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of yesterday's date) to give up temporarily a portion of this third-tracking, to make the Adams Street relocation a more or less temporary construction, to consent to a radical change in construction and routing so as to introduce a new line of trains into the Fourth Avenue subway (conceded by your letter to be a temporary device), to put an additional burden of interest and sinking fund of probably not less than $4,000,000 ahead of any profits which we or the City might get out of the results of our contract, and among other things to give in effect to the City an indefinite option, at a price now unnamed, to acquire at some indefinite time in the future all of our elevated railroads

a proposition which was advanced on behalf of the City at one time in the negotiations preceding the adoption of the contract of March 19, 1913, and was rejected.

In responding to such request we naturally considered whether in the first place the changes which you sought to accomplish were in the interest of improvement of transit, whether they were desired by any considerable body of citizens, and whether our own financial interests were to be jeopardized by their adoption. Moreover, while we had contractural rights which we undoubtedly could enforce in the courts, we preferred not to exercise those rights if a plan equally good and equally advantageous should be presented, and we desired of all things speedy action in order that transit relief might be expedited, and our own burden of interest charges thereby made lighter. We found, as everybody knew, a sharp divergence of public opinion as to the various changes proposed. Probably the strongest and most influential group of citizens in Brooklyn, composed of business men in lower Fulton street, were vigorously opposed to any change in the program, and independently of any action by us they were prepared if necessary to enforce the carrying out of the contract as to the entire third-tracking of the Fulton Street elevated from East New York to the Brooklyn bridge. We found also that there was still a strong desire on the part of public spirited citizens to carry out the so-called Adams Street relocation. We found also that there was a strong sentiment among residents in central Brooklyn, dependent either upon the surface railroads or upon the Fulton Street elevated, that they should have through transit by subway to Manhattan-a conceded defect in the original program. In a desire to reconcile if possible these conflicting and diverging interests, I have within the last two weeks con

ferred with the spokesmen of each of these differing views, and the result was embodied in my letter to Mr. Harkness of December 28th. I could not have gotten these differences reconciled except upon the condition that I should make it plain to the Commission that the program of construction outlined in my letter should be carried out in toto. In addition I incorporated other conditions which seemed to me to be essential to our concurrence in any modification of existing contracts. To these I will refer later.

It is immaterial to me whether the City accepts the revised program laid down in my letter of December 28, 1916, to Mr. Harkness or not. Our company would prefer to carry out the original program embodied in the contract. This, I believe, is the sentiment of that very strong group of merchants and bankers in lower Fulton street who have asked you to authorize the work of third-tracking to proceed. Nevertheless, the plan which I have outlined will, I think, give general satisfaction for a few years at least, and can safely be approved by the City. It certainly is unfair, both to us and to the people of Brooklyn, that these important measures of relief should be postponed indefinitely by lack of decision on the part of the Public Service Commission.

You refer to certain of the conditions which I incorporated in my letter to Mr. Harkness as being extraneous to the Fulton Street situation. They are not nearly so extraneous as your indefinite proposal regarding the acquisition by the City of all of our elevated railroads. Even if the City were prepared with money and decision to buy the elevated railroads at a price which could be agreed upon, everybody knows that negotiations leading to such a conclusion would be a matter of years. And it is quite clear that the City has no money at the present time for such an investment. It ought to be equally clear that no stockholders or bond holders of the elevated railroads would consent to giving any indefinite option upon such properties. For these reasons I have always dismissed, and do now dismiss, such a suggestion as impossible of any present consideration.

The other matters which you consider extraneous are from our point of view (with the possible exception of the payment by the City of the $55,000 which it owes us and which we are willing to leave to the courts if necessary) very closely related to the Fulton Street situation.

In the first place, if Fulton Street passengers are to be carried to Manhattan by way of the Fourt Avenue subway instead of by the Brooklyn bridge, a large part of the trains will necessarily not cross the Brooklyn bridge. This would leave only Myrtle avenue and Lexington avenue trains likely to cross the bridge, and only such passengers as would board those trains west of Broadway, for the shorter route to other passengers would be by way of the Williamsburg bridge, and it is only a question of a very short time when even the first named passengers would demand a transfer at Gold street to the Fourth Avenue subway, where trains would take them, without additional fare, to various parts of Manhattan. Therefore, as you concede yourself, the necessity for operating elevated trains over the Brooklyn bridge will cease in comparatively few years if these other improvements are carried out. In view of this fact, I suggested that the Brooklyn bridge with its appurtenances be made a part of the rapid transit railroad under Contract No. 4, which would give the City the right, if it wished to, to recapture that portion of the railroads after ten years. If your Commission objects to including the Brooklyn bridge under the definition of City Railroads, I have no objection to letting the present contractural arrangement as to the Brooklyn bridge continue, except that I must insist that the rental now paid by the New York Consolidated Railroad Company for carrying its passengers further for no additional revenue be abolished.

The reasons for abolishing this rental were briefly stated in my letter to Mr. Harkness. You seem not to have understood them. Primarily it is because you have asked us to assume an additional burden represented by the interest and sinking fund on not less than $2,000,000 of additional construction, the greater part of which will not add any revenue to the joint enterprise, and this burden will postpone so much longer the division of profits. We offered in my letter to Mr. Harkness to assume this burden both in the case of the proposed changes required at Gold street and Myrtle avenue, and we offered to assume the burden as to $1,600,000 of the expense (more than your estimated cost) of the Ashland Place connection, on the supposition that the elimination of the bridge rental capitalized would just about equal the amount of this new burden. In addition this obligation would probably involve an expenditure by us of not less than $2,000,000

for steel car equipment. You probably do not know, because you were not one of the parties to the negotiations leading up to the March 19, 1913, contracts, that our controlling reason for entering into these contracts was the hope of eventual divisible profits between the City and the company. The City's representatives and ourselves estimated that it was reasonable to expect such divisible profits within a comparatively few years after full operation. Except for that expectation we would not have been justified in entering into the contractural arrangement, for otherwise the operating company would be surrendering all hope of growth of traffic on its lines, and would be giving to the City all of that growth for the payment of interest and sinking fund on the City's investment. It is of great importance to us, therefore, that the City's cost as well as our own for new construction should not be unnecessarily increased, and I think the financial officers of the City, having its future credit in mind and the release of rapid transit investments for other corporate purposes, are equally insistent with us that every reasonable effort should be made to expedite the time of divisible profits. In consenting therefore to assume such an additional burden as is represented by the interest and sinking fund of $1,600,000, we have, we think, a right to ask that the equivalent amount represented in minimum bridge rental should be abolished, and in this arrangement the City will profit as well as ourselves, for it will bring the time so much nearer when the City will receive full return on its investment.

The other "extraneous" matter to which you refer is the express station on Williamsburg Bridge plaza. The reason we incorporated this in our letter was because in view of the diversion of City money to the Fulton Street projects we feared it would have none left for the equally important matter of assisting Broadway elevated traffic by the building of this station. It is true that at one time we might have agreed to build this station with our own money as part of our contribution to City construction, but our contribution is now practically exhausted owing to other demands made by the Commission, and inasmuch as the station is on City property we cannot legally make it an expenditure under any other provision of our contract. We think we are right therefore in insisting in the interest of our patrons on Broadway that if the City is to

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devote additional sums to improvements, this station should be included. Moreover, there is no difference of view as to the necessity of this improvement and it should therefore be one of the first objects of City expenditure.

I do not know that it is necessary to refer to your closing paragraph. I have said that unless a speedy decision is reached we shall be obliged to resort to the enforcement of such legal rights as the contract with the City gives us. I did not intend this as a threat but as an assurance. You have had two years now to reach a decision, and while we would hate to be obliged to compel such a decision by legal proceedings, I certainly think we would be justified in doing so, and even if we do not take such a step there are very substantial citizens who for some time have been eager to thus enforce action.

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Chairman Straus on January 8, 1917, replied to President Williams, calling his attention to the fact that matters between the Commission and the company as to which there was not complete understanding might be further discussed in connection with the preparation of the formal documents. The Chairman pointed out that as a complete and final decision of the matters at issue must await formal action by the Commission and the Board of Estimate on such documents it was the Commission's wish to have them prepared at the earliest possible date. Hence, the Commission, he informed Colonel Williams, had referred these matters to Chief of Rapid Transit Harkness, to have prepared the necessary forms and plans, and had invited the company to name representatives to take up the several matters with Mr. Harkness. The company designated its Chief Engineer, W. S. Menden, and A. M. Williams, of Counsel, as such representatives.

On February 16, 1917, upon receipt of a communication from the Counsel to the Commission, the route for the Ashland Place connection between the Fulton Street Elevated railroad and the Fourth Avenue subway was adopted. This route is now formally known as Route No. 65. It provides for a connection with the elevated railroad, which is to begin at or near Vanderbilt avenue,

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