New-York tribune., 1922-10-09
ew securities provided FOR ia the

new securities provided fnr IN the
plan,
Here Mr. Murphy sets forth the con-
aitions laid down By the Transit Conn
mission and dnclAres that tho plan
fully meets those conditions. The
communication continues:
Preserves 5.Cent Fare
"The three committees which rep
resent the security holders have con.
stantly borne the foregoing conditions
in mind and ii Is respectfully sub
nlitted that the plan now before you
fully meets those conditions and TO
striking degrae promotes the public
purnoses the commission has in view.
The plan preserves the 5-cent fare
ard will make 1t possible for the Inter-
be operated efficiently at that rate Of
fare and kept together AS one system.
This has been accomplished through
the reduction Of the Manhattan rental
which in respect Of all stock subject to
the plan becomes payable only out Of
earnings and the suspension Tor Ave.
year period of the sinking fund res
quirenents Of the Interborough Com
rany's first and refunding mortgage.
The lrtcrborough Consolidated Cor
poration--sthc holSing company--will
cease to hold any stock in the Inter
borough Rapid Transit Company and
will 60 out of existence
AS result OF the elimination Of
poration, the following securities
disappear:
1nterborough- Metropolitan Az
. per cent bonds. .s..,..,..... $63,S0S,00o
Interboropgh Consolidated Corr
poratton preferred stock. .... 46,740,5oe
Interbor0ugh Consolidated Cor
poration common stock with
& ont par value. stated at So
per share ................. 4.s63,134
Total ....-........s........ .Sl14.211.834
an place of these securities there
will remain only the original S5,000,-
600 of Interborough Rapid Transit
Company stock, which will be held by
ing company.
Per Cent Limit
"No dividends can be paid upon the
Interborough Rapid Transit Company
stock for FIVE years, and in no year
can the dividend exceed per cent. This
provision is made against Interborough
stock being speculative security and
against the payment of excessive and
improvident dividends. Any earnings in
excess excess 8, Of 6 !? p per cent upon the Inter
~ s
must remain as reserve against lean
years or for use for additions and bet
terments, or to retire capital securities,
thereby reducing the fixed charges rest
ing upon the enterprise,
"The Manhattan stock dividend rental
is eliminated as fixed charge as to all
Manhattan stock subject to the plan, as
it becomes payable only out Of earn
ings. The obligation to pay dividends
upon Manhattan stock in excess of per
cent for the first year, per cent for
succeeding years (but never in excess of
2 per cent? will arise only in case of
the payment of dividends upon the In
terborough Rapid Transit Company's
stock
Additional capital for the new
equipment and the improvements and
additions deemed by the commission
necessary to provide the public with
adequate service is secured through the
sale OF $lo,b0o,ooo Of ten-year s per
cent notes (which it Is hoped ultimately
to retire by the use Of first and refund
ing mortgage per cent bonds), and
also by such a reduction in fixed charges
as to Justify the expectation that SUBJ
stantlal surplus earnings will be availa-
BILE for capital purposes.
The consummation Of the plan,
avoldlng, as 1t does, receiyership and
the disintegration of the system, which
would otherwise be inevitable, saves
the security holders from very heavy
losses. This is especially true in re-
spect Of the Interborough- Metropoli-
tan ~ per cent bonds, Of which
there are about 6,300 holders, of whom
nearly half are women, estates, trus-
tees, savings banks, trust companies,
insurance companies and educational
and charitable institutions. The hold
ers of these bonds have received no
benefits from the dividends in excess
Of per cent upon Interborough Rapid
Transit Company stock paid during the
years Of liberal earnings, inasmuch as
the return upon the bonds was limited
to Az per cent. Yet as soon as earn
ings declined, default in the payment
Of interest upon these bonds was made.
This default was continued for more
than three years, thus imposing great
hardship upon the bondholders. For a
time it seemed impossible to save any
thing out Of the wreck for these bond
xx