The New York herald., 1922-05-04

1
stock or by holders Of preferred ane
common stock of Interborough Consol
idated Corporation pursuant to the Of
fering to be made as herinafter pro-
vided.
Holders of Observation-Disclosures
tan AZ per cent bonds shall make their
election in this regard at the time OF
their assent to the plan. Holders OF
certificates of deposit Of Guaranty
Trust Company of New York. deposit
tary, representing said bonds. who do
not, within the time fixed as herein
after provided. present their certiff-
Gates of deposit to said depository for
notation thereon of election to purchase
new Interborough ten year per cent.
gold notes shall be conclusively and
finally deemed to have elected to sur
render so per cent. of their bonds.
Holders of Interborough Rapid
Transit Company stock (of which 81
0S7,600 is in the hands Of the public
shall be entitled to participate in the
plan by purchasing at their principal
amount and accrued interest new In
terborough ten year 6 per cent. gold
notes to the extent of 30 per cent of
the par value Of their stock or at their
option by surrendering so per cent.
of their stock for delivery to the
cate. Stockholders shall make their
election In this regard at the time Of
their assent to the plan. The purchase
price of the new notes shall be pay
able on thirty days notice after the
plan is declared operative"
mmission Hearing Resumed.
When the Transit Commission re-
sumed its hearing yesterday on Inter-
borough valuations Clarencs J. Shearn.
counsel for the commission. continued
to draw from William s. Gorsuch. ap-
praisal expert for the Interborough. that
the company's valuation OF $400, 900 900
was fictitious in many particulars. The
commission contends that the I. r. L.
property should be valued at only s174.-
900, co.,
Judge Shearn brought up one item
after another and attacked the Inter-
borough's valuation as being ridiculous.
He attempted to show that the figures
prepared by Mr. Gorsuch were exorbi-
tant and might show an inaccuracy of
40 per cent. on materials and labor
costs. AS an example, Mr. Shearn took
up the item of steel beams. He showed
that Mr.. Gorsuch had figured steel
beams at $3eS7 ton for March. 1922,
March 30 were $3.50. Mr. Gorsuch ad-
mitted there might be difference, but
said he had based his reproduction table
upon an average price for the whole of
March.
Figures on Tunnels Too High.
Mr.. Shearn also brought out many
figures to show that Mr. Gorsuch's esti-
mates on the cost of tunnel work were
exorbitant. Tunnel construction, Mr..
Shearn contended. makes up about 10
per cent. of the total cost Of the SUBJ
ways
Judge Shearn brought out also that
the Interborough seeks $273, ,000, 900 for
its subways, as against an investment
Of only $162, ,000,0 900, and that in addi-
ton 1t asks a reimbursement of $685.
100000 as the value Of the dual con-
tract operating lease. He pointed out
that the company put present valua-
tion of $174,000,000 on It's newer SUBJ
way lines built few years ago, al
though the investment by the Inter
borough was only 100000. Judge
Shearn proceeded to emphasize the
clause in the dual contract giving the
city the right to take, over these routes
after 1923, for repayment of the $10S.-
100000 investment, plus Is per cent, or
a total of $124.000,000.
The difference between the COM
pany's reproduction valuation and the
recapture price of 1928 would be $780,
10000. wouldn't it?" asked Judge
Shearn.
YES" replied Mr.. Gorsuch. who
added, however, that his knowledge of
these matters was from the viewpoint
of the engineer rather than the legal
expert.
Applying the recapture clause in the
dual contract to the Interborough's en-
tire subway investment of $1s2.o00,000
Judge Shearn showed that the 1928
price would be approximately s177 o00,-
900, though the present value advanced
by the company on a reproduction basis
was put at 1918, 100000, a jump OF $685.
000, 1000. This is independent OF the
extra claim for $6S,000,000 as the value
of the operating lease.
Don't you see," asked Judge Shearn.
that IL the commission accepted this
valuation put forth by your company on
the new subways 1t would simply mean
the payment of SOS, 100000 for the use
of an investment of s10S.000,000 for a
few years in addition to paying back the
investment itself?"
Mr.. Gorsuch replied that that was a
legal matter and that he was not quail
fed to answer.
Pointed Query by Shearn.
Judge Shearn then asked:
Putting all the Interborough SUBJ
ways together. in which the company
invested s162.o00.o00. the company now
asks for valuation OF s273.0oo. .o00
That is to say, to be paid S111. 100000
more than the investment just for the
use of the money over and above hay-
ing the investment returned?'
Yes. see the figures" replied Mr..
Gorsuch.
"And on top OF that you are asking
the city to pay s6s,00o.o00 as the value
of your lease?"
"Yes," said Mr.. Gorsuch. ~ know
that is in the statement"