The New York herald., 1922-03-20
s154,OOO,OOO Set Would
Leave Nothing for Stock
holders, 1t Is Said.
14TH STREET LINE CITED
Other Alleged Delinquencies
Pointed Out in Charges In
timating Bad Faith.

mittee of stockholders of the Brooklyn
Rapid Transit to George McAneny
chairman of tie Transit Commission,
made public yesterday, severely con-
demns the recent valuation reports Of
the commission, charges the city with
flagrant violation of its contracts with
the company and threatens suit
against the city to recover $4,000. 900
as compensation for the delays in con-
struction that are alleged to have
thrown the company into the hands
Of receivers.
The actual investment in the prop
critics, the stockholders maintain,
amounts to s23S,o00, 900, while the en-
gineers attached to TIE commission
have allowed ION the basis of theoreti-
cal assumption" only s154,000,000. Be-
cause of this irrecohcilable difference
the stockholders give notice to Mr..
McAneny that they reject the commits
sion's proposals, as the valuations sf-
ford no basis for a discussion of the
plan of readjustment
I'VE arc not in the least concerned
by, nor can we believe" the letter
states. "the current rumors that If the
security holders do not accept the valua
tions as proposed they will be forced
to do so through the deliberate exercise
for such purpose of the powers which
the commission considers 1t possesses.
We cannot conceive that such course
would be pursued, but IL attempted we
feel confident 1t would receive immedi-
ate condemnation in public sentiment
and in judicial determination"
From 10000 Investors.
The letter reflects the views of the
committee. representing more than
10000 investors owning $4,000. 900 or
stock. headed by Albert III. Wiggin,
president of the Chase National Bank.
Other members are Charles A. Boody,
president of the Peoples Trust Com
pany of Brooklyn: Frederick II. Ecker.
president of the Metropolitan Life
Insurance Company; Seward Prosser.
acting chairman. and president of the
Bankers Trust Company: Galen l..
Stone, Frederick Strauss, Gerhard M.
Dahl and Chellis A. Austin.
The committee points out that the b.
r. T. has fulfilled to the letter every
part of its contract with the city. and
even after the system went into the
hands Of receivers the construction pro-
gram was continued. This involved the
borrowing Of S18,000.000 on receivers
court, an accomplishment which Is
called almost unparalleled in the his
tory OF receiverships."
Unfortunately" the letter says, "a
similar statement cannot be made with
respect to the performance by the city
OF its part of the contract"
The uncompleted portion OF the Four
teenth street-East New York line, re-
garded by the traction company as one
OF the most important parts of the sys-
tenn from a revenue and service stand
point is cited as one instance of the
city's delays. The contract was made
nine years ago, the committee states
and the construction has not only not
been completed. but several portions Of
the line have not even been placed un-
der contract. No attempt mas been
made, the committee also points out, TO
start work on the Nassau street loop.
No Basis for Discussion.
Regarding this point the committee
states
"Our consideration OF the conclusions
of your Bureau OF Valuations and the
methods by which they have been
reached. coupled with the manner in
which such conclusions were apparently
received by your commission and COM
mented upon by your counsel. has con-
A.. snta a t.-1
for a prompt businesslikc and unpreju-
diced settlement OF the grave problems
must be dismissed and that the yalua-
tions proposed afford no basis whatever
for discussion
1--WE cannot refrain from emphasizing
the very great Injustice which the pro-
posed valuations dc the rapid transit
properties oG the company. for the ex-
tension and equipment Of which, IN con-
junction with the new city built subway
lines, approximately s7S,000.000 has
been obtained from investors and ex-
pended since 1913. Tho outstanding
debt agoinst these properties, including
the underlying bonds. notes and bonds
issued since 1918. with interest in de-
fault, receivers certificates, tort claims
and other obligations. IL estimated at
over s135.000.000, approximately $751;
100000 Of which has been expended
since 1919, under the direct supervision
and control of your commission or your
predecessors ir authority.
"To provide FOR this debt OF over
s135,00o.000 your engineers recommend
valuation OF approximately 500. 900
or s39,000.000 less than enough TO pro
vide for the debt. thus eliminating COM
pleteiy all stockholders equities in the
properties In reaching this valuation
your engineers have placed net value
OF approximately s22,f00.000 on the
company's extensive elevated railroad
system In the Borough OF Brooklyn,
which was given an earning power under
tho contract with the city OF s3.500.000
per annun, which. capitalized at 8 per
cent. (the rate proposed under your
plan). would support value OF at least
S7o.ooo.00o for the property"