. bonds secured by
purchase money mortgage and backed
by the citys subway investment are to
be delivered to the holders of traction
securities.
",rhe purchase money mortgage pro-
vision Is @ confession that no confidence
can be placed In private operation, and
that default in the obligation on the
bonds will necessitate the foreclosure Of
the purchase money mortgage and the
return OF the properties to their present
owners"
s'Fraud ON the Public"
Mr.. Craig calls the proposed exemp-
tion from taxation OF the properties now
privately owned by vesting title in the
city. "a plain fraud upon the public" "
because:
'The companies are not to be deprived
of the benefits OF operating the lines by
change of ownership for they are to re-
ceive a new lease or agreement for pri-
vate operation by them for two genera
tions to come. The effect of 1t may be
illustrated a simple transaction. Any
house owner could profitably give the
| title to his property to q stranger, pro-
yided the stranger would give him a
| lease to occupy for his life at nominal
rental. with authority to will 1t as he
| pleases upon his death. All OF the bur-
dens OF ownership, such as the payment
Of taxes and assessments and repairs,
are thus cast upon the new owner, while
| the benefits of use and occupation re-
main with the tenant"
Moreover. the Transit Commission's
plan would not take transit securities
out Of the realm Of speculation, in that
it proposes to give the security holders
l1I pcr cent out OF the accumulated
surpluses in addition to the guaranteed
| per cent Mr.. Craig foresees that the
| inside Board Of Control could deter
mine in advance whether the new bonds
| would receive only the guaranteed per
cent or the increased return. and ne
fears they then would go into the market
and purchase the bonds from uniformed
holders and sell Eat a. handsome profit"
when the prices should advance upon an
fnouncement of the increased return.
Further. they could 50 short" of the
market run UP operating expenses so
that no additional return would be pos
sible, and then purchase at substantial
declines. "A cost plus fare" Mr.. Craig
concludes, sis a device for market
manipulation unsurpassed by any other
used for plundering a confiding public"
Mr.. Craig also views with alarm "a
vista for private graft upon huge
scale" in that there is nothing to pre-
vent the insiders and the operating COM
panies from organizing equipment and
supply companies from which they shall
make all their purchases of fuel, sup
plies and materials of all kinds
The Comptroller attributes to Chair
man McAneny a statement that the
citys debt margin is only about $10,-
100000, because OF which release of the
city's S240, 100000 credit tied UP in SUBJ
ways would be imperative. The Comp
troller disputes the accuracy of that
figure and declares that ''the city's debt
margin OF S137,ooo,o0o Is absolutely
puncture proof"
The Comptroller closes his statement
by assailing critics and uninformed
writer's who are Constantly asserting