St r eet Ra i l w a y SECTI ON OF THE T o WMERCIAL & P 'lNANCIAL P h M m CLE. E n t e r e d a c c o r d i n g t o A c t o f Co n g r e ss i n t h e y e a r 19 0 7 , b y W i l l i a m B. D a n a Co m p a n y , i n Office o f L i b r a r i a n o f Con gress, W a s h i n g t o n , D. O VoL 85. N E W YORK, OCTOBER 19, 1907. No.
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  S treet  R  ailway  SECTION OF THE T o  WMERCIAL  & P'lNANCIAL P h M m CLE. Entered according to Act of Congress in the year 1907, by W illiam  B. D ana  C ompany ,  in Office of Librarian of Congress, Washington, D. O  VoL 85. NEW YORK, OCTOBER 19, 1907. No. <2208. S treet  R ailway  S ection . The Street Railway Section, issued three times a year, in February, June and October, is furnished without extra charge  to every annual sub scriber of the Commercial and Financial Chronicle.The Railway and Industrial Section, issued quarterly, on the last Satur day of January, April, July and October, is also furnished without extra   charge  to every subscriber of the Chronicle.The State and City Section, issued semi-annually, on the last Saturday of May and November, is likewise furnished without extra charge  to every Chronicle subscriber.The Bank and Quotation Section, issued monthly, is also furnished without extra charge  to every subscriber of the Chronicle.Terms for the Chronicle, including the four Supplements above named, are Ten Dollars per annum within the United States and Thirteen Dollars (which includes postagre) in Europe.File covers of the Chronicle are sold at 50 cents each; postage on the same is 18 cents. File covers for Supplements can be had at same price.CHICAGO OFFICE—Pliny Bartlett, 513 Monadnock Block.LONDON OFFICE—Edwards & Smith, 1 Drapers’ Gardens, E.C.WILLIAM B. DANA COMPANY, Publishers,Pine Street, corner of Pearl Street,Post Office Box, 958. New York. NEW YORK TRANSIT CONDITIONS. It is a curious commentary on the rapidity with   which city rapid transit facilities have been developed   that it is exceedingly difficult to obtain a satisfactory   method of calculating future growth. This is espec ially true in New York, where the curve representing    traffic gains has been bending upwrards at a surprising    rate since the subway was opened for traffic. Sys tematic and careful efforts to appraise future passenger   business in New York City are therefore worthy of    some study, and the 1906 report of the Board of Rapid   Transit Commissioners, which has now been super seded by the Public Service Commission, First Dis trict, contains an' important contribution on the sub  ject. It is unfortunate, from a news view-point, that   the results of the study should appear eight months   after the termination of the period covered; but the   thoroughness with which the report was prepared ex plains and excuses the delay.The total number of passengers carried in the sub way during 1906 was 149,778,370, as indicated by   ticket sales; the average number carried during a month   was 12,466,786, and the maximum number carried on   a single day wras 605,246. This yearly traffic is about   29% greater than it was in 1905, and the present in crease is at a rate which will very quickly utilize the   maximum capacity of the subway in rush hours.   With a view to determining the rules that govern   these increases, the Commissioners present a graphic   chart which assumes all the boroughs grouped into one   great population centre, and which records the total   number of paid passengers traveling on surface lines,   elevated and subway, from the beginning of 1901   until the close of 1906. The tendency here shown isa curve of travel which increases with substantial   uniformity through 1905, and then in 1906 takes a   more rapid rate. While the average increment for the   four earlier years was some 63 million passengers a   year, in 1906 it ran up to nearly 110 million. The   Commission finds it impossible to determine whether   this large additional number of riders is due to an in crease in the population or in the number of rides per   capita, but is disposed to assume that population in crease is the ruling cause.The growth of travel in the boroughs separately has   not alwrays been parallel w’ith that in the whole city.   During 1902 and 1903 the increases, in proportion to   population, wTere practically uniform in each borough;   during 1904 and 1905 there was a loss in the rate of    increase in Manhattan and a cprresponding gain in all   the other boroughs, but especially in Brooklyn;   occasioned, perhaps, by the interference wyith travel   in Manhattan due to the building of the subwyay, and   to a temporary migration of some of Manhattan’s   population to other boroughs. But in 1906 there wTas   a notable increase in the whole city; Manhattan gained   more than wTas lost in 1904 and 1905, while at the same   time all the other boroughs made material gains.   Much of the growth in Manhattan was in the region   at the northern end of the island, not readily accessible   before the subwTay was built, and it is surmised that   there may have been a migration back again—the   reverse of the 1904-1905 movement. The subway   stations in upper Manhattan handled nearly 8,500,000   passengers in 1906.From such data the Commiss on proceeds to forecast   New York’s future rapid transit needs in a highly   interesting manner. Whether the calculations are too   high or too low cannot be determined from analogy to   any other city in the world, and the only workable   expedient has been to obtain a curve for population   increase and then a curve for per capita riding (which   is increasing at a surprising rate) and combine the two.    As the population of New York City has tended to   increase with cumulative rapidity, with only a few   relative slackenings ever since 1800, it is evident that   the conditions which the city will have to solve if the   curve be continued at approximately the same rate   for ten years more, are neither vague nor remote, and   there is need of the best intelligence and the most per sistent effort if the transportation system of 1916 is   to be made even tolerably adequate to the city’s needs.   The Commission does not attempt to carry its theoretical   studies beyond the year 1916. What provisions are to   be made for the teeming multitudes of 1926 or 1936,.  STREET RAILWAYS. [V  ol . lxxxt . the retiring board does not attempt to advise; the task   of the next decade is as great as can just now be borne.   But the reader can deduce one conclusion from the   facts presented, and that is that all contiguous sub urban territory, with proper rapid transit facilities,   must inevitably share in the overflow.The Commission makes its calculations by boroughs.   During 1906 15,571,889 paid passengers were carried   in the Borough of Richmond. The annual increase in   the last five years has been at a fairly even rate, and   the total increase in that period has been 28%. As suming that the same rates are maintained, there   should be approximately 26 million paid passengers   carried in Richmond in 1916. About 15 million of    these will have to be provided with transportation to   and from Manhattan. Each inhabitant now rides   210 times per year; in 1916 he would ride about 260   times. But there are now only 130 miles of single   track in Richmond, and it is obvious that the trans portation problem can be taken care of for many years   by natural expansion.In Queens the conditions are somewhat similar to   those in Richmond, except that the population is   larger and has increased about twice as fast. In 1906   22,115,729 paid passengers rode on the lines (excluding    the Long Island Railroad), and the total increase in   five years was nearly 100%. The per capita rides are   less in this borough than in any other; they were 73   per inhabitant in 1901; in 1906, 106. The Commission   estimates that the traffic in 1916 will amount to over   88 million paid passengers. The rides within the   borough can be easily enough provided for, and the   travel to and from Manhattan, which is estimated at   53 million people in 1916, will , it is believed, be   handled easily by the Blackwells Island bridge and the   six tunnels now being built between Manhattan and   Queens.In Brooklyn 389,555,025 paid passengers were   carried on the street and elevated railways in 1906.   This is at the rate of 278 rides per capita. Over 60%   of the entire number, or 234 million people, were   carried to and from Manhattan over the bridges and   ferries. Without going into details of the division of    this enormous traffic between elevated and surface   lines, it is sufficient to note the very striking estimate   that 800 million passengers will have to be allowed for   in Brooklyn in 1916. But the present transportation   system in that borough is greatly overburdened, and   the Commission therefore recommends that, deducting    the capacity of the present facilities, subways should   be built by 1911 to accommodate 280 million people,   and by 1916 to accommodate 520 million people. To   furnish this service with only moderate crowding, it   believes that one four-track railroad operating ten-car   trains should be completed across the East River and   into Brooklyn within the next four years and another   one in the subsequent five years.In the Bronx travel has increased about 36% in the   last five years on the surface lines, which represent   the movement within the borough, and it is estimated   that 57 million paid passengers will be carried on these   lines in 1916. The elevated and subway traffic in   the borpugh represents the travel to and from Man hattan, and will be considered under that head. The   capacity of the surface lines for local traffic is appar ently going to be sufficient for some years to come,   although there are not now enough cars in service.Of course the crux of the problem is to be found in   Manhattan. The population has increased 15% in   five years and the traffic has increased 39% in the same   period, but the increase has not been even. Up to1905 the percentage of increase was progressively less,   year by year; but then in 1906 there was a marked in crease in travel on all lines. In 1905 the surface and   elevated lines showed a loss which, taken together,   was equal to the subway travel. But in 1906 the sur face cars in Manhattan carried 391,354,877 paid pas sengers, a total increase of about 7% in five years.   Each inhabitant rode on the surface cars 194 times   in 1901, but only 181 times in 1906. ãThe building of    the subway and the tendency to change residence from   lower Manhattan to upper Manhattan and the Bronx   are cited to explain this. On the present rate of in crease 448 million passengers will be carried on Man hattan surface cars in 1916, and it is believed that this   number can be accommodated by the existing facilities,   if care is given to street traffic regulation and efficient   car design.But the combined traffic on the elevated and subway   roads in Manhattan was 355,331,924 paid passengers   in 1906; an increase in long-distance riders of 108%   in five years, while the per capita rides have increased   from 91 to 164. The Commission believe these ex traordinary figures are temporary, howeve*, and   assumes increases on the basis of 41% in five years,   Manhattan and Bronx combined. At this rate the   total traffic in Manhattan and the Bronx will be about   1,153 thousand million in 1911 and 1,626 thousand   million in 1916. The estimate shows that existing    facilities for rush-hour traffic will come 821 million   passengers short of providing for this traffic in 1916,   and that subways capable of taking this number of    people to and from their work in a year must therefore   be built. Under conditions of moderate crowding    this calls for two more subways within four years and   four within nine years. THE PUBLIC SERVICE CORPORATION OF    NEW JERSEY. In the last issue of the “Street Railway” Section, a   historical study was made of the electric lines owned   and controlled by the New York New Haven & Hart ford, embracing some 1,500 miles of trolley track; the   largest electric system in the world. The Public Ser vice Corporation of New Jersey is, perhaps, second in   interest among the street railway amalgamations in   this country , not alone on account of the mileage con trolled, which is about two-fifths as extensive as that   under the New Haven jurisdiction, but because of the   much larger group of gas and electric lighting proper ties which the consolidation embraces, and also because   of certain unusual characteristics of the leases, and of    the fact that the working out of these contracts is more   or less shrouded in mystery, owing to the absence of    public statements by the parent company.The Public Service Corporation of New Jersey oper ates, directly and indirectly, 658 miles of street railway,   all within the State, comprising principal groups of    lines at Jersey City, Newark, Hoboken, Paterson.   Elizabeth, Plainfield, New Brunswick and Camden,   on the Delaware River, with connecting interurban   lines reaching Perth Amboy, Raritan, Cherry Hill,   above Hackensack; Coytesville, above Fort Lee on   the Hudson; Bayonne, and many suburban points in  O ct ., 1907. J STREET RAILWAYS. the large district traversed. The lines may be described   as covering most of the street railway territory of    northern New Jersey, and, in addition, a group of gas   and electric lighting properties is controlled which cov ers nearly the entire State with its operations. These   diverse properties, some seventy-five in number, are   held in two ways, one large group being controlled   directly through stock ownership, while an equally   important aggregation of properties is leased. Most   of the traction properties belong in the stock-ownership   group, while most of the lighting companies are leased.New Jersey received her impetus of street-railway   building early, and much of the present mileage was   built and electrified between 1893 and 1899. During    those same six years local consolidations were being    effected, and the United Gas Improvement Co. of Phil adelphia was active in negotiating these consolidations.   The principal companies formed in these years were   the Consolidated Traction Co., 1893, which took a lease   of the Newark Passenger Railway for 999 years through   the New Jersey Traction Co., as intermediary, and   controlled, through stock ownership and lease, a num ber of other properties; the North Jersey Street Ry.,   1894, which took a 999-year lease of the Consolidated   Traction Co. and owned the Newark & South Orange   RR.; and the Jersey City Hoboken & Paterson, 1899,   which absorbed nine smaller companies. When the   Public Service Corporation was formed, in 1903, it   acquired these companies as the base of its street rail way system, giving its own perpetual trust certificates   in exchange for stock, on a 40% basis in the case of    the North Jersey, 35% in the case of the Jersey City   Hoboken & Paterson, and 30% for three other proper ties—the Elizabeth Plainfield & Central Jersey, Orange   & Passaic Valley and United Electric Co.The form of these trust certificates was peculiar   in that they were perpetual obligations secured by   stock (which the company obligated itself not to de preciate), and bearing interest at a varying rate—2%   during the first two years, then 2^% for a year, and   increasing thereafter 3 ^ 2 % each year until 6% was   reached, after which they would bear interest per petually at that rate. The reliance thus placed upon   progressive increases in businesss is characteristic, also,   of the rentals paid leased properties. Thus, the Essex   tfeHudson Gas Co., itself a holding company for the   Newark Gas, the Newark Consolidated Gas and all   gas properties between Passaic and Elizabeth, received   3 l  A%   dividends on its stock as the first year’s rental,   to be increased at first l A%  yearly and then 1%   yearly until, in the sixth year (1909) and thereafter,   the rate is to be 8%. This system of progressively   increasing rentals was applied to nearly every leased   property, the minimum dividends usually ranging    from 1% to 2% and the maximum ordinarily being    8%, although there are a number of exceptions to this   rate, the rental paid the old Camden Horse Railroad   in 1904, 1905 and 1906 having been sufficient to pay   24% dividends per annum on all of the company’s   small outstanding capital stock.Now, there are two specially interesting points in   connection with these progressive rentals. Most of    the lease terms are 900 years or more; practically per petual, so far as perpetuity can humanly be reckoned,   but the period of rental increment scarcely shows at all   in the long line of centuries over which the leases ex tend. In most cases the highest rental is to be reachedin 1910 or 1911, and the most distant date at which   maximum payments are to become effective is, ap parently, 1915. Assuming one of two hypotheses—   that net earnings either will not tend to increase, year   by year, or that they will—it is evident that in the first   case the company will be hard put to survive 1915,   while in the second, if the rate of rental increase at   all corresponds to the rate of net earnings increase,   this consolidation of properties must have a very bril liant future. This is the point of primary interest in   the contractual structure of the Public Service Corpora tion: perpetual leases, and ascending rentals, reaching    their limit in 1915.But the second point of interest creates the founda tion of the entire situation, and that is the fact that a   considerable portion of the amalgamated group of    properties was barely able to earn operating surpluses   at the time they were taken into the consolidation.   Thus, the North Jersey Street Railway Co. earned   $4,172,646 gross in 1901 and showed a* surplus of    $113,880, but in 1902, with gross earnings of $4,437,-   310, had less net and higher charges, and reported a   surplus of only $510. The Jersey City Hoboken &   Paterson, with gross earnings of $1,859,931 in 1901   and $1,975,250 in 1902, earned $5,596 surplus in the   former year and $45,523 in the latter. The Hudson   County Gas Company earned only about half its fixed   charges in 1902; this was a United Gas Improvement   property with capital stock amounting to $10,500,000   on which the Public Service Corporation guaranteed   an annual rental of 2% at the outset, increasing pro gressively to 8% in the eighth year. The Hudson   County Gas Company was only four years old at the   time of its absorption, and brought with it all the gas   plants in Jersey City, Hoboken and Hudson County,   New Jersey; it may doubtless be assumed, therefore,   that its own fixed charges were to some extent a charge   upon the future, as was true of most of the other con solidations which went into the Public Service Corpora tion before they had been given time to digest their   own opportunities. Although some of the small properties which went   into the fold in 1903 were earning good dividends   on their capital stock, and were taken over on terms   which appear very moderate in proportion to these   earnings, it is impossible to avoid the conclusion that   the Public Service Corporation relied heavily upon skill   in management, economies to be effected through the   consolidation, and, above all, upon the natural and   normal traffic increases which it felt sure it would ex perience year after year in country growing as rapidly   in population as are the parts- of New Jersey in which   operations are carried on.The results of these first four years of the company’s   operations cannot be exactly set down, as it makes no   regular annual report, although President Thomas N.   McCarter stated in a speech before the Plainfield   Board of Trade on Feb. 12 1907 that the parent com pany was earning about 5% on its capital stock and   confirmed this figure on Sept. 16 1907. It does, how ever, report the earnings of the street railway proper ties, which are sub-divided into four groups, the lines   directly operated by the Public Service Corporation   (including the Camden Gloucester & Woodbury, the   Camden & Suburban, the Elizabeth Plainfield &   Cen tral Jersey, the Elizabeth &   Raritan River and the   Orange & Passaic Valley), the North Jersey Street  4STREET RAILWAYS. |V  ol . lxxxv . Railway, the Jersey City Hoboken & Paterson Railway   and the Bergen Turnpike Company. The first full   year after the Public Service Corporation commenced   operations, that is to say, the fiscal year ending Dec. 31   1904, these street railway properties earned $8,529,828   gross; while for the year ending Dec. 31 1906 they have   earned $9,966,511 gross; an increase in two years of    $1,436,683, or almost 17%; but the increase in net   earnings during the same two years on almost exactly   the same operated mileage was proportionately much   greater, for the net of just under three millions in 1904   increased to over four millions in 1906, the increase   -accurately expressed amounting to almost 35%.No data is given from which the charges against   these net earnings can be precisely computed, though   some light is thrown on the situation in the earlier year   from the published statement for the United Electric   Company of New Jersey, which controls three lighting    properties in Jersey City and vicinity and which ex changed its stock for Public Service Corporation cer tificates on the basis of 30% in certificates for 100% in   stock. The United Electric Company increased its   gross earnings from $1,854,305 in the fiscal year end-   ng Jan. 31 1903 to $2,065,730 in the fiscal year end ing Jan. 31 1904 and increased its surplus balance,   after interest, from $45,731 to $95,905 in the same   period. The street railway mileage of New Jersey has   increased very little during the past three years. It   now amounts to about 1,200 miles, of which the Pub lic Service Corporation, as has been stated, operates   658. This fact in itself, at a time when considerable   street railway mileage is being built elsewhere, is a   good indication of the stability of the trolley enter prises already established. The existing routes appar ently cover the present transportation needs fairly   well, and the tendency should be for these lines to show   a more or less constant increase and to have little to   fear from diversion of traffic to new routes. At the present time approximately half of the entire   gross receipts of the Public Service Corporation are de rived from the street railway department and the   other half are made up of earnings from the sale of    gas and of electricity, the gas sales at the present time   being the more important of the two. The company   announced last fall that economies in manufacture had   made possible a lower rate on both gas and electricity   in certain localities, and it was deemed best to put   these lower rates into effect to head off the growing    sentiment for municipal ownership of gas and electric   lighting plants in the territory where the company op erated—a sentiment which, if it had extended, would   have perhaps meant municipal competition with the   private plants and unnecessary and wasteful duplica tion of facilities. The company is now of the opinion   that the low rates then put into effect, the general   financial situation throughout the country and the   awakening of a wiser public sentiment on the municipal   ownership question have all combined to check the agi tation, at least for the time being. The company’s   gas and electric business is constantly increasing, al though no figures can be given for this branch of the   business, but under present circumstances it does not   find that gas can be sold profitably at a lower rate than   is now charged, except possibly in some suburban lo calities where the rate is considerably higher than in   the cities. This fact, however, is not entirely due   to the tendency of an increased cost where it is neces sary to increase the length of supply pipes, but is due   primarily to the increasing costs of all material from   which gas is made, as well as labor.Taking into consideration these increased costs of    labor and materials, and also the increasing guaranties   on the stock of the underlying companies, as well as   the increasing interest rates on the company’s own   trust certificates, it may be safely hazarded that the   greater portion of the increased earnings of the parent   company have been largely absorbed from year to year,   and it seems logical to suppose that they will be so   absorbed until the principal maximums of the guaran teed dividends are reached, in 1910 and 1911, and the   full 6% interest on the trust certificates is reached, in   1913. In the first three years—which have probably   been the most trying ones that the company will ever   encounter, on account of the rapid increases in the early   guaranty requirements of the underlying properties—   the company has been able not only to meet current   working expenses, but also to raise on a conservative   basis certain new capital that was needed, and to pay   an initial dividend of 1% on the stock in June and   another 1% dividend Sept. 30. The company also ex presses the hope that from now on it will be able to   maintain the stock on a 4% basis. If it can average   the same 8% or 9% increase in gross earnings annually   that it has had so far, the total gross earnings from oper ation of all properties,which were apparently about $20,-   000,000 in the 1906 year, will mount up fast enough to   reach a very handsome figure at the time that the guar anties and the interest on the company’s own certificates   become fixed at the maximum, and the outlook for the   ensuing years must then necessarily improve steadily.It was announced in 1905 that a high-speed electric   line was to be built to handle commutation traffic from   Newark and Jersey City to a connection with the Hud son tunnels, which are now nearing completion. In1906 announcement was made that the Public Service   Corporation, the McAdoo interests and the Pennsyl vania Railroad were to co-operate in this high-speed   suburban project, designed to haul passengers direct   from the downtown terminals in Manhattan to Newark   and points in Hudson County at low rates of fare. In   view of the rapid and continual increases in commuta tion traffic to upper Manhattan Island and the Bronx,   it is probable that a good all-rail route across the river,   with a frequent and attractive car service and a low   rate of fare, will have all the rush-hour traffic which it   can handle, and it looks as if the Public Service Cor poration was to have here a potential source of future   earnings of very great importance. As against the promise of this future traffic, no defi nite setbacks have appeared since the formation of the   company in 1903, except, possibly, the very general   tendency to reduce the price of gas and of electricity.   The company pointed out last year that, at the time of    acquiring the subsidiary plants, the price of gas ranged   from $1 80 to $1 00 per 1,000 cubic feet, the latter rate   prevailing only in certain parts of Newark, south Jer sey and adjacent territory. The base-rate for elec tricity at this time ranged from 20 cents to 13 cents   per kilowatt hour. The new 1906 base-rate was 10   cents per kilowatt hour, except in Bergen County,   and the gas rate was reduced to the minimum of $1 00   at the same time, except in Bergen County, where the   full reduction becomes effective in 1910. These rates   are on the basis of five-year contracts.
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