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Real estate record and builders' guide: v. 85, no. 2201: May 21, 1910

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May 21, 1910 RECORD AND GUIDE 1079 ^ ESTABDSHED-^ MARPH 21V> 1868. "Db6teD P RE\L £571^^.6011011/0 %:,KlTECTUR,E .KoiiSEtiOlD DEGOIiATBtf. Bt/sntess AffoThemes of Ge^Iei^I It^iEHESi.,; PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed ta C. W. SWEET published Every Saturdap By THE KECORD AJVD GUIDE CO. President, CLINTON W, SWEET Treasurer, F, W, DODGE Vice-Pres. Sc Geol. Mgr,, H. W. DESMOND Secretary, F. T. MILLER Nos. 11 to IB East 24tli Street, New York City (Telephone, Madison Square, 4430 to 4433.) "Entered at ihe Post Office at New York, N. Y., as second-class matter." Copyrighted, 1010, by The Record & Guide Co. Vol LXXXV, MAY 21, 1910. No. 2201 THERE has appeared recently in the New York Times "a general description of the plan of reorganization for the Metropolitan Street Railway Company, proposed by the bondholders' committee;" and this plan is far from encourag¬ ing either to the security-holders ol" the surface roads, or to the traveling public desirous of a better service. For its success it depends upon tbe accomplishment of three neces¬ sary objects. In the first place, fixed charges must be re¬ duced; and to this end the committee want to negotiate both with the city aud with the holders o£ the underlying securi¬ ties. From the latter they want a diminution of excessive rentals. From the former a reduction of taxation. If they can succeed in reducing these fixed charges, they expect to be able to raise some $12,500,000 of additional capital, and in this way to discharge all the obligations of the receiver¬ ship and make the system a solvent concern. Upon the foregoing plan there is one obvious comment. If that is the best the bondholders can do, the Metropolitan Street Rail¬ way Company must, indeed, be iu a desperate condition. Everything depends practically upon the success of the committee in inducing the holders of the underlying securi¬ ties to accept lower rentals; and from the disposition which these security-holders have exhibited hitherto, that certainly looks like a forlorn hope. They may succeed in the end in bringing ahout such a resnlt, but it will only be after con¬ siderable delay. On the other hand, when and if the rental charges are reduced, the bondholders should have a strong argument to make on behalf of a reduction of taxation— particularly in view of the fact that the argument would be accompanied hy an offer subsequently to share any profits with the city. The danger to this part of their scheme de¬ rives from the fact that both the Puhlic Service Commission and the Board of Estimate ■will be very much afraid of ap¬ pearing to be lenient to the delinquent corporation. The opportunity, however, of actually getting the street railway systems of Manhattan on a profit-sharing basis is one which should not be rejected in haste; aud ol course a good deal depends upon what proportion of the profits will be handed over to the city. The aim ol the local authorities should be to take advantage of the bankruptcy of the company to get rid of, if possible, the perpetual franchises enjoyed by the underlying companies; and it" it is Impossible to get rid of these franchises, at least, to mitigate their utter inexpedi¬ ency by securing the largest possible share in their fruits. Taxation should not be reduced save by the promise of a still larger share of any earning power, the system may de¬ velop in the future. This question can hardly come up, however, until the holders of the underlying securities can be induced to accept a lower rental. That will be the chief difficulty; and until it is disposed of the local authorities can afford to sit tight and let Ihe taxes accumulate. the property which would be benefitted; and used the profits derived Irom its sale, to .pay the cost of the docks. The whole tradition of American city government is opposed to this sort of thing; and many American cities are forbidden by law to buy any real estate not imperatively required for corporate purposes. Nevertheless it is probable that in the end they will be obliged to come to it, because there seems to be uo other way iu which cities can obtain the funds re¬ quired to meet certain expensive and indispensable public improvements. Take, lor instance, the provision for rapid transit in the outlying districts of New York, It is desirable that certain subways and elevated roads should be built that will not he immediately profitable, in order to develop new territory and to distribute population and business. Private capital will not construct such roads without municipal as¬ sistance. Municipal assistance cannot be provided by the taxpayer without an impossible increase in taxes. As a way out of this dilemma, the city now proposes to assess the ex¬ pense of these rapid transit roads on the benefited property, but this method leads to a great deal of injustice in the dis¬ tribution of the assessment. In a German city the local government would accomplish the same result by purchas¬ ing the property most benefitted, and paying for the Improve¬ ment out of the profits. American property owners consider sjich methods to be invasion of their sacred individual right to benefit from the growth of the city; but the majority of the property owners will soon understand that il they do uot consent to some such method of diminishing the cost of improvements, the improvements themselves will be impos¬ sible. The property owner has GOT to PAY in ONE FORM or ANOTHER, The city will appropriate his property either outright by paying lor it, or indirectly as taxes; but if the money is raised by taxation, it is derived from all the property instead of that immediately benefitted. The prop¬ erty-owners in the built-up sections of the city should real¬ ize that it is simply a question as to who shall pay lor such improvements—they or the local property-owners. Take for instance the vast plan of development proposed lor Jamaica Bay. Who will pay Ior the millions to be spent upon this project, the taxpayers of Mauhattan, or the property-owners whose real estate will be specially bene¬ fitted? THB new "socialist" city government in Milwaukee is, ac¬ cording to newspaper reports, preparing to go into the real estate business—that is, to buy land available for lac- tory purposes, equip it properly and then sell it to manu¬ facturers. This idea has undoubtedly been borrowed from Germany. A number of large German cities have been suc¬ cessfully conducting operations of this kiud. Frankfort, for instance, decided to spend many million dollars in the con¬ struction of new docks; but instead of making the improve¬ meut at the expense of the taxpayers, if managed the opera¬ tion on business principles—ju.^t, for instance, as the Bush Terminal Company, has done in South Brooklyn. It bought THE proposal of the Public Service Commission for a subway along Greenwich street. West Broadway, Varick street, Seventh avenue and 59th street to the Queens¬ boro Bridge is worth careful consideration. The Record and .Guide proposed just such a route about a year ago as a possible alternative to the extension of the existing sub¬ way south of 42d street. Of course, this plan is worth at¬ tention only ill case no agreement can be reached with the Interborough Company; but the continued refusal of the management of that corporation to propose acceptable terms to tbe city for the extensions it desires demands the con¬ sideration of certain alternative plans. The route suggested by tbe coinmission looks like tbe best that could be laid out on a competitive basis. It could be operated independently with every chance of profit, and as an independent line would be extremely useful. On tbe other band, it could, be advantageously combined either with the existing sub'way or with the Broadway-Lexington subway. It could be used, for instance, as a means of providing the passengers on the Lexington avenue subway with a service to the West Side, and tbis service could be arranged either by transfers or by the actual diversion ol certain trains into the Seventh avenue subway at 59th street. Furthermore, even if it fell into the hands of the Interborough company it might constitute an addition to their proposed system. It could transfer to a Madison avenue line, or it could be used for the accommodation of certain Madison avenue trains;^ and in any event it would bring a desirable increase of traffic to a lower Seventh avenue subway. Finally, it would provide lor the very efficient distribution of the passengers landed at the Pennsylvania Terminal. If it could not be built in any other way, it would pay the Pennsylvania Company to con¬ struct and operate it as a necessary supplement to its Man¬ hattan Terminal, Property owners who are interested in the building of a lower West Side rapid transit system should encourage and be encouraged by this suggestion. THERE has beeu of late an increase of speculative inter¬ est in Seventh avenue property. A purchase was re¬ cently made on the avenue between S-lth aud 42d streets by the United States Realty Company, and this lact indicates that tbis section of Seventh avenue appeals to the shrewdest real estate operators in the city as offering one of the best