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Real estate record and builders' guide: v. 86, no. 2232: December 24, 1910

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December 24, 1910. KECORD AND GUIDE 1079 ^ KTABUSHED-^ f^fcRfH aW> 1868. '^to&IEfiloR^LESTAjt.BlIlLDIf/o %aflTEeTU[^E,KoUSDfOU)DEQCS?ATl«t 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