Chapter 09: The Chamber of Commerce

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Rapid Transit in New York City and in the Other Great Cities · Chamber of Commerce, 1906

While the Rapid Transit Commission of 1894 was vainly striving to perfect a plan that would give the people the transit facilities they so sorely needed, the Chamber of Commerce was giving attention to the same problem. Members of the Chamber were familiar with the work that had been done, and were convinced that the remedy must be sought along different lines. The work so done resulted in the framing of a bill that was passed by the Legislature in May, 1894. Under that act, and amendments, the present subway was constructed.

Rapid Transit Committee Appointed. At a meeting of the Chamber, held February 1, 1894, William D. Sloane offered the following resolution:

"Resolved, That the president be authorized and requested to appoint a committee of five to examine the subject of rapid transit, and report what action, if any, on the part of the Chamber of Commerce, it is advisable to take for the purpose of aiding in the solution of this important problem."

"Resolved, further, That this meeting be adjourned until Thursday, February 15, at half-past twelve o'clock, for the purpose of receiving and taking action upon the report of the committee to be appointed under the provisions of the above resolution."

The following committee was appointed: Alexander E. Orr, Cornelius N. Bliss, John A. Stewart, J. Edward Simmons, John Harsen Rhoades.

Report of Committee. A portion of the report presented at the later meeting was as follows:

"In view of the present needs and the probabilities-not to speak of the possibilities-- of the future of this city as the commercial metropolis of the United States, New York requires, and should have, the very best system of rapid transit that the legislative and municipal authorities of the state and city can authorize, and engineering and mechanical skill, and money within reasonable bounds, can provide."

"Her geographical position is such that growth can only be made in one direction-towards the north-and it does not require elaborate argument to prove that in order to insure the comfort and happiness of the people, as well as continuous prosperity and development, there must be an efficient, convenient, and safe system of rapid transit between the business and residential divisions of the city, which, of necessity, will always be widely apart from each other."

Elevated Railroads Not Rapid Transit. "The ways and means of communication that have heretofore been provided are now found to be entirely inadequate. It is true that the surface roads were a great improvement on the old style omnibus, and the elevated roads, in many ways, an improvement on the surface roads; and it is acknowledged that the city has derived very great benefit through their construction and operation; but it is also true, and a truth that must not longer be overlooked, that they cannot, in any practical sense, be said to be systems of rapid transit, or meet the needs, nor can they be made to meet the needs, that are daily becoming more and more apparent, and that should not be longer ignored."

"It is evident to all who study the question in the light of to-day that if in the past there had been intelligent appreciation of the possibilities of New York, and that growth could only be made in one direction, suitable provision would have been made for rapid transit when streets and avenues were being located and land was comparatively cheap. In that case, the problem that now confronts us could have been easily solved. But there was no such appreciation; and ten or twenty years hence the same criticism will apply to us if, suffering as we now are because of past thoughtlessness, and as we shall continue to suffer with increasing intensity as we grow in years and population, we fail, even at this late date, to provide for present and prospective relief. The growth of New York has no more culminated to-day than it had a decade ago, and your committee hazards the opinion that, with ordinary forethought on the part of her citizens and the taking advantage of opportunities as they arise, it is impossible to say with any degree of certainty when, in the future, the culminating point will be reached."

Municipal Credit For Building Road. "For reasons that need not be stated in this report, your committee cannot advocate the building of any system of rapid transit by the city of New York; but, under certain safeguards to be provided by legislation, it urges upon the Chamber the propriety of recommending that a single exception be made to the admirable law which restricts municipal credit being lent to promote private enterprises."

"For the reasons stated above, effective rapid transit construction must now prove a very costly undertaking, and does not present to capital-- which is always more or less timid-- sufficient inducements to attract the large sums necessary to insure a complete system of rapid transit development. This is why the Rapid Transit Commission has been unsuccessful in inducing private enterprise to accept any plan that they have recommended in the past two years, nor will they be successful for many years to come, in the opinion of your committee, unless in some legitimate way private enterprise is stimulated."

Private Capital Will Not Undertake Work. "A corporation organized for the purpose of rapid transit construction could not expect to obtain the necessary capital upon a better basis than six per cent. interest per annum, while money borrowed upon the credit of the city of New York could be obtained for three per cent. Hence it is evident that the revenue necessary to protect the fixed charges on capital borrowed in the ordinary manner must be double the amount of that needed to provide for the fixed charges on capital borrowed upon the city's credit. If, therefore, the city should agree to lend its credit to such corporation to the extent of two-thirds of the cost of the completed system, with the view of minimizing the volume of fixed charges, the needed stimulus referred to above would be presented and a large margin of safety secured."

The report then referred to the building of the Union and Central Pacific Railroads, both of which were private enterprises. The completion of these roads was deemed essential to national development, and the credit of the Federal Government was lent to provide, in part, for their construction, and a second mortgage, subject to a prior lien of equal amount, was taken as security for the credit so advanced. Although this was a departure from conservative principles, the result proved the wisdom of the course, for hundreds of millions of dollars' worth of wealth were added to the resources of the whole country.

Advantages of Rapid Transit. The report set forth further the following:

"Aside from the advantages of comfort and convenience to the people, New York would gain immensely in revenue through rapid transit contact with the yet undeveloped portions of the city lying to the north. It is a well known fact that in four years after the elevated roads had been permanently established one ward alone (the Nineteenth) increased in taxable value more than fifty millions of dollars, a sum many times greater than the cost of their construction, and there is no reason to doubt that similar experiences will follow rapid transit development."

"It is not proposed, however, that the city should lend its credit for the whole amount needed, or take undue risk. The transaction should be based upon business principles of equity and safety. Not more than two-thirds of the cost of construction should be the maximum credit granted, secured by a first lien upon the completed structure, its franchise and equipment."

"Your committee realizes the gravity of the action it proposes the Chamber shall take in urging an exception to a wisely enacted law, but the whole question is of such paramount importance, and further delay is so dangerous, that exceptional measures are necessary to insure success. If the following resolution, which is presented for the consideration of the Chamber, shall be adopted, your committee asks to be continued:"

City to Lend Its Credit. "'Resolved, That the Chamber of Commerce of the State of New York requests the proper authorities of the city, the Legislature of the State, the Constitutional Convention, and the Rapid Transit Commission to take such action as may be necessary to enable the City of New York to lend its credit to corporate enterprise for the construction of a rapid transit system in the said city, upon such terms and conditions as the Legislature may impose; provided, however, that the loan of such credit shall be restricted to such one purpose; and, provided further, that such loan shall not exceed in amount two-thirds the cost of construction, and be a first lien upon the property; and, provided further, that the aggregate amount of the credit to be so loaned shall not exceed the sum of thirty millions of dollars.' "

It will be observed that the resolution proposed that the city should lend its credit to a private corporation which should build the road, and, presumably, own and control it; the city having no financial interest in it after the amount borrowed had been repaid. The resolution did not look to municipal ownership, control or operation.

A Grave Question. In the discussion following the presentation of the report, Morris K. Jesup said:

"We all agree, at least I do, with that part of the report which sets forth the importance of rapid transit in this city. It is a grave question in my mind, and I have thought a good deal about it, as to whether we ought to set the example of asking the voters of this State to undo such a wise provision as now exists with reference to the city's being empowered to lend its credit to private enterprises. I am free to say that, so far as my own mind is concerned, it is not made up as yet; and before entering into a discussion of the matter, as I think it ought to be discussed, we should have a larger attendance than we have here to-day, so that if we do decide that it is best to adopt the recommendations of the committee, it shall be done after a very careful and serious consideration of the whole matter. I therefore move that the report be printed; that a copy be sent to each member of the Chamber, and that final action be postponed until the next regular meeting of the Chamber, to be held two weeks hence."

Importance of Rapid Transit. Jacob H. Schiff said in part:

"If we do not get rapid transit sooner or later-- we may not see it, but coming generations will feel it-- we shall lose our importance as a commercial metropolis. Such things work slowly, but they work surely; and I cannot see why, in a matter that is just as important to the city of New York as the supply of its water or the supply of anything it needs for its daily wants, the citizens of New York should not put their hands in their pockets and tax themselves at as low a rate as possible, instead of taxing themselves at as high a rate as possible, which they will have to do if private capital builds the road. It will not cost six per cent., but will probably cost ten or twelve per cent., to get private capital to build that road; for, in all probability, five per cent. bonds will have to be issued, which will be sold, say at 80, and stock will be issued, which will be thrown in as a bonus, and on which in years to come some ten per cent. dividends will be paid; so that it will not cost six per cent. to the city of New York to build this road, but ten or twelve per cent., and every man, woman, and child in the city of New York will have to pay a part of it.... I am heartily in favor of the report of the committee and hope it will pass."

Legislation Unprecedented. Abram S. Hewitt said:

"Mr. President and gentlemen, I suppose there is no one in this room who does not concur fully with the statement of the committee that rapid transit is indispensable for the present comfort and future growth of this city. The committee, however, proposes a new departure-legislation without precedent, so far as I now recall, in the history of the United States, or the State of New York, or the city of New York. They propose that the credit of the city of New York shall be loaned to a private company for the construction of a work of a public nature, but to be owned and administered by private individuals.... The constitution of the State of New York absolutely prohibits the loaning of the public credit of the state, or of any city or municipality in the state, in aid of any private enterprise. It does not prohibit, however, the construction of public works by municipalities, to be owned by them in such ways as they may see fit, except that they must not issue bonds beyond ten per cent. of the assessed valuation. That is the only limitation."

Erie Canal. "When the State of New York was confronted by a greater problem than this, the greatest that has ever presented itself to a civilized community on this side of the Atlantic-- the construction of the Erie Canal, upon which has been built up the superstructure of the whole state, its prosperity, commercial, agricultural and otherwise-- the state took it in hand; became the owner, borrowed the money, paid for the work, and, perhaps unfortunately, retained the administration of the property after it was constructed."

Croton Aqueduct. "The city of New York has pursued the same system. The Croton Aqueduct was constructed by the public, at its own cost, and administered by its own officers. In no instance has the city of New York gone into partnership with a private company. In no instance has the government of the United States ever done such a thing."

Mr. Hewitt stated that the loaning of the public credit, in the case of the Union and Central Pacific Railroads, was an illustration of the danger of any connection between the state and private enterprises. While that great enterprise returned more than it cost in increased value of the property of the country, it is also true that "every dollar of the money advanced by the government in aid of that enterprise was misapplied by the people who had charge of the enterprise." The money was not used for the construction of the road, but was put into private pockets.

"Gentlemen, bear with me, because I am going to point out what I conceive to be the danger of a departure from well-recognized principles of action. This committee who have brought in this report are among the ablest and most reputable men in this Chamber. In their own spheres of action there are no men whom we would follow more willingly and even blindly to a conclusion; but able and intelligent as they are, I doubt whether they have given that attention to the underlying principle in their report which it would receive from the hands of statesmen. In the only departure which I have ever known the city of New York to make from the sound principle of having no connection whatever with private enterprises, the scandal was equally great."

Brooklyn Bridge. "The Brooklyn Bridge was originally a private corporation with private stockholders. The city of New York never loaned its credit to the Brooklyn Bridge, not a penny, but what it did was to subscribe for a portion of the stock. The city of Brooklyn did the same thing. The administration of the work was in the hands of private stockholders, and it terminated in a scandal; and the result was that the city of New York and the city of Brooklyn were compelled to do what they ought to have done in the first place, or to have done nothing-- they were compelled to buy out the private stockholders and become the sole owners of the work. Now I think these illustrations are sufficient to point out to the members of the Chamber the danger of any proposition which shall look to a partnership between the city of New York and any private company for any purpose whatever, however urgent.... The scandal of the Brooklyn Bridge led to the inhibition which is now in the Constitution against allowing any credit of the city to private enterprise. It was not in the original Constitution of 1846, but was inserted by amendment in order to avoid just such propositions as the one this committee have submitted to this Chamber."

Dangerous For City to Lend Its Credit. "Now I like to get up and down town in comfort, and I confess I am unable to do so at present; but I am not willing to do so at the expense of what I regard as the fundamental principles by which governments of great communities like New York should be conducted. You may get temporary relief, but you will have set a precedent that is so dangerous that you will have speculators, men who are seeking to carry on enterprises for their own profit, appealing before the legislature and coming to the city of New York, and you will be entreated to lend the public credit for the execution of works which in themselves would be desirable, but which, if the public became interested in them, would become abuses and scandals."

"Nor is there the slightest necessity for such a course in this case; and this is a point which I beg gentlemen to consider most carefully. Mr. Schiff has been good enough to allude to the fact that while I was mayor I gave some attention to this question of rapid transit. I may say to you, gentlemen, and Mr. President, that I gave all the attention that it was possible for me to give, with such abilities as I may happen to possess, to the solution of the question. I had consultations with the most experienced and able engineers. I consulted with the ablest lawyers in the city."

Conclusions of Mr. Hewitt. "The conclusion was: First, that as the Constitution stood, and as the law stands, it was competent for the legislature of the State of New York to authorize the city of New York to construct the work."

"Second, it was concluded that to get rapid transit the underground system must be adopted; that it was impossible to get real rapid transit with an overhead railway."

"Third, that the city of New York could borrow the money and provide the capital-- as all the committee agree, and as Mr. Schiff has told us-- at a cost not exceeding three per cent."

City Ownership Not Favored. "And lastly, that the danger and abuse that might come from the construction of the work by city officials and the operation of the railway afterwards by public officers, could be avoided by the simple process of making a lease to a responsible corporation who would have the expenditure of the money in construction, under the supervision of city officers, and who would be sure to make it as light as possible, because they would have to pay interest on every dollar that was expended."

Prophetic Remarks of Mr. Hewitt. The following further remarks of Mr. Hewitt were prophetic:

"It was thought that that could be made to work out in practice, and the draft of a law was made and sent to the legislature, and I regret to say not a man in the legislature could be found to advocate it, and it was finally introduced as a personal favor by a member of the legislature who was willing to do me a kindly service. It was referred to the committee and never reported back; and the reason was that there was no money for any private individual behind that act. Nobody could make a cent out of it."

"But this would have happened if it had been enacted: The work would have been constructed; the money furnished by the bonds of the city of New York at three per cent.; and it would have been leased, as I had reason to think, although I am not at liberty to mention names, by a responsible corporation, at five per cent., and the difference of two per cent. would have retired the bonds in thirty-three years, and the city of New York would be the absolute owners, free and clear of all indebtedness, of this great enterprise, which is as essential to its prosperity as is the Croton Aqueduct. It would have been conducted on exactly the principles on which the Croton Aqueduct has been conducted. Now this committee, whom I respect very much, come to this body and recommend a departure from this sound principle."

"I agree with Mr. Jesup in what he has said, that such a proposition as this needs to be most carefully considered, and I trust, therefore, that his motion that it be laid upon the table and that it be printed and sent to the members of the body for consideration, will be carried; because it will be a very serious thing indeed if this Chamber, which is supposed to represent the commercial intelligence of New York, shall commit itself to propositions, or legislation, that have been condemned not only by the judgment of the greatest statesmen of this country, but by the experience of every state and city that has attempted to become a partner with private individuals in the construction and management of public enterprises."

It was voted to defer further consideration of the question until the next regular meeting, March 1, 1894. At that meeting Mr. Hewitt offered the following resolutions as a substitute for those presented by the committee:

City Credit To Be Advanced. "Resolved, That, in the judgment of the Chamber of Commerce of the State of New York, additional rapid transit facilities are so necessary to the growth and prosperity of the city of New York that the use of its credit would be justifiable, in case it is not found possible, after careful investigation and liberal concessions in regard to taxation and right of way, to secure the construction of a proper system of rapid transit by private enterprise."

City To Own Rapid Transit System. "Resolved, That in case the credit of the city is used, the ownership of the rapid transit system should be vested in the city, but its construction and operation should be entrusted to such responsible corporation now existing or hereafter to be formed, as may be willing to pay, in addition to the interest on the city bonds, the largest annual rental, such excess to be used as a sinking fund to retire the bonds of the city, and when the bonds are so retired, the lease to be terminated."

"Resolved, That thereafter the lease should be sold to the highest bidder, upon such terms as may be prescribed by the city authorities, for periods not exceeding thirty years, in the same general manner as the ferries are now sold, with the stipulation that the successful bidder shall purchase from the previous lessee the rolling stock and other personal property at its fair valuation, to be determined by arbitration."

Control of System. "Resolved, That proper safeguards and conditions ought to be provided by appropriate legislation in reference to the issue of the city bonds and the construction and operation of the rapid transit system, under the general supervision of a board of engineers, so as to insure economy of cost and adequate accommodations for the public use, and that the committee be continued, with power to add to their number, to confer and co-operate with the authorities of the city, in reference to the general plan and the needed legislation."

Mr. Hewitt said also that he had had opportunities to take the opinions of the best engineers and most competent authorities upon the subject of rapid transit, and that he had never known anyone who had studied the question to reach any other conclusion than that the system must be of an underground character; that a system upon masonry arches, like Berlin, would be enormously expensive and an injury to the general aspect of the city; and that the improvements made during the last six years in regard to lighting, ventilation and motive power have removed objections that formerly held good concerning underground roads. Continuing, he said:

Must Be An Underground Road. "Conceding, then, that we must have a new system, and that it must be an underground system, the question comes as to how its construction can be secured. There are only three methods: either by private capital, or by an association of private capital with the city, or by the city itself. Those are the three alternatives."

"The method of construction by private capital was the one arrived at by the Rapid Transit Commission, and I wish to say, in justice to that Commission, that they gave a most exhaustive and intelligent examination to the whole question, and I have no doubt they conceded, in the plan which they devised and which was offered at public auction to the bidders, all that they thought the public would grant in the way of immunity from taxation and privileges to use the streets. As you know, that plan failed. There was no bidder. I think that fact demonstrates the conclusion that it is idle to expect that private capital, unassisted in the same way, will undertake the construction of this very important and very expensive work."

Mr. Hewitt explained that the second method-- by association of private capital with the city-- would require a change in the Constitution of the State, and that the safeguards now thrown around the lending of the credit of municipalities of the state were none too strong. Any proposition looking to a change should be most carefully considered. In the present case it should first be shown that the work could not be done in any other way. He continued:

Credit of the City. "The advocates of this proposition have made no demonstration, and they cannot make the demonstration; for the very simple reason that if this work could be secured by the use of the credit of the city of New York to the extent of two-thirds of its cost, certainly it could be secured by the use of the credit of the city of New York to the extent of its entire cost; and the step from two-thirds to three-thirds is a very small one indeed, when you get over the idea that the city's credit may be used. It is a very small one, indeed, in reference to the fundamental fact, that in the case where the city's credit is loaned to a private corporation the work becomes the private property of that corporation; whereas, in the other case, by the advance of a very much smaller additional amount, the work becomes the property of the city, subject to its control and management; and if it be profitable, as I believe it will be at the end of thirty years, then the gains will flow into the city's treasury instead of into the treasury of a private corporation."

Administration Not To Be In Hands Of City. "It has been objected to the undertaking of this work by the city and on account of the city that there would be scandals involved in the expenditure of this large amount of money by the city authorities, and that the administration of such a work by the city authorities after it was constructed would result in an intolerable abuse, and would practically turn over the city of New York to the politicians and their followers. This objection would be an absolutely conclusive one to my mind, and I suppose to the mind of everybody else, if it were necessary that either the construction or administration of the work should reside in the hands of the city officials. There is no such necessity. The construction of this work, and its administration after it is constructed, can be put up at public auction to the highest bidder, upon the simple condition that the bidder shall be responsible; and, secondly, that he shall pay the interest upon the city bonds and give reasonable security of his ability to do so; and, thirdly, such further sum as in competition he may bid in addition to the rate of interest upon the city bonds. This mode of construction insures the most absolute economy. That is to say, the economy of a private owner in the building of the work, because the lessee will have to pay a rental upon the cost of the work, and he will therefore keep the cost of the work down to a minimum. In regard to the administration of the work, it will be conducted just as other railway corporations are conducted. Competent men will be employed-not politicians-- because the lessee will find that his profit depends upon the economy with which the work is operated."

Mr. Hewitt did not believe that the road should be operated by a commission in behalf of the city. He cited the case of the Croton Aqueduct, from which great abuses had arisen, and added:

Neither Construction nor Administration to be Confided to a Commission. "With this experience before us I do think that we ought not to confide either the construction of this work or its administration to any commission. I think the only path of safety is to lease it, as the ferries are leased, and as many other public works are leased, to private individuals, but keeping sure that at the end of a reasonable term the property shall revert to the city, to be again leased, either at lower rates of fare, which will contribute enormously to the prosperity and growth of this city, and to the advantage of its working classes, or yielding a larger revenue to the city treasury, to be used in the reduction of the rate of taxation."

"You will see from what I have said that I am in favor, therefore, of the use of the city's credit for the construction of this work."

Views of Mr. Inman. John H. Inman, a member of the Rapid Transit Commission of 1891-4, said:

"In regard to the rapid transit scheme proposed by Mr. Hewitt, there is no assurance that a responsible bid by a responsible corporation will be made to lease and operate it on the lines indicated by him. A million dollar guarantee (the amount named by Mr. Hewitt) would be insufficient. Of course, anyone who had a million dollars would be willing to put up that amount for the opportunity of saying at the end of five years (which time it would take to construct the road) whether they would take the lease or forfeit the guarantee, as by that time (that is to say, after the road was constructed) the practicability of an underground rapid transit system would be demonstrated, and if successful, the parties putting up the million dollars would have a great big thing in being able to control this system and its earnings for thirty years. Whereas, on the other hand, if for any reason the underground system should be a failure, the party putting up the money risks only the million dollars, while the city must stand the real loss.... I am very much in favor of Mr. Hewitt's scheme, and will do my best towards carrying it out; but it is in the air, in my opinion. I am as fond of Mr. Hewitt as any man present, but I must say that I do not think there is anything tangible about his scheme. It proposes to spend $40,000,000 to $60,000,000 of the city's money, and he only names a guarantee of a million dollars for faithfully executing the work, and for guaranteeing to carry out the terms of the lease for a period of thirty years, which, in my opinion, is entirely inadequate. Upon a responsible guarantee I would say go ahead."

Mr. Orr's Remarks. Alexander E. Orr said:

"The question that the Chamber is now called upon to decide is simply this: Shall we urge that a single exception be made in behalf of rapid transit construction, to an admirable law (viz., that which forbids any city in this State lending its credit to promote private interests,) so that private enterprise may be stimulated into providing for a great public need, or shall we recommend, irrespective of consequences, a strict adherence to the statute? That is the question."

"I am free to say that I should hold the same opinion that I did when we went before the Board of Aldermen and advocated the building of our rapid transit system by the city, provided we had men at the helm of our municipal affairs that we could trust; but as that is not now the case, nor is there any prospect that we soon shall have, I could not and I would not, as a member of this committee, put myself on record as advising the Chamber to recommend that the city should build this much needed system of rapid transit, which, as far as the light we have had on the subject leads us to believe, would be an expenditure of some fifty millions of dollars, at least, to be controlled by the power which controls the municipal government of the city of New York."

Substitute Resolutions Adopted. On motion the substitute resolutions offered by Mr. Hewitt were adopted. The President of the Chamber, Charles Stewart Smith, and Abram S. Hewitt were added to the committee.

At the regular monthly meeting of the Chamber on April 5 the committee on rapid transit submitted a copy of the bill which it had prepared and caused to be introduced into the legislature. The following is a synopsis of the bill which was drafted by Henry R. Beekman:

Bill Prepared by the Chamber. The bill provides for a new Board of Rapid Transit Commissioners, consisting of the Mayor, the Comptroller, the President of the Chamber of Commerce, ex-officio, and five others named in the bill. The Board may fill vacancies.

Aside from this, the scheme of the bill is to extend the powers of the Board of Rapid Transit Commissioners, under the act of 1891, so as to confer upon said Board the right, if in its judgment it is found desirable, of providing for the construction and operation of rapid transit roads for and on account of the city. The existing powers, therefore, which by law are now vested in the Board of Rapid Transit Commissioners are still retained.

Outline of Bill. If the Board shall determine that it is expedient that a rapid transit road should be constructed at the expense of the city, it is authorized to use any plan which has been heretofore adopted by the old rapid transit commissioners, and which has received the constitutional consent of the legal authorities and the property owners, or of the General Term of the Supreme Court, in case the property owners shall have refused their consent; or it may proceed to devise and adopt new routes and plans which must, in turn, be submitted to the Common Council and to the property owners, or to the General Term of the Supreme Court, for the requisite approvals.

When the plans are finally adopted and consented to, the Board is authorized to advertise for proposals for the construction and operation of the road. Power is given to the commissioners, if they see fit to do so, to make one or several contracts for the construction of the entire system, or parts of a system, of rapid transit. The commissioners are authorized to reject all the bids and re-advertise, or they may accept any bid that, in their judgment, will best promote the public interest.

Bidder to Construct and Operate Road. The successful bidder is then required to enter into a contract for the construction of the road, and also to equip, maintain, and operate the same for a term of years to be specified in the contract, not less than thirty-five nor more than fifty years. The annual rental to be paid by the contractor to the city must be an amount, to be fixed by the commissioners, not less than the interest on the bonds issued by the city to pay for the construction of the road, and an additional sum, not less than one per cent., upon the amount of said bonds. In order to secure the city, the contractor is required to enter into a bond with sureties which shall be satisfactory to the commissioners. He is also required to make a deposit of one million dollars with the Comptroller of the city, which sum is to be repaid to him, with interest at the same rate as that paid by the city upon the bonds issued under this act, as soon as the road has been constructed, equipped and the operation of the same commenced to the satisfaction of the Board.

Bonds to be Issued. For the purpose of paying the cost of construction the city is authorized to issue its bonds, principal and interest payable in gold coin, to an amount not exceeding fifty millions of dollars. The road itself, upon being constructed, immediately becomes the property of the city for which it is constructed. The rolling stock and other equipment of the road is to be the property of the contractor, provided by him at his own expense.

Renewal of Lease. As a substitute for the security of one million dollars, when repaid, the city is to have a first lien upon the rolling stock and equipment. Power is also given to the Board to enter into any agreement that may be considered wise in reference to renewals of the lease, or the purchase by the city of the rolling stock and equipment at a valuation, if the lease is not renewed, and the property of the contractor, embracing his interest in the franchise and the equipment of the road, is to be exempt from taxation.

The contract is also to provide the rates of fare to be charged and the character of service to be furnished. The rentals received are to be paid into the sinking fund for the redemption of the city debt.

Sections 39 to 63, both inclusive, relate exclusively to judicial proceedings for the appointment of commissioners of appraisal and the conduct of such proceedings, where the Board of Rapid Transit Commissioners shall find it necessary to condemn any property in order to provide for the construction of such road.

The bill also contains a provision that where in the existing law a vote of four members of the Board is required, the number shall be increased to six. This is in effect giving the same veto power to two members of the Board that the existing law now provides for; the present Board consisting of five persons, and the Board provided for in the act consisting of eight persons.

Old Commission to Deliver Records to New. The bill also terminates the offices of the present commissioners of rapid transit, and requires them to transfer and deliver to the new Board all the records, maps, plans and other property relating to their work. Provision is also made for the payment of the expenses and compensation of the out-going commissioners. This was considered just. It was necessary to make provision for it in the act, in view of the fact that the payment of the compensation of the commissioners under the present law is dependent upon their making a successful sale of a franchise for rapid transit, which has not yet been done. Provision is also made for the payment of the expenses of the new Board of Rapid Transit Commissioners, and also a reasonable compensation to the members thereof, other than the Mayor and Comptroller, which compensation is to be ascertained and determined in the manner provided for in the existing law; that is, by the General Term of the Supreme Court, but it is to be paid to them from time to time.

The persons named in the bill as passed were: William Steinway, Seth Low, John Claflin, Alexander E. Orr and John H. Starin.

It will be seen from the foregoing that the Chamber of Commerce took up the discussion of rapid transit problems at its meeting on February 1, 1894; that a sub-committee was appointed to examine the subject and report what action it was advisable to take; that this committee reported at the adjourned meeting on February 15; that at a meeting, held on March 1, resolutions offered by Mr. Hewitt were adopted, and that at the next regular meeting, April 5, the committee reported that a bill had been prepared and caused to be introduced into the Legislature. The bill so prepared passed the Legislature and was signed by the Governor May 22, 1894.

Results. The Chamber of Commerce worked two months upon problems that had engaged earnest attention for a quarter of a century. It found the correct solution. That it did so was due to the clear judgment of Mr. Hewitt, a man singularly well equipped both as a successful merchant and trained in the affairs of state. The Chamber has not forgotten the man or his service.

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