The broad ax., 1925-04-04
Mayor William E. Dever Predicts the Adoption
of the Traction Ordinance, tuesday, April 9TH
lContinued from &c ID

four or FIVE millions Of dollars, all
mature February 1, 1927. So that al
that time you have double situation.
You have the situation that the Sur
face Lines have to deal with the city
on some sort of a daily franchise or a
permit by sufferance or the extension
Of a franchise Of some other arrange
ment BY which they can 60 on operat-
ing, either under a temporary settle
ment or permanent settlement; and
you have the companies faced with
the proposition Of about $l67,000,00O
worth Of obligations maturing at that
time, which will have to Be paid either
in cash,-and that is impossible be-
cause there is no cash with which to
pay them-or be paid by rehnancing
arrangements, BY issuing other secur-
ities in their place and BY refnancing
the properties.
i want to take up with you first tbs
possibility Of going on under some
thing Of the same arrangement that
the city and the companies have had
during the last twenty years,-the last
eighteen years,-and / think without
going into details, BY two or three OBJ
servations / can convince you that you
must look elsewhere for a solution
than in a suggested continuance Of the
present arrangements.
I'm the first place, the law limits
the duration Of private franchise to
twenty years. We cannot under the
law Of Illinois, grant franchise for
a longer period than twenty years, and
all Of the people who are interested in
the traction properties, bankers, man
ayers, operators, with one single ex-
ception, are unanimous in saying that
it would be impossible to finance on
twenty-year franchise. In other
words, they say that in February, 1927,
if the city were willing to say 1--WE
will write this contract for another
twenty years and carry it on for an
other twenty years." that with this
S167,000,000 Of obligations maturing at
that time they would be unable on the
mere security Of a twenty-year fran
chise to go out andrefnance the prop
critics; that is to say, they would be
unable to get $l67 100000 worth OF
new money under some new form of
bonds either at FIVE per cent or a
greater rate Of interest and with the
moneys that they would derive from
the new issue take up the old issue,
or to exchange new securities for the
old. 1t would not be possible to ex-
change the old securities for the new
securities, we are told, and / believe
that is true. 1t could only be worked
out after very extensive reorganization
planning that would require a per-
manent receivership and a lot of other
things.
"Of course when these bonds come
due, the first mortgage bonds partic-
ularly, the property is an ample Sc
curity for the first mortgage bonds,
and there is no reason why, if some
other arrangement is not made, the
holders Of those first mortgage bonds
cannot come in and bring a fore
closure suit, the same as you would if
you had mortgage on a house that
fell due and was not paid, and on the
theory Of a diversity Of citizenship
stockholders in different states would
go into the Federal Court, as they
have always done, and have a Federal
Court receivership, and am perfect.
ly willing to go on record from ex-
perience as lawyer observing that
sort Of management Of property II
saying that it is the most unsatisfac.
tory, wasteful and expensive manage.
ment on earth,-Federal Court re-
ownership management.
But we do not have to speculate
about it. The records Of the old Chi.
cago Union Traction Company anc
the records Of the Chicago Railway.
Company under Federal Court re.
ceivership furnish very illuminating
contrast as against operation under
normal and proper conditions.
SO far then as a twenty-year fran.
chise is concerned, it is useless to tall
about solution Of the traction prob.
lem. The companies themselves "a,
they could not do anything with it /
you did give them a twenty-year
franchise. that they would be unabl,
even to rehnance their present obliga
tions.
"on the other hand. the City o
Chicago needs a lot more than Re-
financing Of the present obligations. A
rehnancing Of the present obligation.
simply means taking care Of the pres.