May 21, 1910





RECORD   AND   GUIDE





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Communications should be addressed ta

C. W. SWEET

published Every Saturdap

By THE KECORD AJVD GUIDE CO.

President,  CLINTON W,   SWEET                         Treasurer, F, W, DODGE

Vice-Pres. Sc Geol. Mgr,, H. W. DESMOND         Secretary, F. T. MILLER

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"Entered at ihe Post Office at New York, N. Y., as second-class matter."
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Vol  LXXXV,





MAY 21,  1910.





No. 2201





THERE has appeared recently in the New York Times "a
general description of the plan of reorganization for
the Metropolitan Street Railway Company, proposed by the
bondholders' committee;" and this plan is far from encourag¬
ing either to the security-holders ol" the surface roads, or to
the traveling public desirous of a better service. For its
success it depends upon tbe accomplishment of three neces¬
sary objects. In the first place, fixed charges must be re¬
duced; and to this end the committee want to negotiate both
with the city aud with the holders o£ the underlying securi¬
ties. From the latter they want a diminution of excessive
rentals. From the former a reduction of taxation. If they
can succeed in reducing these fixed charges, they expect to
be able to raise some $12,500,000 of additional capital, and
in this way to discharge all the obligations of the receiver¬
ship and make the system a solvent concern. Upon the
foregoing plan there is one obvious comment. If that is the
best the bondholders can do, the Metropolitan Street Rail¬
way Company must, indeed, be iu a desperate condition.
Everything depends practically upon the success of the
committee in inducing the holders of the underlying securi¬
ties to accept lower rentals; and from the disposition which
these security-holders have exhibited hitherto, that certainly
looks like a forlorn hope. They may succeed in the end in
bringing ahout such a resnlt, but it will only be after con¬
siderable delay. On the other hand, when and if the rental
charges are reduced, the bondholders should have a strong
argument to make on behalf of a reduction of taxation—
particularly in view of the fact that the argument would be
accompanied hy an offer subsequently to share any profits
with the city. The danger to this part of their scheme de¬
rives from the fact that both the Puhlic Service Commission
and the Board of Estimate ■will be very much afraid of ap¬
pearing to be lenient to the delinquent corporation. The
opportunity, however, of actually getting the street railway
systems of Manhattan on a profit-sharing basis is one which
should not be rejected in haste; aud ol course a good deal
depends upon what proportion of the profits will be handed
over to the city. The aim ol the local authorities should be
to take advantage of the bankruptcy of the company to get
rid of, if possible, the perpetual franchises enjoyed by the
underlying companies; and it" it is Impossible to get rid of
these franchises, at least, to mitigate their utter inexpedi¬
ency by securing the largest possible share in their fruits.
Taxation should not be reduced save by the promise of
a still larger share of any earning power, the system may de¬
velop in the future. This question can hardly come up,
however, until the holders of the underlying securities can
be induced to accept a lower rental. That will be the chief
difficulty; and until it is disposed of the local authorities
can afford to sit tight and let Ihe taxes accumulate.





the property which would be benefitted; and used the profits
derived Irom its sale, to .pay the cost of the docks. The
whole tradition of American city government is opposed to
this sort of thing; and many American cities are forbidden
by law to buy any real estate not imperatively required for
corporate purposes. Nevertheless it is probable that in the
end they will be obliged to come to it, because there seems
to be uo other way iu which cities can obtain the funds re¬
quired to meet certain expensive and indispensable public
improvements. Take, lor instance, the provision for rapid
transit in the outlying districts of New York, It is desirable
that certain subways and elevated roads should be built that
will not he immediately profitable, in order to develop new
territory and to distribute population and business. Private
capital will not construct such roads without municipal as¬
sistance. Municipal assistance cannot be provided by the
taxpayer without an impossible increase in taxes. As a way
out of this dilemma, the city now proposes to assess the ex¬
pense of these rapid transit roads on the benefited property,
but this method leads to a great deal of injustice in the dis¬
tribution of the assessment. In a German city the local
government would accomplish the same result by purchas¬
ing the property most benefitted, and paying for the Improve¬
ment out of the profits. American property owners consider
sjich methods to be invasion of their sacred individual right
to benefit from the growth of the city; but the majority of
the property owners will soon understand that il they do
uot consent to some such method of diminishing the cost of
improvements, the improvements themselves will be impos¬
sible. The property owner has GOT to PAY in ONE FORM
or ANOTHER, The city will appropriate his property
either outright by paying lor it, or indirectly as taxes; but
if the money is raised by taxation, it is derived from all the
property instead of that immediately benefitted. The prop¬
erty-owners in the built-up sections of the city should real¬
ize that it is simply a question as to who shall pay lor such
improvements—they or the local property-owners. Take
for instance the vast plan of development proposed lor
Jamaica Bay. Who will pay Ior the millions to be spent
upon this project, the taxpayers of Mauhattan, or the
property-owners whose real estate will be specially bene¬
fitted?





THB new "socialist" city government in Milwaukee is, ac¬
cording to newspaper reports, preparing to go into the
real estate business—that is, to buy land available for lac-
tory purposes, equip it properly and then sell it to manu¬
facturers. This idea has undoubtedly been borrowed from
Germany. A number of large German cities have been suc¬
cessfully conducting operations of this kiud. Frankfort, for
instance, decided to spend many million dollars in the con¬
struction of new docks; but instead of making the improve¬
meut at the expense of the taxpayers, if managed the opera¬
tion on business principles—ju.^t, for instance, as the Bush
Terminal Company, has done in South Brooklyn.    It bought





THE proposal of the Public Service Commission for a
subway along Greenwich street. West Broadway,
Varick street, Seventh avenue and 59th street to the Queens¬
boro Bridge is worth careful consideration. The Record and
.Guide proposed just such a route about a year ago as a
possible alternative to the extension of the existing sub¬
way south of 42d street. Of course, this plan is worth at¬
tention only ill case no agreement can be reached with the
Interborough Company; but the continued refusal of the
management of that corporation to propose acceptable terms
to tbe city for the extensions it desires demands the con¬
sideration of certain alternative plans. The route suggested
by tbe coinmission looks like tbe best that could be laid out
on a competitive basis. It could be operated independently
with every chance of profit, and as an independent line
would be extremely useful. On tbe other band, it could,
be advantageously combined either with the existing sub'way
or with the Broadway-Lexington subway. It could be used,
for instance, as a means of providing the passengers on the
Lexington avenue subway with a service to the West Side,
and tbis service could be arranged either by transfers or
by the actual diversion ol certain trains into the Seventh
avenue subway at 59th street. Furthermore, even if it
fell into the hands of the Interborough company it might
constitute an addition to their proposed system. It could
transfer to a Madison avenue line, or it could be used for
the accommodation of certain Madison avenue trains;^ and
in any event it would bring a desirable increase of traffic
to a lower Seventh avenue subway. Finally, it would provide
lor the very efficient distribution of the passengers landed at
the Pennsylvania Terminal. If it could not be built in any
other way, it would pay the Pennsylvania Company to con¬
struct and operate it as a necessary supplement to its Man¬
hattan Terminal, Property owners who are interested in the
building of a lower West Side rapid transit system should
encourage and be encouraged by this suggestion.





THERE has beeu of late an increase of speculative inter¬
est in Seventh avenue property. A purchase was re¬
cently made on the avenue between S-lth aud 42d streets by
the United States Realty Company, and this lact indicates
that tbis section of Seventh avenue appeals to the shrewdest
real estate operators in the city as offering one of the best