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RECTOR TWINING AND
i' TWINING DODGES AS
MAKES CHALLENGE ON LEASE
Cntlnorf from Tote One ,
I did not come here today to discuss the lease. In the hatter of the lease
the estimates will be In the report! of the Department of City Transit, which will
bn'out soon.
"The question as to the matter of equipment is not a trifling one. Tho mat
ter is a serious one, and I think that you are entitled to know what the report
will have to say. .
"The coming report will sny that the lease in this respect is not nil clear
ft can be read in either way.
"In our own interpretation wo gave it the benefit of the doubt, but it is
quite likely that tho city wll lnot have to pay twice for the equipment. Mr.
BaBllard says the city will not have to pay for it at all.
"When the city would pay for it a second time would come when the city
, part of the bonds now 'amortized' after part of the equipment has been
rht. The city .would pay for it once when under the terms, nf tho nr,mo.
jays
bought,
- w .. .. i t .1 i ... "w w "w p,"-
m ment y woum pay lne lesseo Ior
Wjinoui raaiuuR uy lurmer answer to jur. tfallard's inquiry as to whether
he ever had made the statement attributed to him. tho ri.tm. ! m
iff x formal address.
Mr. Ballard began his attack upon the equipment question as follows:
. "It is charged that under the contract the city would have to pay for the
equipment twice. In this vicious statement there is no word of truth. It is false
and malicious, and it is tho thing what has stirred up the trouble. Mr. Twining
and I are friends, but I think it was King David who said all men are liars.
"Mr. Twining has stated this and so, has Mr. Hancock, and Mr. Potter and
I mean to give Mr. Twining a chance to take it back."
William Hancock on the transit board was seated near Mr. Ballard when
the latter called his name, into the controversy. As Mr. Ballard concluded this
sentence, Mr. Hancock jumped to his feet and explained :
"I beg your pardon. I did not say that."
"I bag your pardon," continued Mr. Ballard, "but Mr. Potter has said this
ftfi enough for both of you. I wou.d say that if he were here today."
Turning then to Director Twining, Mr. Ballrad continued:
"On Februnry 21 a statement alleged to have been made by you before a
committee of the United Business Men's Association with relation to the pro
posed transit lease was published and circulated throughout the city under two
.column headlines. These headlines read:
" 'City will not own what it pays for, asserts Twining.'
"In tho body of the alleged statement this quotation appears as coming
from you with relation to the equipment.
"'The lease would reserve for the city the right to repurchase what it
already paid for, at the end of tho term of the lease.'
"Following he publication o fthis alleged statement the United Business
Men's Association adopted if as the principal reason for opposing the lease.
Individuals also have adopted it as a basis for public attacks upon the transit
lease. it
"Will you please inform us;
"First, did you actually make the statement attributed to you,
"Second, was this statement by whomsoever made a true statement of
fact?"
Mr. Ballard then continued with this set speech after a final remark ad
dressed to the Director to the effect tha he woul dgive him an opporunity to reply
later.
Mr. Ballard in his address flatly denied pessimistic prophecies of Transit
Director Twining that the ratification of tho proposed transit lease between
municipality and the Philadelphia Rapid Transit Company could mean either
an increase in the city's tax rate or a fare in excess of five cents;
The rapid growth and expansion of Philadelphia, which has been ex
perienced during the past two years, and which may justly be expected to con
tinue, Mr. Ballardsaid, will return to the city through the operation of the
high-speed system and through increased tax returns every dolar of interest and
sinking fund charges upon the bonds issued for the construction of the entire
system.
CLAUSE TO ASSURE CREDIT
The provision in the lease reserving to th transit company the right to
establish the present exchange tickets at a rai above the proposed five-cent
universal fare to meet any deficit was inserted, Mr. Ballard explained, not be
cause there would be the slightest possibility of a deficit, but because the com
pany had to take precautions to give it the credit necessary to borrow $40,000,000
to equip any new lines.
Director Twining expressed views diametrically opposed to those of the
spokesman for the transit company.
He declared
That the transit program as now authorized will impose a burden that must
be borne either by the city or by the operating company,
That the city and company instead of drawing closer together in negotiations
are actually diverging and are now farther apart than they were in 1914.
That the 1916 figures of the company show that there would have been under
the terms of the lease a deficit of almost $4,000,000 in the amount necessary to
carry the charges of the unified surface and high-speed system.
Ignoring entirely the optimistic views of Mr. Ballard as to tie future possi
bilities of this city and without any reference to the rapid industrial develop
ment of the last two years, which is rapidly advancing Philadelphia as the most
progressive city in the Union, he repeated the statement that the system now
will cost $90,000,000 instead of $63,000,000 and declared that the prophecies of
former Director Taylor as to the profit from the system cannot be realized now
because the various lines have been extended far beyond the original limits.
TAYLOR FRUSTRATED FIRST PLAN
Mr. Ballard made it plain during his speech that the company had intended
to demand more liberal terms in the lease. This plan was frustrated, he said,
by Mr. Taylor, whose assistance they sought in the negotiations "not because
we wanted to, but because we had to."
As a result of the conferences with Mr. Taylor the company is now willing,
iMr. Ballard continued, to accept an assured return of five per cent, although the
figures for the present year thus far show that the 1917 profit will be at least
nine per cent.
Mr. Ballard declared untrue the charge made by Director Twining and
others that the city will .have to pay twice for the equipment installed on the
high-speed system. He likewise denied the charge that the city will pay
$41,000,000 for the abolition of the present eight-cent exchange tickets.
'J
i TRANSIT LEASE FAIR TO CITY,
DECLARES
Mr. Ballard said': v
. '7?9 clty of Philadelphia has committed
UMlf to a broad program of transit develop
nnt which has received the approval at
Polls of nearly three-fourths of the
voters of this city. It has been admitted
Zjvtry one that theso ,lnes can B've the
and most economical service to the
"People If they are operated by the
MIdelpMa Itapld Transit Company In
Wh a iianner that the present surface
psten. cn act us feeders to the high-speed
"", irr.ito oklpg care of the shorter rides
"W' tnu Burface.
TAYLOIVS DEMANDS N
"At the very beginning Mr. Taylor de
manded of tho Rapid Transit Company that
H agree to his terms of operation, tho basis
w which was that whatever net Income tho
wmpany might have (except from exchange
xa-Kets) when the high-speed lines were
-eptned should be assured to It by a pref
!!?... pay,nent from the receipts of the
5,. v llnes- u was fatr ln Principle, yet
cumbersome and unsatisfactory In Its
Practical operation. This negotiation took
?.? J" Mny.'XDH. and Just prior to that
"ma flguiea had ,,een prepared by jha De.
Prlment nf pirv nvan.it ABli...i, ...i.
"i !.Wnln,r il lhe transit company would
rivLS' year lnt ",0 next twnty or more
I MrM !se "Burta are today, at the ex.
out ? ln,' vca. at le"t five years
W-. . . ' '"ea"' the company's receipts
l?i -t.H?lly' '"creased In the years 1913 to
?.,400.uvii more than the denartment's
ff . i, e,t,"'lil they would Increase. The
9,Jti.'nt tsdinaleo. illlit our repAlnra tnr thin
il'eJif.X,?',,.1 '" JS5.w00.000, Including ex
S' .L',?-V.cket,, Q"r "Mlpts for this fiscal
'Il.L "U1 ninuunt to J28.40O.00O. These
?wf.".T,,r.0 I,ude b a flrm ' New York
'lair!11:. w W know ull New Yorkers
;HS u,i rMlfcaaelphla is standing still,
v.""1 ACObUllta fun th..r havlm k..n
?f tU i.iaV.
r short W. to b favarod with ;
iwUnww (.'wkittMMtrlto will
ntfMMJAf&k
BALLARD
tnc C08t of equipment."
ATTORNEY FOR F. R. T.
but It has not yet been given to the public.
1 hope that these New York experts have
learned something about Philadelphia In
the last tliree years and have been granted
somo share of the vision open for those
who have eyes to see of the magnificent
growth which lies Immediately -head of us.
"But let us come back to the present.
The city voted J63.000.000 for this work.
Contracts were let, and the time had come
when the actual agreement for equipment
and operation of the lines had to be made.
In the fall of 1916 negotiation were opened
by the Mayor, He sent to Councils what
was called a first draft of a contract with
us and we were asked by Councils to
dehne our position. We made a formal
statement to Councils that while the situa
tion had changed materially since May,
1914, we still stood ready to carry out the
spirit of the arrangement of that date.
Well as tho preliminary arrangements
had been made with Mr. Taylor, as this
whole development was his plan, as he knew
more about it man ' -"-manded
the absolute confidence of the peo.
pie, we naturally went to him. We knew
that the press and the pubiio would not
favor any contract that did not bear the
stamp of his approval, and we Mt- pre
liminary to submitting our position to the
Mayor and Councils we should If possible
satisfy Sir. Taylor as to the fairness of
any proposition.
HAD TO SEE TAYLOn
So wo went to Mr. Taylor-not ""
we wanted to. but because we had to. We
started with the basis reached In 1914, Ut.,
that oru net Income (other than from ex
change tickets) should to assures to us .
showed him' that w -I -"'", '-itS
present fiscal year wotiM ''
12,700 000, or nine per cent on cut stocK
(or. eliminating the net earnln811(rr0anoek)
change ticket., seven per cent on i our stock).
and a-ot no furtirer. we w "-- '""
with tli nronosltlon that while private cap-
"tail ,a public' ulllltM waa niMf
RAPID TRANSIT ATTORNEY
TRANSIT OPTIMIST AND PESSIMIST
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. I'hoto by Photo-CrnfUTK.
Ellis Ames Ballard, counsel for the Philadelphia Rapid Transit Com
pany (left), and William S. Twining, Director of City Transit (right),
who discussed the transit situatipn today at the City Club.
we would linve to suffer because wo were
paying too big a rent to the Union Traction
Company", and under no circumstances
would he approve a greater assured return
than Ave per cent,
"There Is no use going over the whole
negotiation. It lasted a month. The result
was we were made to give up all claim
for accumulated dividends under the 1907
contract about J17.000.000 : we were limited
to live per cent on our actual cash capital :
our share ln the future of the combined
properties was restricted to one-tenth, and
then to cap the climax n recapture clause
was Inserted to protect the city ln case It
was found In the future we were making
too much money. We fought against that
hard, but as Mr. Taylor said he wbuld not
approve the contract without It we took our
medicine. As we were giving up so much
we asltid that tho live per cent should be
assured to us against possible contingencies.
Of course. It was agreed that the whole
arrangement was subject to an audit of our
accounts showing that wo were making the
money that we claimed to make, and In
view of tho concessions which Mr. Taylor
had got from us, he approved of the pro.
vision for a temporary transfer charge, If
needed to protect the minimum amount
which had been accorded to us.
"The proposition was then formally sub
mltted to the Mayor and the chairmen of
the two Councllmanlc committees, Mr. Gaff
ney and Mr. Seger, at a conference, to which
the Mayor Invited also Mr. Twining and Mr.
Taylor. It was received with approval by
the preis of this city. The next thing to
do was to draw a formal contract, and It
was suggested by tho Mayor that we follow
as far as possible the form already before
Councils. A month later wo submitted the
contract. It was checked throughout by
Mr. Taylor. It does not deviate In any
way from the terms of our offer."
ItEPORT ASKED
"Now what has happened In the last two
months? The Mayor asked his Director for
a report on how this contract would affect
the city. The Director stated he could not
make this report until he received the audit
of the company's books, already authorized,
and an analysis of the contract to be made
by a firm of expert railway engineers. So
Ford, Bacon & Davis were ngaln employed
by the city, and before either the account
ants or the experts got to work we began
to hear InsinuatU ns which became
stronger as the days went by that our
books were not right (Mr. Twining) ; that
our stock was all water (Mr. Fluck) ; that
there would be a deficit to tho city of
15,000,000 a year (Mr. Twining), or even
$7,000,000 (Mr. Ryan) ; that It would mean
an Increase in tax rate of a dollar (Mr.
Ryan) ; that there ought to bo a seven
cent fare on the high-speed lines (Colonel
Potter) : that the city was paying J41.000,
000 to get rid of the exchange ticket which
the company would put back ln six months
(again Colonel Potter) ; that there was a
nigger In tho woodpile (Mr. Hancock) ; and
that the City was going to have to pay for
the equipment twice (duet by Mr. Twining
and Colonel Potter). Have I overlooked
any of these little pleasantries?
NOT MUCH TIME
"Ten minutes isn't much time to get
through these barbed-wire entanglements,
but I will do my best.
"First. Our accounts, Messrs. I.ybrand,
Ross Brothers & Montgomery are at
present auditing our accounts. Their re
ports will show you that our statement of
earnings Is correct. Fortunately, when Mr.
Stotesbury took charge of this property In
1911, In order to avoid any question In the
future as to the proper amounts that were
being charged for maintenance of the prop
erty and replacing equipment, he sent a
letter to Councils definitely dealing with
both subjects. In that letter he stated that
In addition to setting aside a million and
a half In cash and securities, then on hand,
as a special reserve, the company would
each year take out. of Its gross receipts for
maintenance, and charge to operation,
whether spent or not, fifteen per cent of
those gross receipts. He also Btated that
the company would purchase during the
next five years 1360 new cars and that
half of this purchase would be met from
current earnings and charged to operation,
At the same time the company adopted a
new balance sheet and system of account
ing which had been prepared by the city's
auditors, Messrs. Vollum, Fernley, Vollum
& Rorer, and the same were approved by
Councils. ,
"Now the fifteen per cent has been set
aside each year and charged to operation,
but It has not all been spent. An a result
of the policy which Mr. Stotesbury stated
to Counclln the company now has on hand
In n specl.il fund. In cash and securities,
which It will spend upon this property
when need arises and construction and
material prices are normal. J2.176.000.
"Instead of buying 135u new surface cars
over a period of five years, we bought 1500
new cars within two years and a half. They
cost J7.177.484.S6. Already J3.510.639.37
of this amount has been paid out of cur
rent receipts. A further payment will oe
made on May 1 next, which will complete
the payment of half the cost out of earn
ings. There Isn't another street railway
company In this country that ever took
$500,000 a year for six consecutive years
out of earnings and put It Into equipment.
"Second. It is charged that under the
contract the city will have to pay for the
equipment twice. Mr. Twining has stated
this; Mr. Potter and Mr. Hancock have re
iterated it, and I read In a circular sent out
ln the name of the United Business, Men's
Association the following;
" 'In addition, under the proposed lease,
the oity of Philadelphia pays the Philadel
phia Itapld Transit Company for financing
the equipment- at the rate of six per cent
This plan for equipment continues for the
period of fifty years, and at the end of the
period. If the city desires the equipment re
turned to It, then It must purchase the same
from the Philadelphia Rapid Transit Com
pany, notwithstanding that It has already
paid for it, and, further, that It has also
paid for new equipment to replace old
worn-out equipment which the Philadelphia
Rapid Transit Company had at the begin
ning of the lease.'
A SERIOUS QUESTION
"I want to ask seriously the members
of that very Important organisation which
has done so much, for the city of Phlla-,
delphla ln the paat how It comes that
they permit their name to be used for this
and .other mlrepri."untatlons of fact con-
talned in, that circular, when the itruth could
caaltytaYrW ajatBUIne. by reading th
Ush' ' -
equipment twice. It doesn't oven pay for
u once, une company makes no profit on
the equipment. It would havo made a
profit of 1 per cent per annum on the cost
of equipment under tho 1914' contract,, but
that Is one of the things Mr. Tnylor took
nway ftom us, Thi exact facts are: Tho
company must provide the money to buy
this equipment. It Ih permitted , to bonow
this money at the best rate of Interest pos
sible, and any saving In Interest rate goes
Into the general fund and the city gets
nine-tenths of It.
"Now there will bo paid out of the cur
rent earnings of the property Interest on
these bonds until they are paid off, and on
amortization fund of one per cent a year,
which the city has calculated will fully
pay off the bonds during tho life of the
contract, and ln addition the equipment
will be kept In good order and condition
out of the earnings of tho property, so
that at the end of the contract tho city
will get the equipment ln first-class Bhapo
wlliout the payment of a single dollar.
The company will make no profit what
ever out of the furnishing the equip
ment and it will come to the city at the
end of the term without its having cost
It anything. And yet tho false and ma
licious statement has been heralded about
this town on the stump, and now ln this
circular, that we ore making the city pay
for this twice, and tho Impression has been
created, to quote Mr. Hancock, that there
was a nigger In the woodpile that we had
tried to put something over but had been
caught with the goods.
"Third. It Is charged that tho company
will get $41,000,000 for exchange tickets.
This Is not correct. While the company
will be relieved for the term of tho contract
from tho charge of street "paving and tho
tax on dividends, and will postpone for ten
years payments Into the sinking fund
(which It must then resume and nako up),
this relief was granted to tho com,"iany for
three considerations: First and directly, for
abolishing exchange tickets, which hwo a
gross value at the present time of J9OC00O.
Secondly, so to strengthen the credit of the
company that it would be enabled to bor
row the J40.000.000 which It will have to
borrow to carry out the terms of this con
tract. Thirdly, to so establish tho net re
ceipts of tho unified syBtem ns to make It
certain that the company would not need
the transfer charge provided for In the fare
bectlon unless there was some great and
unlooked-for calamity. But call It what
you will, the company docs not get It.
"The company can get nothing from the
city except Its $1,500,000 and one-tenth of
any surplus from Joint operation. Any sav
ing ln payments, all receipts from every
source whatever, go Into the common pot,
of which the city gets nine-tenths nfter
payment of the Ave per cent dividend to the
company. Iet me Illustrate this by ana
lyzing a year's operation under this con
tract, and for greater certainty wo will
take this fiscal yenr's figures. Our year
ends June 30, Eight months are behind
us.
"At the present rata of earnings the com
pany will how a surplus for tho year of
over $2,700,000. Now If this contract had
been effectl'.e last July we would have been
saved the J735.00O of payment wo are
making to the city (paving J500.000. tax
on dividend Jl 15,000, sinking fund $120,
000). Adding this saving would make our
earnings in round figures J3, 500,000. But
It has been estimated that the exchange
ticket Is of a net value to us of two-thirds
of its gross say $000,000, for It Is be
lieved there will be a pick-up on business
from the reduced fare equivalent to the
difference. This we must deduct, leav
ing $2,900,000 as our earnings for the cur
rent year If the contract had been In effect.
What would become of the money? The
company would get Its five per cent divi
dend J1.600.00U leaving Jl. 400,000 for
division, of which the city would get
Jl, 260,000, or nearly twice tho exchange
rebate.
"But Mr. Twining may say I have
neglected to provide Interest- on equipment.
I answer: Tho Frankford line will not be
operated, according to his own estimates,
until 1919. We do not have to begin to
meet Interest on equipment until 1920, and
by that time our receipts will be much
greater. But assuming that our net re
ceipts In that year nre only what they are
In this. It only takes J 160,000 to pay the
Interest on the money that It will cost to
equip Frankford, and so recasting these
figures the city would still get J 1,125,000,
which is $300,000 more than tho abatement
on account of exchange tickets, and that
$390,000 Is four per cent Interest on J9.750,
000, approximately the entire cost of the
Frankfordillne.
"Fourth. But Mr. Fluck says our stock
Is watered and that If we did not have to
pay dividends on our leased lines there
would be plenty of money for everybody,
Fine sentiment. Mutt and Jeff would call
It 'stalling the rent.' Let us see about the
water. First. There Is no water in Rapid
Transit stock ; It Is paid up In full ln cash,
and the stockholders have lost ln the fifteen
years since 1902 $20,000,000 ln Interest.
That Is gone. But you say look nt Union
Traction and the big guarantees on
Philadelphia Traction stock and K. and P. 4s
which represent the old Electric Traction
and Peoples Traction stock. Now I will
make a statement of fact. I haven't time
to elaborate It or give you details, but
If any one wants details come to my office
and I will give them. Starting with the
formation of the Philadelphia Traction Com
pany In 1883 before which time all the
llnes were separately operated for a six
cent fare and a nine-cent exchange ticket,
there has been paid In cash on the stocks
of the five traction companies. Philadelphia,
Electric, Peoples, Union and Rapid Transit
J74,7T9,005.
"The total of all dividends paid to Janu
ary 1, 1917, equals exactly 0.4679 per cent
per annum calculated upon all this money
from the time It was paid In. Less than
H per cent. Not so very wet. Is It? And
if I Included money raised on bonds at low
rates of Interest, It would Increase tho In
vestment to over J100, 000,000 and brlyg
the Interest down to about 6 per cent.
"Fifth. All tho rest of this talk about
the size of the deficit and whether It will
have to be met, as Mr. Ryan thinks, by a
seventy-flve-cent Increase in tax rate, or, as
Colonel Potter recommends, by a seven-cent
fare on high-speed lines, can best be treated
together.
"I have already shown you what you
can expect from the first year in which the
city and the company have to meet Interest
on, the cost of construction and equipment
of the Frankford Una, namely, that
rJU of th. systw wHI.b.abl. to, I
the
take
, "m
' ' V -
DISCUSS TRANSIT
4000-Year Old Story fold
by Twining In Transit Talk
DIRECTOR TWINING, in his dis
cussion ,of the transit situation
at the City Club this afternoon,
went back 4000 years to illustrate
the difference between the ugly and
attractive presentations of transit
facts.
Here is tho Director's 4000-year-old
story:
There was a King in Egypt
named Snefru, who ruled in
Memphis. And it came to pass
that he dreamed and he sent for
the soothsayers and told them
the dream. The first interpreter
answered: "Woe unto thee, O
King. All thy kinsmen shall
die before thee." Then was
Snefru wroth: caused this mes
senger of evil to be scourged
and sent for a second interpre
ter. He answered: "O King,
live forever. Thy life shall be
longer than the life of thy kins-
men and the men of thy house."
Then the King smiled and gave
presents unto his interpreter,
for, though the interpretations
were one. yet he had clothed his
message in n web of fair and
pleasant words.
The first of those interpreters
' blurted out the truth bluntly, as
nn engineer might, while the
other presented it with the
charming persunsiveneas so
characteristic of nn accomr
plished lawyer.
will bo able to make uso of the Market
street terminal. Like Frankford, with the
gre.it Industrial development now tnklng
place near Its terminus, It will doubtless
practically carry Itself. It will not be
until one jear after the opening of the
delivery loop and such portions of the
Broad street line and the Northwest Park
way line aa are then ready to make use of
It, that the city will be confronted with any
interest payments which even tho normal
growth of this Bystem will not be able fully
to care for.
That year will be the fiscal year 1922-23.
for In this, as ln other cases, the Interest
charges are capitalized for the first year
of operation. Before attempting an annly
sis for that year let us make nomo Inquiry
as to what growth ln population and re
ceipts this city an reasonably expect, for,
nfter all, tho solution of this whole problem
depends entirely on the growth of the city.
"It is a conservative estimate to say that
street railway receipts Increase twice as
fast as the population. From 1900 to 1916
the population of tho city Increased thirty
two per cent. The receipts of tho transit
company Increased 106 per cent. That Is
three times as fast. This rapid transit de
velopment will help tho city grow. If It
doesn't It ought never to have been under
taken. The experience of New York and
Chicago during tho ten years, 1900 to 1910,
while their high-speed lines were being
built, was a growth of from six to six nnd
three-quarters per cent n year In street
railway receipts.
"Now. we can all do a little arithmetic,
though we are not expert accountants. Take
pur receipts for the current year $28,400,
000. I have given you the experience of
three cities over the last two decades. Let
each man figure for himself what Increase
to expect and what the receipts of this sys
tem will bo, say, In the year 1922-1923,
which Is tho first year that the city will
have to meet any Interest charges for con
struction of Broad street, delivery loop ard
Parkway and northwest lines under the
present plans of the department.
"If you adopt a two per cent yearly
growth for the city and only a four per
cent rate of Increase In receipts It will
give you J35,000,000 for the year 1922-1923,
after eliminating the exchange ticket, or
an Increase In gross at the end of six years
of $6,500,000. If, after nllowlng for the
Increased cost of operating the new lines,
the company Is able to save even twenty
five per cent of that gross. Increase, Its
surplus for the year will be $4,500,0O De
duct from this $1,000,000 to cover Interest
nn equipment cost, which Is not now a
charge, and $1,500,000 for our dividend,
and there will still remain $2,000,000 Bur
plus, of which the city will get $1,800,000.
or an Interest return of four per cent on
$45,000,000.
"An outlook such ns this need give the
city no concern. If tho company does no'
better than a four per cent increase which
means that the city will get no better than
a two per cent increase In population, there
could not possibly ln 1923 be a deficit of
Interest and sinking fund charges for the
city to meet out of Its general fund greater
than a million or a million and a half
dollars.
"But In the meantime the city will be
accumulating a surplus from the profits
accruing to It during the years from 1919
to 1923 ; the assessable value of lands at
present undeveloped will be abnormally In
creased by this Improvement, thus increas
ing the general fund from taxation without
any Increase In tho tax rate. But, gentle
men, In my opinion It Is ridiculous to think
that this city will not grow more rapidly
In the next ten yers than It has in tho past.
In the next ten years than It has In the past,
months. A greatly Increased Navy Yard.
The location of a great plant by the West
Inghouse Company. Developments by oil
companies and shipbuilding companies along
the Delaware.
"Yesterday told us of nn award to Phila
delphia shipbuilding Interests of contracts
for the navy aggregating over J50, 000,000.
If these new interests should call for the
employment of 60,000 additional workmen.
It would mean rn abnormal Increase ln
population of SOtsOOO people, and a 300,000
addition to the population of the city means
$5,000,000 Increase In the receipts of the
transportation system h year. It re
quires no stretch of the .taglnntlou to be
lieve that In addition to the normal growth
heretofore experienced such an additional
Increase ln population may bo experienced
by Philadelphia during tu next six years.
"If such should be the -ase the present
contract would return to the city of Phila
delphia every dollar of Interest nnd sink
ing fund charges upon bonds lsucd to covir
the cost of construction. I may be too
optimistic, but, believe me, I am nearer
the truth than those who have gone about
this town howling calamity.
' "Ah ! But you say how about that
transfer charge? I answer If there is
no falling of net receipts below $1,600,000
there can be no transfer charge. So why
discuss it? There isn't a chance of such
a thing unless the Germans blow up the
city, or there is a conflagration, or earth
quake or some such calamity. Then you
ask me, why put It ln the contract If you
aren't going to use It? Just for this rea
son: "The P. R. T. needs credit. It has to bor
row at" least $40,000,000 in the next ten
years for equipment of city lines and ex
tensions nnd Improvements of Its own sys
tem. To borrow any such sum of money It
must be able to say to those asked to put it
up we ore protected to the extent of the
earnings of the Joint system against every
possible contingency. This contract Is not
possible without that protection. I ask you,
in all seriousness, do you not think the city
can well afford to give It?
"Gentlemen, I have finished yet I ask
you to Indulge me for n moment more while
I tell you what I really think of the future
of our city. When I hear the pessimistic
talk that this discussion has brought out,
I lake my stand with the Pharisee and
thank God I am not as other men are. I
believe In the future of our city. It Is the
natural outlet for the resources of the rich
est State In the Union, with Inexhaustible
supplies of coal at Its door and offering the
beat labor market in the country, there Is
little wonder that the great manufacturing
concerns lure turning to us. AUwe needU
proper port development and, transit faclll
ittakito taut FhlUdaJahia WMtf'lMakaiMtJM
t .
tEASE
P. R T TCTASF. TTNFATR TO HTTV ;Ad
-. . -.. w, -.ww--., i
Director Twining said:
"Our engineering publications have late
ly given considerable space to discussing
tho advantages that engineers enjoy who
can express themselves clearly and 'on
vlnclngly. Engineers, general speaking, nre
mainly concerned with the ascertainment
of fact, from which all true reasoning be
gins. "Huxley said, 'Theory sometimes becomes
a tragedy because a beautiful hypothesis
Is slain by an ugly fact.' That Is too often
the case with the engineer; he blurts out
tho ugly fact, and It is unpalatable, where
as, If he had the felicity of expression to
present his facts In an attractive way, the
results might be more satisfactory, I can
best Illustrate this by reciting an Incident
of some four thousand years ago. as re
lated by Doctor Ebers ln 'An Egyptian
Princess,' .
" 'There was a king ln Kgypt named
Snefru who ruled In Memphis. And It came
to pass that he dreamed, and he sent for
the soothsayers and told them the dream.
The first Interpreter answered, "Woe unto
thee, o King: All thy kinsmen snail die be
fore thee." Thon was Snefru wroth ; caused
this messenger of evil to be scourged and
sent for a second Interpreter. He nn
swered, "O King, live forever! Thy life shall
be longer than the life of thy kinsmen nnd
the men of thy house." Then the King
smiled and gave presents unto this Inter
preter, for though the Interpretations were
one, yet ho had clothed his message ln a
web of fair and pleasant words.'
Tho first of those Interpreters blurted
out the truth bluntly ns an engineer might,
while the other presented It with the charm
ing potsuaslveness so characteristic of an
acompllshcd lawyer.
'As an engineer, I have striven to learn
thn facts affecting our transit conditions,
with a view of securing the best trans
portation available, though I realize my
Inability to present my conclusions as hap
pily as I should like; therefore, I crave
your indulgence.
WITH OPEN MINDS
"This transit problem should be consid
ered with open, dispassionate minds; free
from selfishness, bias and prejudice ; re
ceptive only to rellablo and convincing evi
dence ; keeping before us the great and
Immortal truth, 'They who err in vision
stumble In judgment.
"First, wo must face the facts and rea
son from a true basis to arrivt, at sound
conclusions. Confusion reigns now because
the people cannot reconcile the statements
of today with the assurances of the past.
On October 1. 1913, the Director of the
Department of City Transit published this
statement:
"Tho recommended transit facilities will
not only produce sufficient revenue to pay
the Interest on the city's Investment, but also
return to the city the total cost thereof, ln
due course, and the city will ultimately be
come tho woner of ull of these facilities.
tree of Indebtedness, as a great municipal
Income producing Investment.
PUBLIC WONDERING
"The public Is now wondering why that
promise cannot bo realized, The transit
program as formulated at that time was
more modest and had not expanded Into the
ambitious program that has since been
authorized.
"Comprehensively and tersely stated to
day, the fact stands that the transit pro
gram ns now authorized will Impose a
burden that must be borne by the city or
the operating company, or both.
"The city is now face to face with a
situation which was pointed out a year ago
in my report, and which Involves the most
Important questions which have been be
fore the city for decision within Its entire
history.
"The questions now before the public are
deeper and broader than the mere question,
"Miall the Philadelphia Rapid Tranilt Com
pany be paid n guarantee of live per, cent
an Its Mock for operating the clty' sys
tem? "That Is but one of the Incidental finan
cial features of the situation.
THE BIGGEST QUESTION
"Underlying the whole situation Is the
desire of the city for improved and proper
modern transit service.
"Probably most of the people present, If
asked today what the city contemplates In
Its program for transit development, would
answer that the city Is committed to nnd
Intends to carry out the Taylor plan. If I
should ask what they understand by the
Taylor plan I think It Is doubtful It many
could give a clear and Intelligent Idea of
what that plan consists or what It contem
plates. PEOPLE DON'T KNOW
"I find that many people talk enthu
siastically and with great heat on transit
affairs, but when asked specific questions
they reveal the fact that they are chiefly
Interested In some particular phase of thj
program affecting their personal interest.
"Job E. Hedges In a recent speech said
'Men amend the Constitution every day
In language who have not even rend It.'
"As pointed out a year ago, the Taylor
plan may be considered as having three
constituent parts or elements.
First. The system of high-speed lines
running radially from the center of the
cltyln five different directions so as to
seri,e virtually all tho districts of the
city.
Second. The financial plan, calling
fo these lines to be built out of city
funds.
Third. An operating plan based on
a contract with the existing company
by which that company shall agree to
provide satisfactory fcervlce between
any two points within the city limits
on a basis of a five-cent fare, with
free transfers.
"The first two elements of the program
are behind us, nnd we have not time today
to consider them.
"The third element the 'contract' has
been for tho past three years a rather In
different Issue, but Is now a live, active,
vital issue, for the people are at last real
izing that this is the element which should
have received the first consideration,
"I have been asked many times recently
what Is the cause of the long negotiations
over this contract which hae not produced
a satisfactory outcome.
"If you read the history of the lease
negotiations, starting In 1913 and continu
ing Intermittently to the present time, you
will find that Instead of the company and
tho city drawing closer together as time
has passed they have actually diverged
uid nre now really further apart than they
were in 1914.
"The history of these negotiations show
that the process of negotiations consisted of
a proposal made by the city to the company,
and a counter-proporal from the company to
the city, each proposal varying Interms and
conditions as the situation has changed
from month to monMi
"Time does not ..ml, the consideration
of the past negotiations, so I will restrict
myself to explain what Interferes with the
consummation of a satisfactory contract.
"To begin with, the difficulty underlying
this situation is purely financial, and It has
its roots back In the consolidations begin
ning ln the '80s, about thirty years ago.
POLITICAL FINANCIERS
"In those days a group of financiers and
promoters developed ln Philadelphia who
had great faith In the future possibilities
of the street rallwayj business. They were
financiers of the political variety, and the
result of their financing Is reflected ln every
financial statement of the company that
has been Issued since that time.
"It the company's report for 1916 bi
analysed It will be found that the rental
represented approximately two cents oUt of
every fare, collected, and the operating ex
penses, taxes, etc, approximately three
cents, a total of five cents, and the' surplus
available for dividends virtually1 came from
the exchange ticket revenue 'nd1mlssi
'and 1ml
racUsW,
laneous earnings, freight, adn
These .rnUHa f. amountaC ito , i
-v
ircr
" ? .'?.
DIRECTOR TWINING STILL INSIJ
V'
conditions, the problem consists In 1
ing to stretch the remaining Income
and four-tenths cents to cover 'the r
ments of, say, four cents, had ths'ti
system been ln operation last year;
ainrerence or six-tentns of a cent
enue passenger does not seem to be
gap between tho city and the compai
wnen we conaioer mat tne compai
rled about 600,000,000 revenue rjaa
last year. It Is evident that there
havo been a shortage of about II.
of tho amount necessary to carry th"
ilea system last year, is. to xnis f,0
be added the 1900,000 which the
received from the exchange tickets.
would be abolished under the city's'
gram. It Is obvious that there would 'k
deficit of about $4,000,000 In the cash
C3sry iu moot me requirements. ii
WHO SHALL PAYr Wa
"It Is therefore clear that tha dill
In the negotiations lies In dceldln. i
shall pay this excess cost, and no .lease 'i
oe aeciaea until tnis matter Is deCeh
and permanently settled.
"A temporary reduction in tho city's"!
gram of construction would not change!
in nippies mvoiveu, Dut wouia tempor
affect fllA nmnflnf ft tt, ahnaM r
"Under present laws the comnanr '
not be made to assume this excess cost..
"I want to Impress upon you, gentlemM
the eerlousness of this situation and I waSi
to ask you to give this nuestlort sertsll
thought, for this must bo settled falriyJH
ft Is to be settled at all. A settlement, alM
the llnes of the 1907 contract will result.
nothing but abiding dissatisfaction, andttj
contract of this magnitude which intereM
every citizen as a stockholder of tho cMs
should be given careful study nnd investl
gatlon. v.'
"I am Blmply amazed that your organ!
zatlon, which Is composed of promtnM
citizens, and business men, has not in;auj
way endeavored to independently check th
figures and statements which have beei
Issued by this department as official, ami
have not In some way endeavored to tab
a stand or definite position ln this trans
situation. ( ij
TOO BIG A MATTER .f
"This matter is too large to be leftj,
the opinion of any Individual without s
eral or at least one Independent' check.';
"The situation has grown within thi
four years from an estimated Investmea
by the city of J35.000.000 to an investmen
estimated at present to exceed J90.000.008.
This estimate Is In dispute. Mc. Tay
lor denies that the cost wilt be this grSw
Editor Eve.vino LEDQEn. ";;
"At the same time the original invsM
ment by the lessee has dropped from' $21,
000,000 to J17.000.000. '.?.
"Originally the company's Investment vrm
to have been over forty per cent orUi
total, and has now dropped to less ta
nineteen per cent. , ,,
'The earnings of the svstem as Dlanne
in 1913 were estimated to $1 of gross .ft
J10 of investment. This Is now dimli
Ished to Jl of gross to JIB of Investmen
"The transit commissioner's report "i
1913 stated that Jl of gross earnings to, I
of Investment In rapid transit lines ym
all that could be profitably supported. T-
"All large enterprises are financed e
borrowed money. jl
"Money Is of the same intrinsic vaj
whether furnished by a corporation or'by
city. The only difference between the m
of city money and corporation money'l
In the difference ln the Interest rates'!
which the money can be borrowed,. T1
rate to be paid on the borrowed money
pends upon the credit of the borrower. T
basis of credit is the financial soundness
the borrower. The security of the loan mw
rest upon the ability of the borrower 1
pay the Interest, nnd repay the principal
ENGINEERING DEFINED
"McHenry has defined engineering' ,i
'the art of making every dollar of lnvea
ment earn the maximum interesfponm
"As the city Is now committed to a pri
gram which Involves a large Investmei
and a consequent Interest payment, 1
the duty of every citizen to use his bei
effortB to obtain for the city the best r
suits possible. . ',,'
"There Is no question that the clty.es,
finance Its program, as the city bonds' to
volve the faith and credit of the entli
city and do not necessarily depend upo
the earnings of the system, but the clt
must determine, before any lease can t
executed, whether those bonds are to t
carried by the taxes or by tho business, an
if the business, In what way and to wh
extent.
"The proposed relationship between th
city and the Philadelphia Rapid Trans'
Company may be described 1ft this tra:
The city's system may be represented a
a vigorous young man, who through altfc
lstlc motives has been Induced to underttth
to build a large, new and modern plan
for the making of a public necessity, an
has thereby incurred heavy debts and oM
gatlons. He then, for business reasodi
proposes marriage to a woman fourtes
years older, who has Inherited an old plafe
practically a monopoly, used for the oatn
purpose, which he continues to operat
though twice as large as the one he Intone1
building. The woman's plant has been vs
profitable, but it Is so encumbered by to
quests to relatives, under the will. that,h(
own Income has been very uncertain, at
on at least two occasions she felt that ha
situation was almost helpless. She has be
resourceful, however, and- lately, the W
normal prosperity, combined wltfr a chant
of managers of her plant, has produced ,
substantial Income for her. The pair real!
that when they are married her Income' wt
not provide their living expenses and atf
care for his obligations. They are ji
wrangling over the terms of a prenuptla
agreement, and a bone of contention Is t
matter of using her lncometo apply to kl
debts. She Insists upon retaining
of It for her own private use, while heViii
slsts that a greater share must come!
him to further his plans or else both bum
become a charge upon the public She cei
tends that he must curtail his obligation
by reducing the extent of his plant or U
agree to raise the cost of the productive
nis works. He objects, as he Is rats
RtuDDorn, and Is determined to carry-
Ills plans as a matter of pride. He eiiM
good credit whlclrvshe alms to utlllijtf
protect herself and her burdensome
lives. He, urged by his friends, wamj
iu join wuii mm in irvinc to Dreaa
will and thereby secure relief frsm'J
erc.islve and unwarranted bequests? Mi
i-ly there Is no love betweenv'thlZ!
congenial pair and their present 4reIaUii
ship Is only a matter of expediency,'' Oft
"Recognizing the conditions and relaMst
of this couple, will you kindly vnturj
guess on each of these three questions:
"First. Would such a marriage be .
partnership? itf
"Second. Will they ever mutually ass
to such a' union? ;.,
- intra, it ney oo, wnicn one will &'
neaa or. tne ramiiyT ;
"We nil know by the experiens
others mat marriages are not
itnimlv hnnnv whn th Inmm
meet the living expenses, Hqwevsr,-
rerventiy nope tnst in due time
auote the story books concerning tk
say 'they wero married and lived,,
vi- rt.-w.rrt "' '-
STATE POLICE ARRBQT4
ON CHARGE fOT
rnsoner na mue 11
to Destxuctfofi; ai
m
-iAncAstkr.' 41",''. 1
Troslel.., t
IatsroousM,
Pr feHaU,JUf
rMWMUy,nbt
8X
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