The New York herald., 1922-01-23
His Report as Special. Aid
to O'Brien Tells Of Old
Albany Plot.
FARES CAN BE FORCED UP
Favors Compelling Companies
to Live Up to Their Orig
inal Contracts.

Counsel John p. O'Brien for tie spe-
cial purpose of making a survey of
the Transit Commissions tentative
plan for the reorganization of the
city's railways and with view to the
protection of the city's interests as
the municipal administration sees
them, has made preliminary report
10 Mr.. O'Brien.
The records and files of the Transit
Commission and a transcript Of the
record of it's recent public exan,ina-
ions were placed unreservedly at the
disposal of Mr.. De Ford several weeks
ago. At that time Chairman George
McAneny and lis associates Of the
commission pledged to the special as
sfstant of the Corporation Counsel
their full cooperation so long as his
efforts remained constructive rather
than destructive in character.
Mr. De FOrd's Recon- M nda tions.
AS result of his Investigations Mr.
De Ford makes the following recon-
considers the city's rights in the prem
ises:
II recommend that the city attempt
TO secure the immediate enactment of n
statute amending subdivision / of Sec
ton 40 of the public service commission
law (Chapter As OF the Consolidated
Laws). by striking from j. the require
ment that the transit commission shall
permit street railroad compa nies to
r 1aroa ,.nta <Nf 20 ft,.,% t.A
pecessary to enable them to earn a
reasonable return upon the property
which they devote to the public use,
Notwithstanding their franchise or con-
tract obligations to charge lower rate
Of fare.
1.-The Transit Commission. as the law
is can bind the city to any plan of re-
adjustment which it may propose. with
out the consent of the city authorities,
but it cannot bind the owners of the
roads to any plan of readjustment with
out their consent.
Argument for Amendments.
"A critical study OF the applicable
laws clearly sustains the proposed
amendment. for these reasons:
'(a) The law providing for the
States regulation of rates of fare to be
charged by street railroad companies.
prior to the enactment of the Transit
Commission Law. was in part az fol-
lows
1.-The public service commissions were
empowered. upon their determination
that a rate OF fare charged b. a street
railroad company was not fairly COM
pensatory, TO fix reasonable rate In
lieu thereof: but we're not empowered
TO permit the increase of any rate or
charge beyond that to which the street
railroad company was limited by the
terms of It's franchise or by the terms
of its contract with the local author
tiles
"(b) The transit act OF 1921 (being
that under which the Transit Commits
sion was organized and is acting), as
originally enacted. provided that inde-
pendent of the formulation or execution
Of plan Of readjustment which the
commission empowered to p iopt and
execute. 1t might, upon determination
that a street railroad fare was not ia irly
compensatory. in its discretion. fix a
higher rate OF fare. Notwithstanding that
a lower fare had been heretofore pre-
scribcd by general or special statute.
contract grant, franchise condition, con-
sent or other agreement
Large Power to Com M ission.
"This provision Of the transit act of
1921 gave the commission the extraor-
dinary power of exemptlng the owners
of the roads from their franchise and
contract obligations to the city, IL the
commission. in It's discretion. chose TO
exercise that power but II left the Tran
sit Commission with the authority and
the power In negotiating the terms Of
the purchase of street railroads from
their owners. to say to them that II they
did not consent to the terms OF purchase
which the commission proposed, il would
not grant them permission to charge a
fare in excess OF that to which they
were limited by the terms of their fran
chises or their contracts with the city.
"(c) An act. amendatofy OF the ORR
rinal Transit Commission act. was al
most Immediately passed. which stripped
the commission of this discretionary
mower and made Il mandatory upon the
commission, II they failed to persuade
any street railroad, however obsolete its
type or whatever its current losses from
operation. to become party to the COM
missions proposed plan OF REIMBURSEMENT.
TO grant that road permission to charge
q rate of fare fairly compensatory Tor
tbe servico rendered. notwithstandinS
that n lower fare had heretofore been
prescribed by general or special statute.
contract. grant franchise condition, con-
sent or other agreement.
Roads Are Unfettered.
"It Is clear. therefore, that the law
as framed relieves the owners OF tne
roads from the compulsion OF their
financial plight 10 accept any proposal
that the commission may make. how
ever just: or. conversely. fortihes them
lr e.cnding by any proposal tnat they
may make. however unjust, with the
surety that. rejecting any OF the COM
missions proposals.. they may compel
Il TO grant 20 them an increase OF fare
which will increase their earning ca
pacity and t.us reestablish the former
values OF their operating properties.
"The original transit act. providing
that the commission migl... in It's dis
creiion. grant increases Of fars IN en-
cess OF the limit fixed by franchise or
contract provisions was bad. enough :
the amendatory net. providing In ei-
feet. that the commission must grant
such increases. IA infinitely worse.
',rhe transit act empowers the owners
of the roads 20 compel. the commission
10 allow them price for their proper
ties predicetad upon valuations which
they (thc owners) fix, and TO f1x rate
~ faro (frrpspectiVe OF their franchise