December 4, 1909.'





RECORD   AND   GUIDE





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Copyrighted,   1909,   by   Tbe   Record   Sc   Guide   Co.





Vol. LXXXIV.





DECEMBER  i,  1909.





No.   2177





THE income account of the Interborough Company for
the year ending June SOth last shows clearjy that it
should divide the proflts of the proposed Seventh avenue and
IMadison avenue extensions with the city. The net income
of the Interborough Company for the year amounted to about
13 per cent, on the original stock of that company- Thus
after four years and a half of operation it is earning a per¬
centage on its original stock which would have made that
stock worth somewhere between 250 and 300—provided no
merger had taken piace. Moreover, the chance of future
profit is still very large. The Subway is carrying now a much
heavier trafflc than it did last year, and will probably earn
over 15 per cent, during the current period. The lengthen¬
ing of the platforms will increase its carrying capacity by
30 per cent; and the increase of residential population on
"Washington Heights and of business population at Longacre
Square and along Fourth aveuue will provide eventually
a much greater density of traffic dependent exclusively on
the Subway. In another flve years its net earnings will
probably amount to over 20 per cent, on its original stock.
When the Broadway-Lexington avenue line is operated there
will be a reduction, but not for long, nor will it be serious.
The proposed extensions along Madison and Seventh avenues
will not be so quickly profitable as the existing Subway, and
they will be burdened with a heavier load of interest charges;
but at the end of ten years they will be earning far more than
six per cent- on the value of the stock necessary to equip
them. The districts through which they run are destined
to great future business development, and eventually the
traflic which they develop will be as dense as it is on the
existing Subway. It Is only fair that any profits over six
per cent- on the stock issued to pay for the equipment of
the proposed extensions should be shared between the com¬
pany and the city.





inhabitants of the East Side, it seems as if this point might
be waived—-providing the company met the commission's
objections in the two other respects. On the other hand,
when Mr. Willcox" declares that the Interborough Company
cannot be allowed to build any extensions in Manhattan and
the Bronx unless it also builds more subways in Brooklyn,
the Record and Guide feels bound to declare the demand
unreasonable- The failure of the Interborough Company to
propose certain needed Brooklyn extensions would be cen¬
surable, provided the monopoly of that company in respect
to rapid transit was complete, or in case, as far as it is com¬
plete, it were to be preserved. But the commission has laid
out a new route in Manhattan competitive with the existing
Subway rather than supplementary thereto, and this route
is apparently intended for the purpose of affording another
company an entrance into Manhattan. Moreover, this Man¬
hattan route includes a Brooklyn extension and is officially
called the "Tri-Borough System." Finally, the Brooklyn Rapid
Transit Company already operates elevated roads in Brook¬
lyn and wants to supply additional means of rapid transit.
Why, when the Interborough Company is obliged to meet all
this competition, should It be obliged to assume the respon¬
sibilities of a monopoly and be forced to build subways
wherever the commission thinks they are needed? Above
all, why should the poor tax-payers and travelers of Manhat¬
tan, who have been denied additional rapid transit for yeari
because the Fourth Avenue Subway in Brooklyn blocked the
road—why should they continue to suiter from intolerable
congestion, because Brooklyn may be suffering from a milder
version of the same trouble? Last year the commission said
to Manhattan, "You cannot have any subways, no matter how
profltable they may be, until an unprofltable subway haa
been built in Brooklyn." Now when the Brooklyn suhway
is under construction, the commission says: "No matter hoff
much certain parts of Manhattan and the Bronx remain In
need of subways, we object to their construction until still
more subways are laid out and contracted for in Brooklyn."
Why  this persistent discrimination against Manhattan?





THE LATEST phase of the continuous disputing per¬
formance between the Public .Service Commission and
the Interborough Company leaves the contending parties so
far apart that the public, which is Interested personally in
new subways, has reason to be discouraged. If the commis¬
sion was absolutely opposed to the terms under which the
Interborough Company proposed to build its extensions, why
did they not announce this decision long ago and make some
effort in the meantime to reach an understanding? As it Is,
flii months more have been lost and nothing accomplished.
In respect to the merits of the present dispute, the Record
and Guide Is Inclined to sympathize with the commission
on some counts and with the Interborough Company on
others. The former is right in objecting to saddling on the
city the cost of all the real estate, easement, damage suits
and increased taxes. It is right also in insisting that the
Subway extensions shall not be built under the terms of
contract, but shall afford the city a share of any future
profits above interest and sinking fund requirements. The
proposed subways are too important to be treated merely
as extensions; and while it is reasonable that they should
be leased for a deflnite period, it is unreasonable to demand
from the city all the probable proflts of such a lease. The
rate of remuneration which the company propose to pay for
third-track privileges on the East Side elevated roads is
also too small; but inasmuch as these tracks would only
accommodate long-distance passengers and would be an im¬
mense  and   easily  accessible  convenience   to   the   swarming





CERTAIN   CONSERVATIVE   financial   writers   have   re¬
cently been warning the business  community that the
business   of  the   country  is   again   showing   symptoms   of   a
dangerous   excess   of   prosperity;    and   the   warning   should
most assuredly be seriously considered.    With the defective
currency and credit system of the United States, every period
of good   times, when capital is in demand for all sorts of
business   purposes,   tends  soon  to   stretch  the financial  re¬
sources of the country to the point of absolute inelasticity;
and   something  of  the   kind   is  happening  now-     Money  is,
indeed,   easier than   it was,   but the  comparative   ease  has
the appearance of being only temporary.     In case the busl-.
ness   expansion   continues,   relief   will  have   to   be  found   in
some direction; and it is not apparent iust where such relief
can be obtained-    The railroads will need to raise or borrow
a great deal of money during the coming year.    They cannot
obtain  that money on  advantageous terms,  in case there Ia
a fall in the price of stocks-    On the other hand, stocks could
not   be   further   advanced   without   the   employment   of   an
amount of capital for the purpose that would make credit
conditions still more dangerous.    Possibly the situation may
be straightened out, in case stocks are kept at about their
present level and further speculation discouraged; but even
sfich measures may not be effective, because It looks as It
the general economic situation was becoming unwholesomely
speculative.     The  price  of commodities  has  almost  reached
the level prevailing in March,  1907-    In some lines, such as
food,  prices are higher than ever before in the history of
the  country.     People  are  spending  money  as  extravagantly
as they were three years ago.    Imports are enormous.    Ex¬
ports are less than they were last year.    The country is ex¬
porting all the gold it produces.    Real estate speculation la
rampant in  the West,     The prices  of agricultural  land  haa
been  very  much  increased,   owing  to  the  prosperity  of  the
farmers of that region; and they have been borrowing rno^iey
on this increased value in order to. buy more land.    In'the
meantime wage-earners have not, except in exceptional cases,'
received any increase in wages, and it-looks as if during the
coming year the higher cost of living, coupled with the com¬
parative Immobility of wages, would result in serious indus¬
trial disturbances-     In   spite of all these dangerous symp¬
toms,  there is no immediate threat of a crisis, but storm
signals are-certainly fiying.     It behooves conservative busi¬
ness men to take in sail, and prepare against a check to the
business   expansion   of   the   country   and   a   contraction   •{
credit and confidence.