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December 24, 1910.
KECORD AND GUIDE
1079
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Biisafcss Afto Themes of GejJer^I IfrttiifST^.
iFRICB .PER YEAR IN ADVANCE ESQHT -iSOLLARS
Coromunlcalions should tie addressed SW
C W SWEET
fubJisl7ed EVerg Satardap
By THE RECOKD AND GUIDE CO,
President, CLINTON W. SWEET Treasurer, F. W. DODGB
Vlce-Pres, & Genl. Mgr., H. W. DESMOND Secretary, F. T. MILLER
Noa. 11 to 15 Eust 24th Street, New York.City
(Telephone, Madison Square, 4430 to 4433.)
"Entered at the Post Office at New York^ N. Y., as scennil-elass matter."
Copyrighted. 1910, by The Record & Guide Co.
VOL. LXXXVl.
DECEMBEP. 24, IlllO.
No. 223-J
THE ALTERNATIVE IMPOSSIBLE.
IT is time that the property owners of New York showed a
livelier appreciation of the danger of their interests ani
to the credit of the city, involved by Ihe tenacious adherence
to the plan of building the Triboroiig'h route with the city's
money. The Committee of the Allied Keal Estate Interests
have stated the objections to such a course of action with
the utmost force and truth. Indeed, the Committee erred, if
at all, on the side ot under-statement. Quite apart from the
positive advantages to be derived from reaching some agree¬
ment with the Interborougii Company about Subway exten¬
sions,, the positive disadvantages of the alternative course
are both numerous and ominous. The effect of borrowing
so much money for Subway construction wonld be nothing
short of disastrous. The credit of the city depends not
merely on the proper expenditure of the money borrowed, but
partly upon the amount of city stock issued compared to the
size of the market, which exists for that class of security.
No matter bow good the purposes for which the city borrows,
its credit will certainly be injured in case it attempts to
borrow more money than the possible lenders are able an'i
ready to supply. Even in tbe past New York has been
straining its credit by the extent of its applications to the
money market. At present it is asking for almost ?40.000>-
000 a year for ordinary purposes. During tbe next six or
seven years it will be demanding about $15,000,000 more for
tbe new water supply, wbich brings its total demands up to
$65,000,000 a year without borrowing one cent for Subways,
If the Triborough route is built tbe sum total of its annual
emission of securities will amount to about .$100,000,000.
Surely every sane person must recognize that sucli a sum
could not be placed every year for tbe next live or six years
without placing the credit of tbe city in a very precarious
condition. One hesitates to make any prediction about a
matter upon which only an expert can offer an authoritative
opinion, but in all probability so much money could not be
placed unless the city were prepared to pay five per cent, for
it. Before making up their minds to commit the city to a
course so disastrous, those members of the Board of Esti¬
mate who are hesitating should seek expert advice upon tbis
most essential of all points. And in the meantime the tax¬
payers should make themselves heard. If the city should
deliberately undermine its own credit and depress tbe value
of its existing securities, it is the property-owner in Mau¬
hattan who will pay two-thirds of tbe hill. The present crisis
is the most serious one which has ever been reached in the
financial history of New York, and the taxpayers should make
themselves heard.
CAN'T AFFORD THE TRIBOROUGH.
THE city's credit would undoubtedly be very much injured
hy the annual emission of aimost $100,000,000 of se¬
curities, even though there was a guarantee that the money
would be remuneratively expended; but if the Triborough
route is built with the city's money, sucb a guarantee will
not be forthcoming. Tbe advocates of such a policy should
seriously consider jusl what they can expect from an operat¬
ing tenant of that subway—tbe expectation being founded
on Mr. McAdoo's moribund offer. What Mr. McAdoo of¬
fered to do was to take all the fat, in the shape of a Man¬
hattan and Brooklyn trunk line and leave out ali of the
lean in the shape of desirable Bronx and Brooklyn exten¬
sions. Yet in spite of the fact that he bid only upon the
most profitable parts of the proposed system, he wanted the
city to supply two-thirds of the money, stand all the possible
losses, and divide the profits, if any, in half. What he or any
otber possible tenant would offer for the whole eyatem, no
cne can say; and he withdrew even the first great bid
at the first possible opportunity. B'ut if the city builds the
Ti'iborough system without securing a tenant, it will have to
make arrangements lor the extension also, and the certain¬
ty, that ou such a basis it will have to make even a worse
bargain than the mie Mr. McAdoo offered with a future ten¬
ant, would undoubtedly have a disastrous effect upon the
terms, upon which the money could be borrowed. It is not
plain, as Chairman Wilcox states in his letter to the Board
of Estimate, that Mr, McAdoo's offer proves that the city
can afford to go ahead with tbe Triborough route if neces¬
sary. What that offer proved w-as that the city .cannot un¬
der amy circumstances afford to go ahead with the Tribor¬
ough route; and the quick withdrawal of the offer, without
allowing any proper time for its const der atioin, adds an ad¬
ditional confirmation to that already indubitable statement.
COMING TO TERMS.
THE Public Service Commission has done tbe people of
New York a great service by recommending in general
the acceptance of the offer of the Interborough Co.; and the
Kecord and tiuide devoutly hopes that it will resolutely stick
to its recommendation. During the next few months the ut¬
most pressure will be brought to hear upon the Commission,
to rescind its recommendation, or to insist upon modifica¬
tions of the Interborough Company's proposal, which the
management of tbat corporation will not accept. But in
view of the sweeping nature of its approval of the Interbor¬
ough's plans it can hardly chamge its attitude vi'ithout self-
stultification. The truth is that the city has in a sense been
forced to come to terms with tbe Interborougb Company, be¬
cause the impossibility of the alternative competing systems
prepared by the Commission. The Record amd Guide does
not agree with those critics of the commission, who assert
that it was sheer waste to spend a million dollars in the
preparation of au independent system. It was good and
not bad economy to test what could be done in the way of
drawing up a route aud specifications for a competitive sub¬
way. If tbe commission had not pursued such a course, the
city could never have obtained the offer of such excellent
terms from tbe Interborough Co. We have always believed
tbat the Commission's route was badly laid out, and that its
plans were made unnecessarily expensive, but their general
policy was correct. That policy has failed, because the policy
of building competing subways is necessarily wasteful, and
because the tenant of the existing subway is necessarily in a
situation to offer better terms for extensions than the city
can obtain from an independent operator, if the city will
learn that lesson, it will be worth a good mauy million dol¬
lars. The plans for tbe Triborough route have been the club
with which the Interborough Co, has been pounded into good
behavior. Such a club will always be needed, not because
the Interborough Company is an exceptionally "bad" corpora¬
tion, but because a club, is always needed to prevent public
service companies from presuming on their opportunities.
The Commission has not thrown away its w'eapon. The al-
teimative of competition always remains open, provided the
behavior of the company is had enough to make tbe price
worth paying. But for the present tbe club has done its
work; and if tbe plans for the Triborough route should now
be carried out, after tbey have served their purpose, such an
action would be like sending a Dreadiiaught to do the work
of a Mauretania. The Dreadnaught could carry the passen¬
gers, but at what a cost?
WHAT ABOUT THE ESTIMATE BOARD?
1-^HE Record and Guide refuses to believe that the Board
of Estimate will oppose the Commission Jn its desire to
come to terms with the Interborough Co. Apparently only
seven votes of sixteen are pledged to such action; and it
may be expeo^^d that in the end the sober judgment of the
Borough PresTdents of Manhattan, Brooklyn, Queens and the
Bronx will agree with tbat of the Mayor, These gentlemen
are perfectly right to take time for consideration. Quick
action is desirable, but this is a great question, and its settle¬
ment cannot be hurried. Nevertheless the Presidents of these
four Boroughs are likely to agree eventually with Mr, Gay¬
nor, because only in this way can the transit needs of their
constituents be met. The Brons and Brooklyn will get as
much rapid transit from the Interborough Co. as from the