The New York herald., 1922-03-21
TRAP SEEN IN ALBANY ACT
TO SMASH TRANSIT PLAN

per cent. sinking fund gold nonds OF the
New York Municipal Railway Company
together aggregating cbout $4,000, 600.
The letter took exception 10 the yalua-
tions as much 600 low. II scored the
city for not having carried out its part
OF the dual contracts. These delays and
defaults upon the part Of the city. the
letter stated. have resulted in enor-
nous losses to the operating companies.
not only in current revenue. but in
greatly Increased cost OF construction,
due 10 throwing a large mart OF con-
struction into the period OF high costs
resulting from the war. It Is estimated
that the construction expenditures OF the
operating companies have been thus in
creased by at least SIS. 900, 900. and THAI
the net revenues are suffering TO the ex-
tent OF fully 100000 year"
It was the city's delays and de-
faults" the bondholders contend. to-
gether with war conditions, that drove
the companies into a receivership.
II. II. T. Finances Improving.
The letter then proceeds to state that
by reason of general reductions in
operating costs and increases in gross
receipts tho net earnings of the 3. r. T..
elevated and subway lines have inn
proved until they are now sufficient 10
yield substantial return upon the
notes and bonds outstanding, with the
result that holders OF these securities
may hope soon to be able to carry
through plan of reorganization which
viii provide new securities to take up
existing securities. including arrears of
interest and the prior lien represented
by the receivers certificates"
In view of this proposed reorganiza.-
ton OF their own. the letter continued.
The commission should not expect these
security holders to cspouse any plan
(which does not place them in at least
as favorable a position as they hold
to-day" This significant reason for
disapproval Is added:
There Is another difficulty. In or
der to justify the committee in recon-
nleitding the commissions plan to the
security holders whom it represents it
is necessary that the bonds approved
by the commission should not only be
sufficient in amount but should be
adequately secured Further study and
the course OF events since the commits
sion's plan was first announced have
caused this committee and its counsel
grave anxiety as 10 whether the new
bonds viii be adequately secured. The
committees counsel Mr.. Cravath) viii
be glad to give your counsel the rca-
cons for this anxiety
The board of directors Of the Brook
|n City Railroad Company expressed
its view in a resolution adopted March
II, which said III part
Until the city authorities are con-
WINGED OF the wisdom of the plan and
cooperate to insure Its execution the
directors feel prolonged litigation by the
city 20 test the plan and the power. Of
tho commission Is reasonably certain.
The directors feel that they could not
recommend the acceptance of any OF the
appraisals made by the valuations pu-
reau."
Doubt Is expressed also of the com
missions power to bind the city to a
rate of fare sufficient 10 pay per
cent. upon the prospective bonds and
alSo Interest upon the citv's Investment.
That doubt. the resolution saye. VII
impair the marx etability OF the bonds.
Mr.. Hedley's letter defining the posi-
ton of the Interohrough held that under
the dual contracts Of nine years ago
his company actually had expended
s1t.3f5. 26s In excess OF the tentative
value placed upon that work by the
commission experts. The company's In
terest in tho old subway Mr.. Hedley
placed at S62,e55,2t2. whereas the com.
mission valuation placed upon II Is only
s33.ot1.2:S.
lie concludes that "the present value
Of the property I'm question Is at least
$500. 900. 900. instead OF $174,.ct ,o5s, as
reported by the valuations bureau"
A letter signed by Alfred Skitt. presi-
dent of tho Manhattan Railway Com
pany (the IL" lines). repudiated the