The New York herald., 1922-02-23
TRANSIT ECONOMIES
HURTFUL TO SERVICE
NOn-Rush Subway Service
40 Per Cent. Below Pre-
War Days.
COMMISSION HAS FACTS
Peremptory Orders for Bet
terment Likely to Follow
Investigation.
SILENT ON VALUATIONS
Companies and Security Hold
ers Have Not Defined
Attitude.
SILENT ON VALUATIONS

Transit Commission inspectors who
have been checking up conditions at
points of super-congestion in the sub
ways find the service now being rem
dered in non-rush hours is from 80 to
40 per cent. inferior to what it was
before the war.
When Frank Hedley. president of
the Interborough, testified before the
commission several weeks ago he ad-
mitted that train service in non-rush
hours had deteriorated until it had be-
come only about 81 per cent. as ef-
ficient as formerly. Trains had been
taken off the schedule in the interest
of economy, he conceded, and every
other possible saving was being eX-
ercised, save only in the factor of
safety, to keep the company out Of a
receivership.
Recent investigation reveals that
present conditions on the INTERIOR
ough lines are not materially i'm
proved and that many of the other
city transit lines are open to like
criticism on the ground of curtailed
service as an economic expedient.
This Is a phase of the transit situa-
ton which the commission probably will
explore in some detail when it resumes
public examinations next Monday. 1t is
to convene this afternoon subject to last
Mondays adjournment, but the hearings
90
certain material is not yet ready for
presentation. ..4 =
1t is a phase peculiarly relevant to
the subject of valuations to be fixed
upon the railway properties. The com
panies will try to contend for an in
creased valuation on the ground of re-
Gently improved operating receipts and
indicated future earning capacity. The
commission will counter this claim with
the contention that improved receipts
have been attained at the cost of con-
spicuously deteriorated public service.
To Order Bettcrments.
In transit circles it is expected, In
fact. that the coming hearings may lead
90 the extensive issuance by the COM
mission Of peremptory service better
nent orders which will have a dual
effect. They will alleviate somewhat the
IDc ITlDuldtlOIlS OIL ITdNGI. l5ul tllGN
also will increase cost of operation will
cut down operative profit. and thus
may have a tendency to reconcile the
owners of the roads to the terms Of
absorption preferred under the COM
missions plan Of economic unifcation.
None of the transit company manage
nents or protective committees of Sc
curty holders has yet defined its atti-
tude toward the recommended valua-
tiOns A derIara finn be ton..ftinn Of
the Interborough is awaited with espe-
cial eagerness because of its con-
spicuous position in the traction field.
An interesting analysis OF the effect
which the recommended appraisal. if
accepted, would have upon the various
classes Of Interborough security holders
was made public yesterday. 1t was
substantially as follows:
Although the Interborough's total
valuation was set down as only STA
221,056, as against a bonded indebted
ness Of approximately $500. 600. 900, ex-
perts who have studied the situation
advance the belief that the company's
bond and note holders will obtain prac-
tically 100 cents on the dollar This
belief is predicated on the theory that
the ]. R. T. has additional assets not
included in the physical property vaIua-
tion which will make up the difference.
Solely on the basis. however of the
s174,221 .056 valuation, it is obvious that
tn bond and note holders could not get
a full return, even il the s35, 900 900 in
common stock were completely ignored
in the reorganization financing. on the
valuation proposed by the Transit Com
mission experts the bond and note
holders, II the corporation accepted the
appraisal, would be scaled down TO
about 81 cents on the dollar. with the
stockholders getting nothing. But this
would not be a cash transaction. The
bond holders would receive in exchange
for their present holdings issues at
per cent. of the new quasi-public bond
to be put out under the general re-
organization program.
New Bond Appointment.
The apportionment of the new bonds,
however, is to be left to the companies
themselves. For example. IL the Inter-
borough should accept the s174,221 ,056.
the corporation would receive that
amount of new bonds and would then
proceed to make it's own distribution.
IL the company decided to let the stock
holders share In the scheme there would
be proportionate reduction in the
amount accruing to the bond and note
holders.
This would require about $4,000 900.
leaving only s1e2.000,ooo for the other
obli-tiioho' bIl NHiS DdhlS tnt ONHttS
of the higher grade issues would receive
only about 81 cents on the dollar.
In the bureau Of valuation report the
Interborough's bonded Indebtedness was
divided into three sections, as shown in
the following table. the first column
giving the bond issue and the second
tho property valuation made by the
commissions experts:
Valuation by
Bond issue. Commission
1-S52 100000 (refunding original
subway bonds and other pur-
purposcs) ................. 8J6, OF 900
2-Sfos, 100 .000 subway construc-
ton under dual contract) go. 90 65s 900
$50 100, 900 elevated third
tracking and extensions. under
dual contracD ................ 1851 900
STA $50, 900
Attention was called TO the fact that
the chief shrinkage In these figures is
aund in the first item. According to
those familiar with the subject. the
reason for this reduction is that the
$4,000. 900 included bonds which were
involved in financial ventures that turn
ed out badly for the Interborough. 1t Is
said, for instance. there was a loss of