New-York tribune., 1921-04-20
Under Contracts, Inter-
borough Pays SO, ,OOO,-
600 Yearly in Rentals
to Manhattan Company
Could Then Retain
Five-Cent Fare
Would Be Able to Declare
IN Per Cent Interest
ON Outstanding Stock

che Tnterborough Rapid Transit Com
pany pays annually more than $6,O0o,-
900 in rentals on it's investment in the
elevated lines of the Manhattan Rail
way Company will be ordered by the
new Transit Commission as one means
Of effecting a continuation of the pres
ent scent fare rate on the subway
system.
Governor Miller, in conferences with
George McAneny, Leroy T. Harkness
and Major General John F. O'Ryan,
The members of the new commits
sion, has amplified his contention
that the new traction law contemplates
the wiring away of all unproductive
obligations of the transportation COM
panies, it was learned by The Tribune
yesterday, by insisting that the Inter
borough must relieve itself of the
Manhattan lease.
1t was said that, if it is physically
possible, the Interborough must put
itself in condition to operate pYofitably
on a scent fare and that one way of
accomplishing this end will be to save
the 100000 monthly now paid to the
Manhattan, for which no profit accrues
to the InteHsorough. Figures have been
prepared to show that the INTERIOR
ough, relieved of its obligations to the
Manhattan, not only would be able to
continue the Scent fare without def
cit but would be in a position to pay
TX per cent interest on its $35, 100000
outstanding stock.
Has e99-Year Lease
Under a 999-year lease obtained in
1908 by the Interborough Of the elevated
lines of the Manhattan company the
marlborough, in consideration for the
control of the elevated systems in Man
haitian and the Bronx, guaranteed the
payment of the interest on the Manhat
tan's bonds and stock. For the fiscal
year 1919, which is declared to be rep
resentative of the condition that has
! prevailed each year snce the lease
/ was signed the Interborough paid out
Of its gross income as an operating
expense these items:
Interest on Manhattan consolidated
A per cent mortgage bonds, S1.627,360:
interest on second mortgage per cent
bonds, $lS0,9 Manhattan organiza-
tion, $4,000; guaranteed dividend of
per cent on S60,000,000 of Manhattan
capital stock, $4,2O0,oO0, or total of
s6,O43,2SO.
It has been contended that the
F460O0,000 of mortgage bonds of the
Manhattan represented about the ac-
tual physical value of the entire ele-
vated systems, and that if this prop
erty were turned over to the bond
holders there would be no property left
for the holders of $50 100000 worth of
stock. In other words, it is held by
the Governor that the Interborough is
paying Z per cent dividend on that
smount of stock which represents no
physical property.
The lnterborough reported that last
year, after paying its Manhattan lease
obligations, it was operated at a loss
ef $2,6Oo,OOo. According to the views
held by the Governor, the Interborough
by divorcing itself from the elevated
nnes, would be able not only to make
] up Its present deficit, but would have
margin out of which to pay a gen
erous interest on its own stock. The
margin, however, would not be suffi-
GENTLY great to pay in addition the in
terest on the city's investments in the
system.
j The Board of Estimate, after examin-
ing the financial affairs of the Inter-
porougn last year, arrived at the same
conclusions which the Transit Com
m'sslon IS now asked to take up.
HOW the Transit Commission in
lenas TO end the lease has not been
aaelermlned. 1t has been held by some
snat II the commission has power to
Ssncei contracts between the COM
tls paa'es and the city it can do the same
sa.g sh,.ng IN the case of contracts or leases
a oes~een various companies, if those
ronslacts rsat: are adjudged to be sub
'e'SiVe OF efficient service.
Contract Is Contract"
.naAkers representing a variety of
Me1sts Maaeiests IN the Interborough and the
.aanhattan Company expressed much
thaprlse yesterday at the report that
n .ns new Transit Commission plans as
t"e OF Its first moves in solving the
suson .on.a problem an abrogation of the
~'a'sact between the two comnanies.
~ representative of the bondholders
" ne lnterborough asserted that he
~ ttSSa'u conceive of no way in which
,Ss. contract could be set aside other
ins sn through receivership for the
,,asseroorough, which would throw all
hasS contracts of that company into the
aanas OF the court.
+,ss was made plain by interests ;den-
,hss hlaso with the Manhattan Company
~;,t any effort to break the contract
tsstaa 'ne interborough would be CON
con.s seu IN the courts. "a contract is
Manha...' SAID spokesman for the
lev" as'an ~ Company, "and | don't be-
Com,;;nne ;ne members of the new Transit
tenn. 'ssion are foolish enough to ~
lesagp' 20 set aside q contract that is
u oiholng In every way"