New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-04-14
Measures, Offered After
Special Message, Pro-
vide Valuation Be Based
on &C., or Contract Fare
Ban on Inclusion
OF Watered Stock
Wants Earnings To Be on
Lines Replacement Cost
at Pre- : War Expense
From, q Staff correanoudent


ALBANY, April 13.-Governor Miller
to-day sent a special message to the
Legislature urging the enactment OF
amendments to the new public utilities
law to prevent watered stock of the
transit lines from being considered by
the transit commission in appraising
the physical value of the property.
The Governor also recommended that
where traction line has a five-cent
fare agreement with the city and the
earnings Of the road are limited by this
acceptance the Transit Commission
shall also take this fact into considera-
tiOn.
The recommendations Of the Cover
nor, which mean that the physical val
uatlon of the roads shall be deter
mined on basis which shall in no in
stance exceed what 1t would cost to re-
place the property at normal or pre-
war prices, less depreciation, were
later embodied in bill introduced in
both houses by Senator John Knight
and Assemblyman Simon L. Adler.
After conference to-day between
Major General John F. O'Ryan. who
commanded the 9th Division, the re-
port gained currency here that General
O'Ryan had been offered place on the
Transit Commission. Otto T. Barnard,
one-time candidate for Mayor of New
York City on the Fusion ticket against
the late Mayor Gaynor, also was men
toned as possible appointee.
Silent as to Appointees
Governor Miller declined to discuss
the reports or any of the others that
preceded them, saying:
y have not made any announcements
anywhere. But you cannot keep people
from guessing. ! shall send in the
names to the Senate, possibly to-mor-
row."
The Governors message follows:
"The ordinary standards of physical
valuation, either original or reproduc-
ton cost less depreciation, do NOT
meet the emergency with which we
have to deal, and physical valuations
according to any standard that could
be prescribed will in most cases under
existing conditions be grossly unfair
to the public.
ut is claimed that many surface
lines in New York City cannot be
operated at q profit at any reasonable
or practicable fare and it will doubt
less be necessary to discard some lines
and to operate others even at a loss to
provide the public the necessary serv-
ice. Amy plan or any rate based on
the physical valuation of such lines
would manifestly be unjust to the
public.
Opposes Gratuities to Lines
Moreover, the rate of fare fixed by
franchise or contract is proper if
not an essential element to he taken
into account in the valuation of the
property affected Companies which
have agreed TO operate at five cent
fare or have accepted franchises with
conditions annexed imposing a five
cent fare and the investors in the Sc
curities of such companies have no
just claim to valuation Of their
properties without regard to the
average earnings which they may
reasonably be expected to make in the
future at such fare under the con-
ditions which are likely to obtain.
Indeed, the true rule of valuation of
any property for business purposes is
the capitalized value of it's prospective
earnings under normal conditions.
Where such earnings in the case of a
public utility are limited by contract
or franchise they should be compute d
and the property affected by them
valued according to such limitation.
Any other basis Of valuation Of the
traction lines in the City of New York
might result in enormous gratuities to
the companies at the public expense.
Public vitality Affected
eve are dealing with a problem
vitally affecting the public welfare. and
for that reason alone the exercise of
it's police power by the state is iusti-
fed. It is not a question of the rights
of the companies, which are fixed by
contract or franchise. The problem is
to determine what is in the ultimate
public interest, how credit can be pro
vided to finance necessary extensions
and TO obtain the additional facilities
required to render adequate public SER
vice. And in the solution of that prob
lem private interests must not be per
mitted to capitalize the public need
at is very difficult to prescribe by
statute a standard or principle OF
valuation that will be fair and not toe
inflexible. l fear that in the absence OF
any other prescribed standard the
CONTINUED on page sIx)