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PHILADELPHIA RAPID TRANSIT COMPANY
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ANNUAL REPORT OF THE PRESIDENT
Te tit Stockholders of tiu
PhXadtlphia Rapid Transit-Company!
, P. R. T. has been built up by the present nianagement, with es es es
operatien of its men, se that its net earnings are new.iuffident te meet
Its normal needs.. See letter of W, C, Dunbar, financial Vice-President,
pages 6 and 7,
P.. R. T. dividend of 6 for 1922, with present' earnings, Is
assured, unless prevented by disruption of the present effective corn
Knatien of men and management
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P. Pw T. was formed In 1902 in the interest of Union Traction,
and in order te guarantee te Union a dividend it could net earn for itself.
. P. P. T. in 1911, at the end of nine troublous years, had spent its
entire $30,000,000 capital and was approaching bankruptcy.
P. R, T. and Union Traction stockholders then united in an
appeal for help, and T. E. Mitten was given full charge of the property,
at which time an entire change of policy was inaugurated.
P. R. T., in the eleven years that followed, 1911-1921, earned
a surplus of $11,595,494. Of this total $5,846,514 has been paid in
dividends, and $5,748,980 has been put back into the property.
During this period, 1911-1921, the only new capital available has
been the proceeds of a $10,000,000 bend issue, guaranteed by Union
Traction in 1912. Fer this guarantee Union demanded, and received, ab
solute title te every asset that P. R. T. had, including Market Street El.
T. E. MITTEN, President:
I respectfully submit herewidi Income Account and Balance
Sheet for 1921, which have been approved by Messrs. Vellum, Fernley
8: Vellum, certified public accountants, in agreement with Messrs.
Lybrand, Ress Brethers and Montgomery, which latter firm acts for
the Gty Controller under the terms of the 1907 city agreement.
In accordance with the published Policy and Program for 1921,
the net income of $1,807,292 was spent te improve the condition of the
property. Deferred maintenance, due te wartime conditions, was over
come during the year, and the reserve fund for renewals re-established
at $1,671,679 as against the amount of $1,500,000 set up as per your
requirement in 1911.
Critics for the city assert that the present upkeep appropriations
are tee high ; meanwhile, ether critics contend that they are tee low.
Mr. Charles Hansel, Consulting Valuation Engineer for the Penn
sylvania R. R.. the Reading Railway and the Central R. R. of N. J., and
member of the Engineering Committee for all Class 1 railroads dealing
with Federal valuation of railroads, and Mr. Geerge W. Fuller, a recog
nized authority en public utilities, who are thought te represent the best
experience in such matters, have spent nearly two years in careful
inspection of .P. R. T. property in greatest detail. These eminent
engineers have certified that the property is maintained in an appro
priate operating condition and that present appropriations are necessary
te maintain its present condition.
P. R. T. annual net earning capacity, with present wage reduc
tions, new approximates $3,000,000, after paying all operating expenses,
fixed charges and taxes. This will provide $1,800,000 for the 6
dividend en P. R. T. stock, leaving upwards of a million dollars other
wise applicable te payment of back dividends, which must new be
used te finance expenditures for betterments and improvements.
There is no ether source from which te draw, until P. R. T. credit,
nude worth-while by continued payment of dividends, is sufficiently
established te make P. R. T. guarantee geed, se that track extensions
and ether additions te property may be thereafter financed under the
terms of the 1907 city agreement
Further financing' has been accomplished through car trusts,
principal and interest en which have been paid out of earnings, and
when, two years age, P. R. T. sought, te raise $3,000,000 mere
capital by a re-arrangement of its car trust issues, Union Traction
refused its required assent, unless P. R. T. should make ever te it
absolutely, everything it had acquired since the turnover of 1911.
This unfair condition was net met and the plans for extensions
had te be abandoned.
Certain directors, headed by Mr. J. J. Sullivan, a member of
the beard of P. R. T as well as president and director of Union
Traction, have publicly stated their unwillingness that T. E.
Mitten, and his group of experts forming the Mitten Management,
shmild continue te direct P. R. T. affairs, and have appealed for
proxies te be voted for a beard of directors that will substitute
some ether directing force.
P. R. T. men' and management have worked strenuously
through eleven years of co-operative effort, te build up P. R. T.
property se that its proved value, before Public Service Commis
sion, is new sufficient te insure a continued return, ample te pay
present rentals te underlying companies and 6 upon the
$30,000,000 of paid-in capital.
P. R. T. stockholders have been enriched by new values,
created by co-operation of men and management, who have thus
earned the right te demand that the result of their co-operative
effort be net destroyed, nor the management changed te endanger
the continuation of their forward progress.
Men and management, co-operating for economic accomplish
ment, justify the continuation of the present co-operative
combination, because of the substantial assurance given te the
permanency of dividends te stockholders, by insurance against
strikes, and through the direct interest of every empleye in
producing economics and added income, which each expects te share,
P. R. T. proved property value, before Public Service Com
mission, is sufficient te insure a continued return, ample te pay
present rentals te underlying companies and 6 upon the
$30,000,000 of P. R. T. paid-in capital. Expert testimony has been
pres'ented, showing that the accomplishments of men and manage
ment represent an annual saving. te the car riders of ever
$16,000,000. It is safe te say that nothing less than a 10c fare
would have been required, had only ordinary operating methods
prevailed. The earnings, efficiencies and economies effected by
co-operative effort can be summarized as fellows :
Passenger receipts approximating $7,000,000, induced by
superior salesmanship producing a net revenue of $2,400,000
Advertising receipts attributable te better marketing of
available space ....'. 300,000
Saving in operating cost due te scientific car scheduling and
routing; and increased speed aided by skip step 8,350,000
Increased energy production per unit of fuel consumed and
saving in power demand account lighter weight of Nearside
car 1,800,000
Accident prevention work and enlightened policy of claim
settlements 1,500,000
Developed production in car repair shops, refinements in
methods of painting and maintenance of car bodies and
equipment ,,,, 009.000
Accelerated track relaying and repair 140,000
Improved fare collection and station methods en subway
elevated 210,000
Benefits derived from low rarie of labor turnover 160,000
Savings account bulk purchases, standarditatien and reduced
handling of supplies 260,000
Reduction in fire insurance premium rate in recognition of
improved housekeeping and fire prevention methods 100,000
,.. $1 6,120.000
Only 1,606 suits against P. R. T. are new pending for unsettled
accidents, as against 4,953 unsettled suits inherited in 1911 from
former managctnerit 2.55 of operating revenue was required iti
1921 for accident costs, as against 6.21 required in 1910.
$1,807,292 net income earned in 1921 compares with the
deficit of former management of $1,222,735 in 1910. Fixed charges
new represent but 23.27 of operating revenue, while 4627
was required in 1910.
$5,748,980 undistributed surplus, 1911-1921, has been spent for
improvements, and the equities produced by this expenditure have
been, preserved te P. R. T. stockholders. This surplus of
$5,748,980 compares with the deficit of $1,118,609 in 1910.
W. C. DUNBAR,
February 25, 1922, Mce-President, Finance & Accounting.
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P. R. T. empleyes' saving fund already contains $1,000,000 of
P. R. T. bends and car trusts. P. R. T. empleyes collectively own
mere than 30,000 shares of P. R. T. stock, which evidences their
belief in P. R. T. future prosperity, with present management
P. R. T. operating costs will be reduced by extra effort of men
and management, and this without any lessening of service. The
payment te P. R. T. empleyes for super co-operation during 1922
is proposed, in an amount net te exceed 10 of P. R. T. payroll,
after paying 6 dividends te P. R. T. stockholders.
President Mitten's agreement covering direction of P. R. T.
affairs, unchanged since 1911, expires March 31, 1922, and will be
continued, providing that P. R. T. stockholders new assent te the
proposed financial participation by P. R. T. empleyes in the result
of further co-operative accomplishment.
P. R. T. stockholders, by forwarding their proxies te support
the present management, will encourage empleyes in their new
responsibility, and thus insure the payment of a 6 dividend for
1922. These whose stock is with brokers should insist that it be
voted te support the present management, which will produce the
dividend.
The enclosed proxies, returned in sufficient number, will be
accepted as evidencing stockholders' endorsement of the proposed
policy, and will insure the election of a beard of directors te
support Mitten Management, which, with 10,000 co-operating
empleyes, may be depended upon te supply uninterrupted service
te the public, as well as dividends te P. R. T. stockholders.
February 25, 192:
T. E. MITTEN.
President
PHILADELPHIA RAPID TRANSIT COMPANY
BALANCE SHEET
DECEMBER 31, 1ff1
ASSETS
Read and Equipment Expenditures for Leased Lines,
Real Estate, Sinking Funds, etc. ... S52,561,S80.01
Reserve Funds for Renewals
Ch.: $1AS0,000.00 ...
5lcur,tlC, 421,679.11.... 1.671,679.11
Cash. 756.S66.23
Material and Supplies. Accounts Receivable, etc.... 2.145,725.05
Deferred Assets and Unadjusted Debits. ....... A.ijr 2,400.819.75
$59,536,973 A 5
LIABILITIES
Capital Stock, Authorized $30,000,000 Paid in $29,991,660.00
Funded Debt 16,432,000.00
Audited Accounts, and ether Current Liabilities .. 751,571.43
Accrued Rentals, Interest and Taxes .. i ...,...,..., .. 3,677,236.99
Reserve Accounts :
Renewal and Depreciation ,n,v,v,Ml1l
Other Reserves , . ... .., v..... . ..... ......,..,,
surplus ....... .(....j... ij,i.i, ., .... .... .. . ....r. . . v -
2,258,55523
566,095.37
110,873.29
5.748,980.84
$59,536,97345
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