Cornell University Law Library. THE QIFT OF Date <^ - '. z p./.f- /J"~ Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/cletails/cu31924022807089 STATE OF NEW YORK FINAL REPORT OF THE Joint Legislative Committee Appointed to Investigate the Public Service Commissions Vol. 11 TRANSMITTED TO THE LEGISLATURE APRIL 20, 1915 ALBANY J. B. LYON COMPANY, PRINTERS 1915 Final Eeport of Joint Legislative Committee 1^77 Q. Yes, it is broad, and it is not a fair question, either. A. Well, it is just as fair as a lot of others. Q. Well, wouldn't the necessary determination of these ques- tions of policy, having them transferred, entail a certain amount of delay in the subway work? A. Any transfer of power will entail delay in the subway work. A new commission of five will entail delay in the subway work, too. Q. You think that the determination of these questions that you say would necessarily have to be determined would open up the same questions that have already been decided, on the new subway contract? A. Every time a new man has come upon the Commission questions have been opened up. There are a number of people who are very persistent, — and that is not a criticism of them, — lots of things in this world you don't get in any other way, whether you deserve it or not, maybe, aside from the ques- tion of persistency, and in ways where every new Commissioner that comes on, and I can see something of the future judging it from the past. By Senator Mills : Q. How long does it take to break in a Commissioner, Com- missioner? A. Well, that depends; of course, if you have arch- angel standards — Chairman Thompson. — We have in Albany. The Witness. — Yes, I have seen some of them up there myself. I think the New York standard shows very well in comparison, too; but of course if you have got a man that never makes a mis- take, that always knows in advance what ought to be done, whose hindsight is no better than their foresight why New York City won't know the new Commissioners, can't be able to see them, they will be so far in the clouds. Chairman Thompson. — I think the only solution is to send more farmers to New York. The Witness. — From New York, perhaps. Colonel Hayward. — That is all, unless the Commissioner has some other statement, or some members of the Committee want to ask him something. 44 1378 Investigation of Public Service CoxMmissions Chairman Thompson. — That will be all. We will take a recess of five minutes. The Witness. — Well, I am not sure but what I have got some- thing, now you have got me started. (Recess five minutes.) Proceedings after recess : By Colonel Hayward : Q. Now, Mr. Maltbie, I am not disposed to be unfair about this automobile matter. And your statement that you paid for it, but I think we ought to complete the record. I didn't know that there had been any payment made for this car, I found this card the same as Judge McCalFs card, and Mr. Williams' card, and now I have the bill, which I presume is the amount that you paid for this ear on that 155-mile trip from 8 a. m. to 10 p. m., and I want it to go on the record, if it needs any justification, if this justifies it, that the amount you paid was $3, and I want to make this statement, Mr. Chairman, that I didn't have this bill at that time, this bill was not in the cabinet where these cards were kept, and I now have the bill, it being $3 paid for the car. By Chairman Thompson: Q. Do you have. Commissioner, a special file for bills of the Commissioners paid to the city ? A. Well, I don't think you will need a very large file. Colonel Hayward. — Well, I offer this bill in evidence, I sup- pose there is no objection to it. Chairman Thompson. — ISTo. Bill received in evidence and marked Exhibit No. 21, as follows : New Yoek, July 2Y, 1914. MiLO a. Maltbie, Public Service Commissioner, 154 Nassau Street, City. To Public Service Commission, for the First District, Dr. 154 Nassau Street April 25. 15 gals, gasoline consumed by P. S. C. Cadillac car on trip to Peekskill, Tuxedo, etc $3 00 Final Eepoet of Joint Legislative Committee 1379 (Kubbex stamp: Jul 37 1914 Public Service CommissioiL for the First District Per W. S.) Rendered by request. By Assemblyman Burr : Q. Commissioner, if you hadn't paid that bill do you feel that you would have wronged the city in any way? A. Personally I would have felt so, yes. I don't say that as a standard to be ordinarily followed; I do not say what other people may or shall do in a case; that is my standard. Q. You think the Commission should be held up to criticism if it didn't pay for a ride as you have done ? A. I think that is a question largely of amount; if it is repeatedly and constantly done, I don't think it is right. If it is done occasionally, why, that i-s different. There is no way, you can't say to a man he shall go so many times with the car and so near to his house and shall not go to his place there, but shall go the most direct way; there is no automatic rule and the only thing that decides it is for a man, as I have said, to have a keen conscience and live up to it. By 'Chairman Thompson : Q. Just a minute: The question is, Commissioner, the same question that a railroad president has as to how he shall ride in the private car or use the funds of the corporation for his enjoy- ment, as to how far he should go with that, and with passes and everything of that sort that they have, isn't that so? A. Yes. There is no statute of the State of New York here that places a value on a man's own feeling of what is right and what is wrong. Q. It is a thing that can be abused? A. Absolutely; and I did not abuse it; absolutely did not. Q. Well, that is for you and Colonel Hayward to get together and talk over. A. Well, I think Colonel Hayward agrees with me. Assemblyman Burr. — I think the most important thing is to convince the Committee that he didn't abuse it. Chairman Thompson. — All right, leave out the Colonel and satisfy Assemblyman Burr. Assemblyman Burr. — No, I am satisfied; satisfy the Com- mittee. 1380 Investigation of Public Seevice Commissions The Witness. — I think I have satisfied every man on the Com- mittee, without having spoken a word to them; but I can go further if you want to. Colonel Hayward. — I agree with you, Mr. Maltbie, it is not a question to be entirely regulated by statute. The Witness. — Or the criminal law. 'Colonel Hayward. — Or the criminal law. A. Or the criminal law or any other way. Chairman Thompson. — Is that right, Colonel? 'Colonel Hayward. — ■ Yes. Chairman Thompson. — Any other general law question, I sup- pose. Have you got any other statement to make? A. Just one or two things, unless I get started. Chairman Thompson.^ — ■ Are you liable to go as far as some of your colleagues, in the present statement ? A. I don't think so. Q. Well, you can go ahead. A. The first thing I have from the Secretary's office is that publication of the fender and wheel guard report which the Colonel said was in the papers before elec- tion did not appear in the papers until November 14, 1915. Q. 1915? A. 1913. While I am not a politician and don't pay any attention to politics I don't think election day ever comes as late as November 14th. Chairman Thompson. — No, not up the State. By Colonel Hayward (resuming) : Q. Well, I find here, Mr. Maltbie, in the publication of the opinon it is dated October 27, 1913 ? A. Well, that is the date when I finished the opinion up. I put it on when I finish it up always. Q. That is your original ? A. It is not given to the public when — ordinarily, I don't think it is given out to the public when it is handed to the other Commissioners; I don't believe it is given out before it was adopted. Q. I asked you the other day, do you remember, while we were having our hearing over in the Aldermanic Chamber, when you Final Eepokt op Joint Legislative Committee 1381 told us that you had talked with the engineer about when changes in the specifications and plans would be completed, and you made that a kind of stopping point, or chaxiging point, and the sugges- tion that was there made was to ask the 'Chief Engineer to make a statement of that, of some of those facts, have you it there? A. I can give you a statement. I had a brief talk with one of the engineers the other morning, I only had two or three moments, but I think I can have this statement made. Q. Well, I don't care unless you want to modify your estimate of the statement of the other day ? A. No, I think it confirms it. I have these engineers' statements for each kind of a section that was let, but it is rather a long statement. Q. What is the one most remote, did you notice, readily there ? A. September 1st, 1915. Q. September 1st, 1915. Well, now, that is a little further than I thought it would be, or a little further than you thought it would be ? A. ISTo, I don't say that, six months I thought it would be ready, two or three months for the preparation of plans and two or three months for the specifications, six months would bring it pretty nearly to September 1st. Ey Chairman Thompson: Q. Anything further, Commissioner ? A. I don't think there is anything but just this statement here, Mr. Chairman, that you asked for, regarding the number of gas and electric complaints that have been handled in the Bureau under my general super- vision, and a list of the subjects coverel in those complaints, and without taking time to read it, if you desire, I will hand it to the stenographer so it may be put in the record. Chairman Thompson. — Very well. " The total number of complaints handled by the Bureau of Gas and Electricity for the seven and one half years ending December 31, 1914, was 44,000. Of this number 35,0i00 were applications for tests of gas meters from consumers and 5,500 were applica- tions for tests of electric meters from consumers. A total of 3,500 informal complaints not either involving a test of a gas or electric meter were also handled. These informal complaints were not classified until 1911, but since that time the Bureau has handled 1382 Investigation of Public Service Commissions 343 complaints of overindexing of meters, 687 complaints of ser- vice conditions against gas companies, 462 complaints of service conditions against electric companies, 86 complaints: as to in- adequate supply of gas, 93 complaints as to virrong billing of gas and electric companies, 50 complaints as to prepayment meters, 55 complaints as rebates on tests of meters, and 77 complaints as to gas deposits. ■The Commission has also tested and sealed a total of 2,704,764 gas meters. Gas and Electric Complaints Being billed on wrong meter. Prorated bill for electricity. Failure to secure Board of Fire Underwriters' Certificate. Meter locked through error on part of company. Extension of gas mains. ISTew gas range set on complaint. Secured no permit from Bureau of Highways to open streets. Made no application for gas. Estimated gas bill. Two meters registered same current. Consumer claimed wholesale discount on retail contract. Electric meter tampered with. Nonpayment of gas bills. Low voltage. Electric street lights not burning. Bill incurred by former occupant. Failure to supply proper address for installation of gas. Crossed risers. Delay in supplying electricity through running the wrong line. Delay in supplying electricity on account of strike. Failure to make formal application for gas. Refusal of Bureau of Highways to allow company to erect poles. Delay in supplying gas on account of leakage in house pipes. Failure to secure consent from property owners for electric service. Refunding of money from prepayment meter. Final Eepoet of Joint Legislative Committee 1383 Failure to receive approval of Park Department for extension of service. Discontinuance of gas through bookkeeping error. iComplaint as to minimum charge made by certain electric com- pany. Failure to supply gas unless applicant made personal applica- tion at company's office. ■Overindex. Failure to return gas deposit. Refusal to combine service under wholesale rate. Delay in supplying gas on account of breakage of prepayment meter. Failure to combine lighting of adjoining properties. Leaking gas meter. Amount of rebate as result of P. S. C. test. Allowance made for leaking meter. Failure to supply gas because of the attitude of the Board of Estimate regarding the franchise of the Westchester Lighting Company. Amount of deposit required for electricity. Refusal to allow interest on deposit. Gas discontinued because of defective house pipes. Gas discontinued because of defective gas stove. Amount of deposit required for gas. Shortage in prepayment meter. Error in rendering estimated bill for electricity. Objection to placing poles in front of premises. Defective prepayment meter. Estimated bill for gas. Failure to refigure electric bills. Breakdown service. Failure to close an account. Failure to supply because of defective gas fixtures. Inspection of gas holder. Refusal to make electric lamp allowance. Prepayment required to supply gas and electric service where premises are more than 100 feet from main. Charge for installing gas range. 1384 Investigation of Public Seevice Commissions Bills rendered for gas where meter was found to run slow on companies' test. Delay in supplying electric service because of violation filed by the fire insurance exchange. Leak at stove connection. Damage to sidewalk. Leak in water pipe due to escaping electricity. Delay in supplying gas through failure to supply proper street number. Combing tenants' consumption, electric. Failure to rebate under the eighty-cent gas law. Failure to supply electricity because of misunderstanding of the form of contract desired. Failure to supply gas through prepayment meter because pre- vious meter has been broken into. Leaking gas pipes. Kemoval of meter without notice. Proper forms of electric contracts. Transformers on premises. Failure to set prepayment meter. Leaking gas mains. Monthly guarantee for electricity. Defective prepayment meter. Refusal of Bureau of Highways to allow company to open streets. Failure to render final bill for gas. Defective piping. Eefusal to set certain types of ranges. Discontinuance of electric supply because of alleged tampering with meter. Failure to execute contract for electricity. Rates for electricity. Location of gas meters. As to placing wires on private property. Wrong riser for gas. As to payment for damages to prepayment meter. Destruction of trees by electric wires. Failure to supply certain types of electric lamps. Defective gas meter. Final Report of Joint Legislative Committee 1385 Delay in installing range. Eefusal to supply underground service. Discontinuance of gas supply because of leaking house pipes. Discontinuance of electric supply for nonpayment of bills at other premises owned by consumer. Defective gas range. Delay in installing a gas range. Minimum charge for gas. Charge for exchanging gas range. Refusal to transfer deposits from one address to another. Failure to supply sitreet lights. Stoppage of house pipes. Installation of new gas burners. Insufficient voltage of new transformers installed. Condensation in gas meter. Stoppage in service and meter. Condensation in house piping. Stoppage in house riser supplying meter. Meter failed to pass gas. Stoppage in branch of service. Gas fixtures found in bad condition. Stoppage of gas account of defective prepayment meter. Fuse in junction box blown out, electric. House pipes trapped. Small service pipes. Old pipe cut and new drip in service. Sagging gas mains. A. There is only one other thing I wish to speak of, and I hesi- tate to speak of that because I am not sure that the entire matter was referred to in the proceeding, and I don't know that it is in- cumbent upon me here to reply to things outside of the record; but reference has been made to conferences which I have had with the Mayor, with President McAneny, and with Mr. Polk, the Cor- poration Counsel ; I have had such conferences, and they arose in this way : Matters have come before the Public Service Commis- sion regarding the subway contracts, the approval of which must be given by the Public Service Commission under those contracts, and I have done my best to prevent things going through which I thought ought not to go through, -when I have seen that the steam 1386 Investigation of Pubxic Service Commissions roller was being prepared I have gone to the Mayor and I have gone to Mr. McAneny and asked them to help to prevent those things being approved. Chairman Thompson. — So you have a steam roller here, hey ? A. Well, I have been ironed out several times over there. I don't suppose you would call it a steam roller, but I can tell you it has blocked the way. Take the Ward & Company contracts, that is the contracts submitted by the Interborough Company for the ap- proval of the Commission; another was the Stevens contract that the Interborough wanted to let to Stevens for extension of the elevated lines at cost plus 15 per cent., the Stevens contract was disapproved, and I could give you many other instances. Now, when I heard that those things which ought not to be approved, I have gone to the public officials and have secured their aid; and while I have never given any statement so publicly before, it was brought in by the statements that have been made here, part of it brought out by statements that have been made here and partly immediately after the hearings, and I think it is but fair to say that we stopped approval of several things before the Public Service Commission which ought not to have been approved ; those matters would not have come before the Board of Estimate and Apportionment and there was no way to stop them only to go to the public officials of the City of New York and state to them that these matters were important to the City of New York, as it affects the finances of the city and of the City of New York, and it was my duty to look into them I thought, and to look into them and stop them and I went to the Corporation Counsel and told him. In franchise matters why, when a franchise is granted from the city authorities of the City of New York it is not proper for the Public Service Commission to amend that franchise, and re- fusal to make them comply with the terms of the franchise is equivalent to an amendment of the franchise; the result has been we have stopped some of those things over there. Now I tell you that when a man works over there in a minority of one or perhaps two on a number of these things and he knows that matters are not proper to come before the Commission over there I think he is justified in using every means he knows to prevent the thing from going through. I have no apology to make for the fact that FiKAL Eepoet of Joint Legislative Committee 138Y I have conferred, and there is no apology needed; I have con- ferred with the Mayor and President McAneny and Mr. Polk and Mr. Pounds, another member of the Board of Estimate and Ap- portionment, and if I had to do it over again, I would do the same thing. Chairman Thompson. — There is nothing in the law to prevent you ? A. 1^0, precisely not. By Colonel Hay ward: Q. Mr. Maltbie, there was some statements in the newspapers that were not brought out here on the witness stand, that was part of an unfinished speech, wasn't it? A. These conferences with the city officials was referred to in the record but part of the senates, the innuendo was made on the outside. Chairman Thompson. — Anything more ? Colonel Hayward. — That is all with Mr. Maltbie. 'Chairm'an Thompson. — Do you want to take a recess now ? Colonel Hayward. — Well, Mr. Ivins is here, and we might pro- ceed with him. ■Chairman Thompson. — Colonel, do you think Mr. Ivins ought to be siworn or proceed and make his statement? Colonel Hayward. — Well, I think the Committee agreed that these gentlemen who were invited here were simply to go into the question of recommendation. Chairman Thompson. — That is all. Colonel Hayward. — Well, then, I see no reason why he should be sworn. Would it be proper, Mr. Chairman, to read this letter into the record that was sent out as to the scope of these questions ? Chairman Thompson. — Yes. Colonel Hayward. — This is a letter signed by Senator Thomp- son as Chairman of the Committee and is addressed to the present witness, with others: " SiE. — On behalf of the Joint Committee appointed by the Legislature of the State of New York to investigate Pub- 1388 Investigation of Public Service Commissions lie Service Commissdons of tte State of New York and to investigate and report in reference to legislation affecting Public Utilities and also to ascertain and report concerning duplication of functions or other matters affecting the ad- ministration of the Public Service Law of the iState of New York and tie Intersitiate Commerce Act of the United States, we beg to solicit the benefit of your advice in the premises. " The Legislative Investigating Committee finds in opera- tion in the State of New York, pursuant to the Public Service Law, two Public Service Commissions in two Public Ser- vice Districts, known as the First and Second Districts re- spectively, the First istriet comprising the Greater City of New York and the Second District comprising the remain- ing portions of the territory of the State of New York. Each Commission is separate from the other, separately organized and maintained, headed by five Commissioners, one of whom is designated by the Governor as Chairman. " The Public Service Commission of the First District is charged with all the duties placed upon the Rapid Transit Commission, pursuant to the Rapid Transit Act, viz. : Con- struction of a new system of subways in Greater New York with the general details of which you are no doubt familiar. The Committee intends to pursue its investigation along the following lines: " First. — By examination of the Commissioners and otherwise to ascertain whether the Public Service Commis- sioners are personally efiicient and whether there is any ground for just criticism of their official actions either sep- arately or as a body in their district. " Second. — Whether the Public Service Commission Law, as enacted in 1907, and since amended to date, providing for two Commissions in two districts in the State, has proven to be a satisfactory organization of the Commission and whether the Public Service Law has proven substantive and sufficient legislation on the subject. " Third. — As to whether the Public Service CommissiMi, First District, is exercising inconsistent functions, viz. : The quasi judicial exercise of regulatory powers over public utilities and also the exercise of administrative powers in tlie Final Eepoet of Joint Legislative Committee 1389 matter of the construction of new rapid transdt facilities within the City of New York. And, if so, ought legislation be had (either in the interest of the proper exercise of public utilities regulation by a Public Utilities Board) who may in order to effectively regulate, the better performance of their duties by not being required to perform some other incon- sistent official act, taking a great deal of their time — or in the interest of a proper administration in the construction of a local improvement and an acknowledgment of the theory of Home Rule, — ought administrative functions now exer- cised by the Public Service Commission, First District, be transferred to the City of New York, or to the Board of Es- timate or some proper department thereof. " Fourth. — Has the organization and maintenance of a Public Service Commission of the State of New York proven itself a proper and satisfactory and necessary governmental function of the State which the State ought to exercise. And, if so, ought the organization thereof be further maintained in two departments in two separated districts. And if con- tinued in two separated districts, ought there to be any ter- ritorial change in the boundaries of the district. " Fifth. — We would like to be advised as to whether, under the present administration of the Public Service Commis- sions Law, there is duplication of functions either (a) be- tween the Public Service Commissions and the City Admin- istration; or (b) between the Public Service Commissions ■and the Public Service 'Corporations; or (c) between the separate districts of the Public Service 'Commission; or (d) between the Public Service Commission of the State of New York and the Interstate Commerce Commission of the United States. And, if so, in either of the above instances, we would like suggestions as to a remedy. " Sixth. — We also seek advice in reference to suggested amendments to the Public Service Act in the interest of per- fecting the law in consistent or isolated instances, which may occur to the minds of experienced and interested persons. " Seventh. — In conclusion, the Committee deems it their paramount duty to recommend to the Legislature any sensi- ble, necessary and practical amendments to the Public Service 1390 lNVESTIGATI0]5r OF PuBLIC SeEVICE COMMISSIONS Law and the Public Service Commissions Law, either of a substantive or collateral character, which experience under the act may have proven to be of value to the State and in the interest of a permanent perfection of the law and also proper and satisfactory administration thereof. " In behalf of the Committee, I, therefore, herewith invite your attention to the subject, and ask if we may have the benefit of your views publicly expressed before the Commit- tee at some time during our hearings in relation to the mat- ter, as outlined above, or such part thereof as you may have any interest in, and the Committee would also welcome any suggestion which you think is within the province of this in- vestigation and will be of benefit to the State or locality. " Pespectfully submitted, "(Signed) GEOEGE F. THOMPSOI^, " Chairman." Colonel Hayward. — Well, the idea, Mr. Chairman, of this let- ter, in lie last paragraph of the letter, was to let the witness deter- mine what particular questions they were experienced or inter- ested in and continue with their recommendations. Chairman Thompson. — I think it would be a proper policy to pursue, as a general proposition, will be to let the witness make his statement and then you or anybody else can ask anything that occurred to them. I think we better take a recess now for lunch and meet at 2 o'clock or thereabouts. We will now take a recess until 2:07. Recess until 2 :07 o'clock p. m. After recess, February 24, 1915, 2:07 p. m. William M. IviNs, called as a witness, testified as follows : Direct examination by Colonel Hayward: Q. Mr. Ivins, you had a copy of the letter that the Chairman sent out, which I read this morning? A. I have. Q. I suggest you proceed in your own way to convey the thoughts, in the order you have them, on those subjects included in Chairman Thompson's letter, and we will get along more rapidly. Final Report op Joint Legislative Committee 1391 A. I shall have to ask the indulgence of the Committee somewhat because of the fact that I am suffeo-ing from bronchitis and my voice is not wholly at my service, as I should wish. I can say that, in order to answer the questions which are either covered explicitly and specifically in this letter, or those which are covered implicitly in it, that it isi necessary to consider somewhat the his- tory of this particular legislation. We cannot very well disassoci- ate the history of a measure as important as this is from the con- sideration of that measure and the question of its applications to new conditions and its conformity by amendment to new re- quirements. ISTow, as a matter of fact, this legislation — that is, the Public Service Law of this Stat© — was passed during a legislative session of 1907. That, however, was not a wholly spontaneous piece of legislation, but was the result of evolution. The Commission — or Committee — ^will remember that many years before that we had attempted to create in this State a Railroad Commission. The attempt was a failure and the Railroad Com- mission was abandoned. Subsequently, however, the Interstate Commerce Law was passed, and with the creation of the new Interstate Commerce Commission, under the law as passed, we had presented to the different states the possibility of solutions of problems which our first Railroad Commission had wholly failed to solve. We subsequently provided for a new Railroad Commis- sion. During the years 1903, 1904 and 1905 there was a very considerable agitation at this end of the state in favor of dividing the Railroad Commission in two Commissions, or at least in two sections, or two departments; eaii under such conditions, that the problems of transportation, as they presented themselves in Greater JSTew York, should have the attention of a body which was selected from among the citizens of Greater New York, which held its sessions in Greater ISTew York, and which was easily reached and approachable by the entire citizenry of the city. The political influences were so strong at that time that the effort to bring about a separate Commission for ISTew York City was de- feated successively for three — and, if my recollection serves me — for four years. Simultaneously, a number of gentlemen in the city were urging, or promoting, the passage of a bill in the legis- lature, which should control the issue, through some properly or- ganized public body, of the securities of public service corpora- tions. The gentleman who was most active iv- the effort to secure 1392 Investigation^ of Public Seevice Commissions the passage of a bill which would provide for some guarantee against over-capitalization was the late Judge E. B. Whitney. The gas question and the price of gas raised a series of issues which resulted in the appointment of a legislative committee, of which Governor Hughes was counsel; and that resulted in the passage of the gas law, or the Gas Commission Bill. Then, in 1905, we had a very active mayoralty campaign, in which the contest was between Mr. McClellan, Mr. Hearst and myself, and throughout that campaign, one of the principal subjects of discussion on the part of all the contestants for the mayoralty was the control and regulation of public utilities, and, so far as Mr. Hearst is con- cerned, the actual municipal ownership. Up to this time, how- ever, we had the new Gas Commission and we had the old Eail- road Commission. In the early winter of 190i6, Mr. Root made a speech, which attracted the attention of thoughtful men all over the country, in which he pointed out the fact that the tendency towards extreme nationalism and extreme centralization of national government was due to the fact that the states themselves had failed to conform to their duty in the regulation of what was generally spoken of at that time as predatory, or lawless, wealth, and of the control of politics by the corporation. In 1906, Mr. Hughes ran for, and was elected. Governor. In his first message to the legislature he called the attention of the legislature to the necessity of the performance by the State of New York of its own duty as a sovereign community, if it did not wish to see that duty — or, at least, its power — lost to it through making it compul- sory on the nation to do the work which the State itself should do. After the Governor's message was sent in, work on the draftsman- ship of the Public Utilities Law was begun. That was done by a number of gentlemen, members of the legislature, the Governor's legal adviser and some volunteers here in the city, who were co- operating to the end of bringing about as perfect a Public Service Commission Law as they could. At that time, we had before us nothing which could really serve us as a guide except the old laws of our State and the "Wisconsin law, the Federal Statute and two Massachusetts acts. It was seen at the time that any statute which should be then passed would naturally and necessarily be very largely experimental in its character. One of the fundamental considerations was the abolition of both the Railroad Commission Final Eepoet op Joint Legislative Committee 1393 and the Gas 'Commission, and one of the first incidents which arose in drafting the new law was the scope of the measure, whether it should include railroads, lighting by gas or electricity, telephones, wharves, piers, bridges, ferries and tunnels. It was conceived at the time, that, if that law was made as broad at it was possible to make it, and in such a way as to make it cover practi- cally all of the public utilities of the city and the State, that it would probably break down of its own weight. The draftsmen were also confronted with this very difficult proposition, namely : That, if we were then a State Board, we would be immediately confronted with a constitutional question, namely, as to how far a State Board could appropriate and use municipal moneys; could exercise what was in reality a municipal function ? The question was complicated because of the fact that, at that time, there existed the Eapid Transit Commission, and the Rapid Transit Commisf- sion had undertaken and had been doing all the work which led up to the first of our subways. I was asked by the Governor to pre- pare a brief on the constitutionality of certain features of the bill, and I did prepare such a brief, and I called his attention to a series of cases, beginning with the famous Draper case, as early as 1857, which grew out of the creation of the Metropolitan Police District, down to the Franchise Tax cases and the Sun Publish- ing case. I refer to that matter now because it is a question which will have to be borne in mind by any legislative committee w'hich proposes to redraft or amend this law, inasmuch as the same ques- tions will still remain. The cases bearing upon this general ques- tion of constitutionality are, first, a group of cases which are known as the Metropolitan District cases, the Draper case, the Pinkney case, the Herster case, the Shepard case and the Barry case. In all five of these cases — the latter four relying upon the decision in the Draper case — the statute was held to be constitutional. Then came another group of cases in which the legislature sought to bring within the rule in the Draper case certain legislation, but where the courts held that it was a legislative invasion of a local function, and that such legislation was unconstitutional. The cases in that class are the Devoy case, growing out of a question of the transfer of the Police Board under the law of 1857; the Troy Police Law, known as the Ashburton case, and the law of 1867, transferring certain powers of the Mayor and Board of 1394 Investigation of Public Seevioe Commissions Aldermen, known as the Acton case. Then there came another group of cases, which your Committee, I conceive, will have to bear in mind in order to avoid the rocks and the dangers of un- constitutionality in any proposed legislation. In addition to the two groups A and B, was another group which may be classed as C, where certain new districts were created by the Legislature, and you have before you now for consideration the precise ques- tion of a creation of a new district, or of a redistricting of the two districts as they now exist. In this class of cases, no local functions were devolved upon the new officers, and they were held to be constitutional. Then came a series of subdivisions, or groups, under that, the Acton, the McDonald case, the Cherry Tree case, the Allison case and the Franchise Tax case, to which I call your particular attention, as well as Wilcox against the Mayor and the Sun Publishing Company case. I refer to these matters now, and it gives me pleasure to be able to submit my brief on these points, because it may possibly serve the Committee somewhat, and possibly serve it very materially, in avoiding certain contestible decisions. It was finally decided by the leaders of the Legislature and the Governor that there should be two Boards, one that for the Second District, the other that for the First District; and in order, so far as possible, to avoid any question of constitutionality and the exercise by a legis- latively appointed body of a purely local function to confine the First District entirely to the geographical territory of Greater New York. That is why it happened that the jurisdiction of the First District was confined entirely to Greater New York and did not take in, for instance, the counties of Westchester, of Suffolk, of Nassau and some of the other counties, as was originally pro- posed. These same considerations led to the final determination on the part of the Legislature and the Governor to vest the func- tions of the Rapid Transit Commission in the First District Com- mission, inasmuch as the questions involved had been sufficiently discussed in the Franchise Tax case and in the case of the Sun Publishing Company; and it was conceived that, under this de- cision, it would be entirely safe as a constitutional proposition to vest the duties of the Rapid Transit Commission in the new First District Commission. The proposition was made at the time, as the proposition is now made, that the proper allocation Final Report of Joint Legislative Committee 1395 of those functions was in tlie Board of Estimate and Apportion- ment, but neither the Legislature nor the Governor thought it wise to disregard the apparent permission in the two last cases to which I have referred and vest the power in the new board, par- ticularly in view of the fact that the State government at that time was wholly out of touch with the municipal government; had no party political relationship to it and had no party political confidence in it ; the fact being that three members of that Board of Estimate and Apportionment, the Borough President of Man- hattan, the Borough President of The Bronx and the Borough President of Queens were removed by the Governor from that board. I believe that if the Board of Estimate and Apportion- ment had been differently constituted at that time, the problem would have been solved in a somewhat different manner, by leav- ing all of those functions which I will speak of as the Eapid Transit Board's functions in the municipal authority instead of vesting it in the State authority. I have referred to the fact that, at the time the New York statute was passed, we had but few precedents. I thought it worth doing, however, and I and two associates wrote a book, which was the first of its kind, on the control of public utility, into which we brought together all of the authorities of any kind in any of the States, or in the federal administration, bearing upon such control, and bearing, among other things, upon a very important question which was raised, namely, the constitutionality of the delegation by the Legislature of that which amounted to legislative power, as well as the con- stitutionality of the creation of a new character of judicial power in addition to that which was exercised by the Supreme Court or the courts in general. I shall be very glad to file with the Com- mission — the Committee, I should say — a copy of that book, which brings down all of the authorities to the time of its pub- lication. It is now, however, really out of date, because so many different States of the Union have adopted Public iService laws, many of which have been very largely fashioned upon the lines of the New York Public Service Law. It was recognized that our work at that time was distinctly experimental. It was recognized, however, that it was emphatically necessary. No one was pre- pared to say what the precise result of the experiment might be, and the gentleman who did that work did not, at the time, have 1396 Investigatioit op Public Service Oommissions the same confidence in universal salvation by legislation, wEicli seems to be entertained by so many people who to-day spend a very large part of their life in talking about something they are entirely ignorant of. I can say that there is no problem which is more difficult of solution than that of the control and regulation of public utilities in the city of New York, except the problem of the government of the city itself. No one claimed perfection for that law as passed in 190Y. It has been amended a number of times and from time to time new functions have been thrown, have been allocated, to the Commission; but always with a care to avoid the placing in the hands of the Commission of any func- tions which might possibly raise the question of constitutionality so far as the exercise is of a purely local function, and the ex- penditure, a purely local, tax, by a body which was purely and distinctly a State body. The consequence is that our ferries, our bridges, our docks, have not yet been brought within the pro- visions of the Public Service Law of this State. Any revision of the law will have to consider these matters, if there be any inten- tion on the part of the Legislature, acting upon the suggestions or report of this Committee, to give a larger scope and a greater function to the Public Service Commission. My own familiarity with the situation grew out of the fact of my association with the Governor and the leaders of the Legislature in drafting the law. The law went into effect on the first of July, 190Y. The Gov- ernor appointed his first Commission, the membership of which this Committee is entirely familiar with. The Commission for the First District began, or attempted to begin the organization, the creation, of the apparatus for the performance of its work, early in July. By the end of July there was very considerable public clamor to the effect that the 'Commission has not really begun to accomplish anything. Financial conditions were already begin- ning to be very strained, and complaints with regard to transpor- tation corporations were not less, but greater than theretofore, and the question of congestion and crowding, and satisfactory service began with the question which had been raised by a case that had been brought in the Federal courts concerning the monopoly which had been created through the Interborough-Metropolitan system, resulting in what was a sort of a psychological crisis here. As a result of that situation, Governor Hughes suggested to the Final Eepoet of Joint Legislative Committee 1397 Commission that they should at once begin their work by the most complete and exhaustive examination, investigation and analysis of the entire transportation system of Greater New York, and that I be retained as counsel for the Commission in that work, and I acted as special counsel for the Com m ission from the 1st of August until about June of the following year and conducted the investigation which resulted in the dissolution of the !New York City Bailroad Company and the practical reorganization of the Metropolitan Street Railway Company and refinancing of the sub- way system and the recreation of the Third Avenue system. There had been some question as to how these Commissions should be organized, how many members there should be in each Commis- sion. It was finally decided that there should be five in each Commission ; but in order to avoid the most difficult question, the Commission for the First District was not given any regulatory functions with regard to the great railroad system, trunk line sys- tems, such as the Long Island, the Pennsylvania, so far as it was in ISTew York jurisdiction; the Erie, so far as it was in this juris- diction ; the New York Central, New York & New Haven, New l''ork & Harlem, etc. ; and that was all thrown into the work of the up-State Commission. The result was to produce a rather illogical situation, because its function is an integral function for the State as a whole, 'and instead of having it exercised by one single body, which should represent the State as a whole, the peculiar exigencies of the situation resulted in the creation of the two Commissions. That was known to be experimental to those who were doing work at the time, and one of the questions which you now asked me in the letter which you addressed to me is vir- tually as to whether or not that experiment has worked out with all the success that was hoped for it in the beginning. That enables me to come at once to one of the main points which you have been flattering enough to ask for my opinion on. I believe that there should be but one board. I believe that that should be a State board. I think that it should consist of seven members, three of whom should be elected, or selected, I should say, from the electorate of what I will speak of generally as up-State; the other three from the electorate of what I will speak of generally as down-State. I think that sooner or later it will be found neces- sary for the Legislature to divest this Commission of all of the 1398 Investigation of Public Service Commissions functions that it acquired from the old Board of Kapid Transit Commissioners, particularly if there be only one Board. That Board, however, could be made up of seven, the same way in which the Supreme Court of Massachusetts is constituted, three of the members might be selected from such geographical locations as you shall determine on as being the jurisdictional geography, and three from the other. One might very well be taken at large, and the function of the member taken from anywhere in the State could be that of a presiding officer, and there could be turned over to him as his peculiar duty the matters which involved the possi- ble conflict of law or jurisdiction, between the Federal authorities and the State authorities in respect of inter-State and intra-State jurisdictions. If that were done, and if ultimately that which is a purely local function, a purely municipal function, is turned back to the municipal government, it would then be possible for the State, without making its statute obnoxious to the claim of unconstitutionality, to select such district down-State as you saw fit. You might take in three or four of the lower river counties and all of the island counties without any difficulty. Now, you are confronted at once with a practical question, namely, as to what would be the effect of the transfer at the present time of the powers which were derived from the old Rapid Transit Law to the Board of Estimate and Apportionment, taking them entirely away from the Commission for the First District. I think that Mr. Maltbie is correct, and I believe that he is wise in his testi- mony when he says that one of the very certain effects of that, one of the things that can be foreseen — and very few things can be foreseen in respect of the incidents of legislation — would be a delay in the work which is going on; and the problem presented to your Committee, therefore, would be the old problem which was expressed in so homely a phrase as Mr. Lincoln has indicated as that involved in the process of swapping horses while crossing a stream ; but I concede that ultimately it will be necessary that all of the functions which were derived from the Rapid Transit Law shall be placed either in the Board of Estimate and Appor- tionment or in some municipal department which shall be created by the Legislature for that purpose, because we cannot overlook the fact that we are now carrying on in this city probably the greatest and the gravest experiment in municipal ownership ex- Final Report of Joint Legislative Committee 1399 penditure which has as yet been tried anywhere in the world. We have our municipally-owned water system, we have our municipally-owned subways, our municipally-owned bridges, our municipally-owned tunnels, our municipally-owned ferries, our municipally-owned docks, and we have gone into a stream of municipal communism which is larger than that entered upon as yet by any city in Europe, although we had not gone into the actual details of operating any public utilities, except the water system and the ferry system and the bridge system. The largest part — far and away the largest part — of the expenditure of the present First District Commission is incident to the function of construction and the functions of ownership. It is generally said through the State : " Why, you have a Commission down here which is costing you $2,800,000 or $3,000,000 a year." As a matter of fact, from the point of view of the State, that is not a fair proposition. It is not a fair statement, because iive-sixths, if not seven-eights, of that entire expenditure is incident to a func- tion which is purely local, whereas, if you were able to allocate that local function where it properly belongs, and then unify your State function as it should properly be done, you would at once relieve the community of a source of great misunderstanding, that mysterious misbelief on their part, that the State, as such, is making this tremendous expenditure, whereas, as a matter of fact, it is the people of the State of New York who are making these expenditures. Now, those are certain radical features looking toward organization and looking toward distribution of power. The statute itself is susceptible of very great improvement in very many directions. I do not think it is necessary for me to call your attention to the work which has been done by the jSTational Civic Federation in preparing a draft bill for the regulation of public utilities. The National Civic Federation prepared such a bill not only, but it brought together into one single volume all of the statutes of a regulatory character, either Federal or State, which are now in force in this country, and which can be con- sulted, beyond any doubt, with great benefit by the draftsmen of any proposed new bill. The Draft Type bill, of which I believe some of the members of your Committee, if not all of them already have a copy, is followed by an appendix, and the appendix is by no means vermiform, but is very vital and really reaches to the 1400 Investigation of Public Seevice Commissions question of the vitality of the entire proposed law. Pages 68 to 110 of that pamphlet contain a discussion of the merits of the different sides of the controversies which are raised with regard to certain of the proposed sections of the Draft Law. They are practically all of them of fundamental and essential importance. The first of these raises this question, for instance : " Should the States subject municipalities which are owning and operating pub- lic utilities to the same regulation and control which it imposes upon private corporations?" Our present law makes no such provision. The consequence is although you have a general Police Law of the State, providing for the regulation of public utilities, just as soon as a public utility has become a municipal utility, it has passed outside of the control of the sovereign police power of the State. Now, it is advocated by many that municipal borough utilities should be subject to the same control as any other. Personally, I believe that that proposition is a correct one, and I believe that our laws should be so amended. One of the effects of that would be, for instance, immediately to bring the regulation of our municipally-owned and operated ferries within the control of the State board exercising the police power of the State. That is a very good illustration of the kind of question which is raised from point to point with regard to those matters concerning which there has been any dispute and concerning which ultimate agreement has not been easily reached. By Senator Mills : Q. You would not, of course, Mr. Ivins, attempt to redraft this entire law ? A. I should by no means attempt it. I believe that a repeal of this statute and the substitution in place of it of a new statute would be a very grave error. In the first place, we have had this statute on the books now for very nearly eight years, and we have had it repeatedly interpreted. We Icaow what its mean- ing is. Phraseologically we understand it as the result of a long series of judicial interpretations. To throw away the result of that experiment and those determinations would, to my mind, be the greatest sort of economic waste. I, therefore, should hope that the Committee will not recommend the repeal of the present statute, but I believe that the present statute can be amended in sections, and from point to point, in such manner as very greatly Final Eeport of Joint Legislative Committee 1401 to improve it, and among other things as to make possible the more perfect enforcement of the law and a more perfect administration of the functions which are accorded to the Commissioners. Q. Now, let me make a suggestion to illustrate. Would it not be well to consolidate all those sections which refer to the issue — those stocks and bonds — which, in the present act, I repeated with reference to railroads, and then with reference to gas com- panies and then with reference to electric companies ? A. One of the defects of this law, as it now stands, is that there is constant repetition, predicated upon particular subject-matter, without proper classification, predicated upon the object or intent sought to be achieved by the statute ; and the Senator's suggestion, to my mind, is one to which no possible objection can be made, but is one which should be readily and properly accepted. Everything with regard to the regulation of the financial condition of public utilities should be brought together. Everything with regard to the regulation of transportation of passengers should be brought together. Everything in regard to the regulation of freight rates should be brought together. To my mind, there should be as little definition in the act as possible, because I am never oblivi- ous to the fact that that is a fundamental axiom of law. Q. Isn't that the only way we can get uniformity ? Of course, under the present law it would be possible to amend a section applying to the issue of railroad bonds and amend a section apply- ing to the issue of gas bonds, for instance? A. You would have under those conditions an 'absolutely anomalous situation. That would be distinguishing between different kinds of securities, whereas the fundamental principle which is applicable, if appli- cable at all, should be applicable to all. By Colonel Hayward : Q. Do you know why they prepared it in this form originally ? Was it because parts of it would stand up and parts of it might not? A. The counsel is undoubtedly as familiar as 1 with the proposition that the statute would be in part constitutional and in ■part unconstitutional, and the greatest care was needed to make this as little obnoxious to the question of imconstitutionality as possible, and, therefore, so to construct the statute that, if any particular sections were found imconstitutional, the validity of 1402 Investigation of Public Service Commissions the remainder of the statute should not be impaired, but that it should still stand as an independent structure and have its own automatic operative force precisely as though there had been no impairment of the whole by the declaration of the unconstitution- ality of any particular section. The work as done was not done as a work of art from the point of view of a legislative proposition. It was done imperatively and regardless of the necessities of the time and in view of the very uncertain and unsettled condition of the law concerning many of the powers which "weve sought to be devolved upon the new board. Now, -we have found out a great deal that we did not know before, and by referring to the decisions of the last eight years, and to the practice in the different States, as well as by the application of the principal of co-operative legis- lation by Massachusetts, New York, Illinois, Pennsylvania and Oklahoma, where we have great differences, nevertheless, we find certain fundamental and universally applicable principles, and I believe it would be a great mistake to attempt by legislation to cover any conceivable case. I think in that respect some of our western laws, like some of our western constitutions, break down because they try to foresee the unforeseeable ; and even a member of the Assembly or counsel to a legislative committee cannot, by any possibility, foresee anything whatever except this one certain fact, namely, that there is not a single law on our statute books which has accomplished the object for vs^hich it was passed, and that object alone; but every law has, in addition to a partial ac- complishment of the act for which it was passed, resulted in num- berless unforeseen and unforeseeable things; and if you load up this statute with an attempt to foresee what is going to happen in the future, you will make a great mistake. By Colonel Hayward: Q. Do you think there has never been so complete a judicial distribution that this can be separated? A. I have no question about that whatever, that is a thing that ought to have been done some years ago, and we have seen it ought to have been some years ago; but, of course, it is a work of great seriousness, and it is going to involve great care in draughtsmanship of such part of it and particular care should be taken not to lose the benefit of those judicial interpretations and settlement of the words and phrases that might be lost if you attempt to go too far in the definition. Final Eepoet of Joint Legislative Committee. 1403 Q. What would be the resulting benefits from such consolida- tion, Mr. Ivins, other than brevity ? A. Well, the first would be that you would become more unchangeable than the average man would be from reading this law, I will say, and that there might be no conflict because of the fact that in one section such as that in regard to the cost of securities certain phraseology is used while in regard to service securities another phraseology is used, and the question is raised as to which phraseology controls. Is their purpose identical ? Or do they mean two distinct things ? That has raised a serious question and given a great deal of difficulty to people who have been interested in the proper working out of this problem because here we are confronted at once with what I conceive to be the most serious feature of the entire situation. If we get along somewhere going into it, if the Board of Estimate and Apportionment continues to attempt to exercise functions in regard to franchises such as it is suggested by this Bureau of Franchises of the First District, attempt to do certain things and then, second, attempt to do other things, you will finally precipi- tate a situation which Tve cannot stand. That is to say, you will drive private capital out of investment in the public utilities, and inasmuch as the public utilities has still through the public service to be met, you might create a situation whereby there will be no means of performing that public service except as a municipal or State function and you will be driven directly into State owner- ship or into municipal ownership on a scale and in a manner which will entirely eliminate the possibilities which are thus found by capital in those purposes and compel the use of public capital realizable through the exercise of taxation and through that exer- cise only, and it is a question whether we as a city or a State are wise enough to attempt the situation which would result in the elimination to the discouragement of new investment of private capital in public service. Now, if you will clean up your law, if you will make these different sections more conformable to each other ; if you will give the Commission discretionary power hold- ing the appointing power responsible I don't care who the man is who is willing to take the governorship of the State of New York, I don't care who it is, the man who is willing to take the govern- orship of the State of New York, is willing to take his political, his mental and his. moral life in his hands when he is willing to 1404 Investigation of Public Service Commissions undertake the solution of this problem. If he doesn't want to solve it he ought not to be Governor; he ought not to run for Governor; but if he does run for Governor he ought to try to solve it, so that the people will know where the responsibility rests. There may be such a condition, a situation where for in- stance, Mr. A says " I was behind Mr. B and Mr. C was behind Mr. A and Mr. D was behind Mr. E and Mr. E was in another room ; " nobody was responsible for anything. Now, with a large Commission you get a distribution of responsibility just such as has been demonstrated by the investigation which you have con- ducted here, which is one of the things which should be cured. By Senator Mills : Q. Mr. Ivins, referring to the requirements of the law as to whether with reference to the Public Service, whether the Com- mission can investigate on its own authority the gas and electric cases, because in those cases there was a question that you had to have a complaint before you could investigate? A. Yes, now, that was due to this fact when this law was drawn, so far as it affected the transportation, of the securities of transportation com- panies, no one was perfectly sure as to what would be the best way of treating the old Gas Commission Law, and therefore the Gas Commission Law was stuck into this statute nevertheless, and in the same way the Kapid Transit Commission Law was carried into it with the result that this present statute of ours, where it has some very admirable features, has been very badly interpreted, has nevertheless expressly amorphosed the securities, and with pre- cisely such difficulties as that to which Senator Mills has referred. Now, to go further in answer to a question asked by Mr. Hayward. I will point to two or three things which it seems to me call for a determination or a statement under this law. We have this ques- tion raised: in apartment-houses, we will say, the Woolworth Building is as a matter of fact performing a public service; it is performing a public service to its tenants at least, and equally so should your statute attempt to take over the regulation or control of the public function of the public service which is limited by the very definite right of property, or should we entirely disregard that and leave out of the law that control without regard to any question of public service when there is no public franchise. Now, in a number of western States, they have included every service Final Report of Joint Legislative Committee 14-05 whetlier it is accompanied by or grew out of a franchise or not; in others they have not done it. We have another question and which I thinlc will answer that precise question which Mr. Hay- ward asked, and which is involved in the last question asked by Senator Mills. We have in this State the word " issue " in respect to security. Now, we have no definition of what " issue " is and we have so far as I know no satisfactory construction as to what the meaning of " issue " is. Whether the security " issued " when they are provided for but still lying in the treasury subject to sale for the purposes of the corporation, or whether they are only issued after they finally come out of the treasury. You have got that question which is not cleared up and you have got the question which is raised in this very proposed draft act in the argument pro and con concerning it. In section 19 will be found, on page 71, another question with regard to the efficacy of the law. Should your statute be so amended as really to permit the appoint- ment at first on these boards of the men who are best qualified to perform the functions of the ofiice, as our law now stands, and as popularly interpreted, the best qualified men of this city cannot be commissioners on public utilities; but the man who thinks he has at some time or other and in some way or other seen the other side of the moon and has established a reputation on the other side of it is quite capable, and is quite qualified for appointment to oflSce. That raises the question at once as to whether or not your law should not provide so as to take away these disqualifica- tions for membership on the Commission, or should be a cause of removal from the Commission of any man who is actually identi- fied with the public utilities, or with the public service. By Senator Mills : Q. What is your opinion about that? A. My opinion is that you can never get expert work done by experts. I don't want a philologist to say what I shall want, I don't want an astronomer to run the subway, and I don't want a sociologist to do anything, and I wouldn't ask my dentist to run a train on which I am going from here to Chicago, for in case he did I would take mighty good care not to get on the train. Q. Mr. Ivins, with reference to stock and bond issues, we had a somewhat definite question up which are devised and which are 1406 Investigation of Public Sekvice Commissions contained in this model law, but which are not contained in our present law. Now, the Committee is anxious to get enlighten- ment on that question. Now, section 10i7 of the model law pro- vides for the refunding debt, discount and expenses, and there is no such provision in the present law. Now, do you think that such a provision is necessary, and would it add strength to the law ? A. Well, that all depends upon your interpretation of the words, " debt," " discount " or " expense." I will give you a specific illustration: The Metropolitan Street Railway saw fit to issue $15,000,000 of bonds at a discount of $4,500,000 and for- seven years it carried that discount on its books as an asset, precisely as I might carry my last year's butcher bills on my books as an asset; it is not an asset at all, but it is carried there. Now, there is no question whatever that certain discounts have got to be charged, and I will give you another illustration of that: A $55,000,000 mortgage on the Interborough was authorized and the question arose as to what the redemption clause should be, whether it should be a hundred and five or a hundred and ten, and the question arose as to what the bonds should be sold at, whether ninety-five or ninety-seven and a half. Now, if you will insert the word " reasonable " then you will be justified in using these words and then in cases of real difficulty you will have your right to apply to the courts, or the parties in interest will have their right to apply to the courts for a determination of what is reason- able under the rule of what is laid down in the Standard Oil case and in the Tobacco case, and under the rule of common law, which is as old as the statute of labor, and older than that of Queen Elizabeth. Q. Where provision was made for the amortization and the discount, would it be a good provision to insert in this law ? A. If you will always use the word " reasonable " which has been part of our law for about four hundred years. And now you have the same sort of question in regard to a matter of really great gravity, that is, obsolescence. By Chairman Thompson: Q. Have you been talking with Commissioner Wood? A, Have I ? No, I don't know him. I am probably better unknown to the present Board than any man in the city. But we will say Final Eeport of Joint Legislative Committee 1407 this: A railroad company to-day determines to put on two or three hundred cars, of a needed typej that type may be destroyed by invention within one or two or three years, but the investment has been made in good faith and if the investment in that type had not been made the service wouldn't be alive to take over and continue the work when the new type is created, and it would be utterly wiped out, all this investment, which was represented by the type that is utilizable but not being absolutely obsolete. That brings you right into the heart of the question of the methods of determining physical values for the purpose of determination of the return which shall be allowed on an investment of the securi- ties which ai"e to be authorized. Now, if you will go through the suggestions and arguments pro and con in the latter part of this pamphlet you will find a number of just such questions raised. To my mind it ought to be solved and solved now by the law ; we ought not to be in the position that we are in. So far as I can observe or discover we have had no railway development in the United States in the last two years and we have had no railway investment in the United States in the last 'two years; we are hopelessly behind the requirements of our time. If you make the law so rigid in theory it means a strangulation and is going to drive us into a capitalistic or municipal socialism, one or the other, which would be one of the greatest possible evils. Therefore I do not hesitate to say and believe that these suggestions contained in the last forty or fifty pages of this particular pamphlet are sug- gestions which have got to be considered by you if you are going to amend this law with any hope of doing it in such a way as to secure real efiiciency on the part of the administrators and real efficacy as far as the law itself is concerned. All the laws ever drawn is no better or no more efficient than its administrators, and no body of administrators that has ever lived has been any better or more efficient than the law which invested that power in them. Those two principles have got to co-ordinate and may be said to be reactionary ; it is reactionary in precisely the same sense that the swing to and fro of the pendulum of a clock is reaction- ary, and in no other way; it is reactionary in precisely the same sense that the flywheel of an engine is reactif.nary. It will do the thing which you design, it will regulate what you are looking for in it. Are you looking for this regulation of the State as it 1408 Investigation of Public Seevicb Commissions now stands and as it has been applied for jhe last five or six years as to any element of regularity, for without regularity there can be no regulation. But it is within the possibility of its scope that all sorts of irregularities, deformities and special instances and casualties of the kind that result from these and practically speak- ing there has been a practical breakdown of the Commission, at least, in this department. Now, whether that is due to this Dis- trict or is due to the Commission or is due to the frame of mind of the investor no one can tell, but we know to a certainty that the improvement is not encouraged by the law as it now stands and that there should be encouragement for the improvement by cer- tain amendments, and most of those you will find suggested in the draft bill of the Civil Federation. Colonel Hayward. — That draft bill ought to be in the record. Chairman Thoinpson. — Yes, we ought to have it in the record. Senator Foley. — As an exhibit. Senator Mills. — Make it an exhibit. Chairman Thompson. — I don't mean to copy it in the record, we can have it as an ex'hibit and I understand the Civil Associa- tion or Federation has had it printed and we can get eleven or twelve printed copies and use it as well as any other way. The Witness. — You will find a great many fad suggestions in the draft of the draft bill, there is no question about that. Chairman Thompson. — There are several suggestions here that are new and we would like your idea about them. Colonel Hayward.— Would you like a recess, Mr. Ivins ? You spoke of having bronchitis and that you were tired and I thought perhaps you would like to take a recess of five minutes. The Witness. — I would rather close now and make one bite of this cherry. Chairman Thompson. — There are several things I would like to know about. Have you ever practiced before this Public Serv- ice Commission ? A. Having been counsel to the Public Service Commission as special counsel I do not believe then or now that Pinal Report of Joint Legislative Committee 1409 it was conformable to my idea of my functions as a lawyer to practice before a tribunal of which I had been the counsel, and therefore I have never taken a retainer to practice before the Public Service Commission. Q. You were one of the special counsel along for some time? A. From the 1st of August until June 6th or 7th, the time when we were solving the first of those matters, the greatest of the prob- lems that arose, and that is the reorganization of the entire street railroad system of Greater 'New York. Q. Have you got an automobile record? A. I don't recollect of anybody drawing me in automobiles. I have never used a public automobile. In order to get over the city and do the work I hired two automobiles, one for day and one for night, and hired them at my own individual expense for four months. Q. JSTow, Mr. Ivins, to be serious — A. I think that is mighty serious; it was to me. Q. Yes, but do you think the present Commission has got power enough in certain matters now? The law gives them the power, for instance, that stock issue shall be permitted only at par and bond issues may be issued below par, down to 75 per cent. ; do you think that that is advisable? A. Why, that grew out of the historic condition of affairs. The first statutes of this State had a provision for the full payment of capital stock that was allowed mining and manufacturing corporations that was passed in the late forties or early fifties. The theory was adopted to the effect that stock ought to be full paid, but bonds being obligations need not be full paid. The result was that advantage was taken of that situation to bring about precisely the very greatest of all evils which we have had to complain of, of over-capitalization and of watering. I cannot give you a better illustration than this : that the Metropolitan Street Eailroad Company issued a certain amount of stock at par but they issued fifteen millions of bonds at sixty, or seventy, I have forgotten which it was ; then they car- ried the discount as an asset. There again you should have a provision for the exercise of power within reason, according to the general law of the market place ; another matter which ought to be or may be said to be serious after an issue at par the very moment of the issue at par the principal disappears, because it 45 1410 Investigation of Public Service Commissions may be above par to-morrow and below par the next day and tbere is no power on earth to keep it at par. Q. In that connection, Mr. Ivins, it is left with the discretion of the Public Service Commission as I understand it, in one case it had to do I think with the capitalization of a lease which was called to the attention of the Public Service Commission at least, can you tell us about that ? A. Well, it was the intention of the law, when originally passed, to prevent capitalization of leases and it was to prevent the recapitalization of leases and over-capitaliza- tion of leases by means of combinations, and the conditions which resulted in effect, of the effect of the water brought about the de- struction, for instance, of the Metropolitan Street Railroad system. Q. Another proposition: What do you say of the provision which prevents the impairment of the capital stock, that is, section 121 of the new law — • A. The question always goes to what is capital stock ? Q. If you want to enlighten the Committee on that subject I would like to have you. A. If you want enlightenment on that subject, I would refer you to the case in 75 New York, a railroad case; that determines the relation of a stockholder to the corpora- tion. It is impossible that there should be absolute fixity of capi- tal values in any business enterprise for any specific length of time. Capital which is invested is the property of the corpora- tion, but the capital stock, so called, is only the right to have divi- dends if dividends be earned, to share in the dividends if they be earned and to share in the losses if losses be incurred, and share in the ultimate distribution in case of final liquidation; but you cannot by legislation — Q. Shouldn't the Commission be given power to prevent a cor- poration from impairing its capital of a public service company ? A. Absolutely. But the question to my mind was so far as the Commission itself is concerned, they should not be permitted to impair its capital, but if its capital be impaired, because of gen- eral economic conditions, very much that is due to the impairment may be restored as result of other still future conditions then this Commission should not be given — should not be put in the posi- tion of deus ex machina. Final Report of Joint Legislative Committee 1411 Q. I mean the willful impairment, shouldn't the Commission be given power by special provision forbidding the corporation doing that ? A. The statute now to-day has that, and if you put that into your statute you're only going into something that is declaratory of the existing law. If the directors of a corporation to-day take steps knowingly and deliberately to impair the capital they are guilty of a violation of their trust and are subject to suit in a derivative action for the benefit of all the stockholders ; but there are all kinds and gradations leading up to the willful act and it seems to me that the Public Service Commission could exercise its discretion and supervision. I think they ought to have discretion for the protection of the investing public. I think it ought to have discretion, but as I have said your law covers that situation. But if a Public Service Commission saw that a rail- road company was deliberately — or an electric light company was deliberately impairing its capital it ought to be permitted to take steps to stop that impairment; but the question would arise as to whether it is right or wrong in taking those steps and then there should be some provision for review by the court, a proceed- ing for review by a writ of certiorari, and the Supreme Court could then pass upon the reasonableness, which is the final deter- mination in all these cases, and then there wouldn't be the scaring and frightening of private capital from investing in these very enterprises which would need investment, unless we are going to undertake the responsibility by taxation or municipal bonds. Q. Another proposition; what do you think of residing the power in the Commission to suspend the rates and schedules or to bar emergency rates pending an investigation or otherwise, by giving the Commission power to make reparation in cases that reduced and another order made making the plaintiff a rebate? A. You know, Mr. Chairman, that there is no language to this blessed day which will relieve those burdens because it is unchangeable, unless there be some statute whereby you get some such safety for the activity it is not intelligent, common, sane, human intelligence, and you never will have an efficient law. Q. Then the question of bringing in and then supervising, bringing it within the supervising powers and regulatory powers of the Public Service Commission ? A. I think I spoke of that while you were absent, Mr. Chairman, and it is on the record. I ItX-^ INVESTIGATION OF Jt'UBLIC SERVICE UOMMlSSlOWS believe that every public service, by whomsoever exercised, whether it be a private corporation or what in the interests of safety of the city and the intelligent exercise of the police power ought to be brought within the same law. Q. In that connection, what about water companies and water transportation ? A. Logically, I don't see any way to excuse the failure to include them; but there again we have got to bear in mind that life and logic are two entirely distinct things, or become so originally from loss of life, and what we want is vitality in our law. Q. That same thing would apply to municipalities that acquired by condemnation or supervision of the Public Service Commission public utilities within their limits ? A. I think so far as the acquisition is concerned that that should not be left to the approval or disapproval of the appointees of a State officer. I think that out of our 5,000'000 of people in this city 4,000,000' of them want to try the experiment of municipal ownership, and inasmuch as they are going to pay their own money for the administration of the city among elected officials, they ought to be left alone to do it, instead of having such a question as that turned over to the appointee of a general officer, because that is distinctly a feature of home rule and local self-government. Q. JSTow the question of enforcement; I notice it seems to be suggested that the person who has the enforcement has got to get the approbation of this Committee, this National Safety Federa- tion Committee ? A. Yes. Q. It appears that it provides that they may go to the Supreme Court and sue for it, if the parties make a failure to apply or turn it in to the city treasury, they may go to the Supreme Court, or any court having jurisdiction, and get an injunction, or order and judgment of the court requiring the Public Service Utility to comply with the order, and also gives them the right to sue for penalties and makes a willful violation a felony punishable by five years' imprisonment ? A. To make every violation of this statute a felony is precisely as absurd as to make it a felony to wipe your nose, and any law which makes a bondholder with a group of facts more undesirable than any other economic situation is a law that is bom dead. Now, as to who shall have the right of Final Eepoet of Joint Legislative Committee 1413 initiative you have a very grave question. You are familiar with the fact that in the charters of different cities, and particularly in the charter of our city, we have a provision for taxpayers' suits ; a taxpayer may bring an action to prevent waste or taxpayers may bring action to compel the performance of a specific duty. I think that wherever specific interest is shown that this power ought to be and should be possessed in that interest, and finally reach its ultimate solution in the Court of Appeals. Now, a citi- zen of a city, of this city particularly, should not have the right of initiative in respect to the compulsion of performance of duties by public officials because that sort of thing is only an invitation to general universal blackmail. By Senator Foley: Q. What do you say to a small money penalty, Mr. Ivins, to be collected in a very summary way without at least a jury trial, something like our Tement-House Law? A. Mr. Whitredge's experience probably will answer that. When that provision as to the five thousand penalty was put in personally I very strongly opposed it ; but if you will provide a reasonable, penalty, one which is small enough to be collectible and then provide some summary means of collecting it, as the Senator suggests such as is pro- vided with regard to the Tenement-House Law, I think you will finally discover that that will be the means of bringing about enforced co-operation between the factory, but just as long as the railroad companies, or the telephone companies, or the gas companies know that the law is one that cannot be applied they will disregard it. The fact is, they tried to put so many teeth into this law that they filled up its mouth so the blooming thing couldn't shut. By Assemblyman Donohue: Q. Mr. Ivins, in the early part of your statement you referred to the fact that certain of the functions of the Public Service Commission are not given to the Board of Estimate on account of the personnel of the Board of Estimate in the year 1907. Now, under the elective system do you think there is any guarantee — do you give us any guarantee that the personnel of the Board of Estimate would ever change? A. I wouldn't give you a guar- 1414 Investigation of Public Seevice Commissions antee of anything under the elective system, not unless I get to the madhouse. Chairman Thompson. — Well, Mr. Ivins, I believe that is all, and the Committee is very grateful to you for the information you have given us. The Witness. — If I have been of any assistance to the Com- mittee I am very glad. William A. Peendeegast, called as a witness, testified as follows : Direct examination by Colonel Hayward: Q. Mr. Comptroller, we read in evidence a letter from Chair- man Thompson to your predecessor on the stand, Mr. Ivins, and we asked him to simply go ahead in his own way and give his views on the questions that Chairman Thompson put in the letter, and that without being put under oath, as long as it is only sugges- tions and opinions that we wish to inquire about, and I think the same plan may be well followed -with your testimony, if that is satisfactory to you ? A. I don't know that I recall everything that was stated in that letter. I would like to have it. It is hard to follow the witness. I might say the questions that the Committee has shown an interest in with the previous witnesses, or some of them, have been questions of possible transfer of the rapid transit powers to the Board of Estimate and Apportionment or some city board, and the question of jurisdiction, theoretical jurisdiction of this Commission, the question of assumption of jurisdiction over water companies and telephones, at all events as far as this district is concerned, and also the question whether there should be one Commission for the entire State rather than two. I don't know what Mr. Ivins may have had to say about the size of the Commission, but as far as I am concerned I do not care to state about the size of the two Commissions, but the two should be left. I think those are the principal questions the Com- mittee has been inquiring into. What I may have to say regard- ing the Public Service Commission and its work will be of course based upon what has been my experience with the Commission as a public official. For one, I wish to say that although I was not FnifAL Eepokt of Joint Legislative Committee 1415 in public office at the time I was very mucli in favor of the Pub- lic Service Commissions Law and felt that it responded to what in this city at least might fill a great want. The Kapid Transit Commission was composed largely of very able men, I might say very distinguished men, and as far as its particular functions were concerned, I believe those men discharged it or fulfilled it very satisfactorily. The difficulty was that there were a great many questions of much public import and of gTeat local interest to the people that the Eapid Transit Commission did not affect at all. In fact, it did not reach those elements at all. The Public Service Commission was therefore devised to meet the requirements of the work whereby the present Commission had failed to meet of the construction of the great subways, of our system of subways in this city, and it imposed upon them a tremendous task. ISTow, I have been, I might say, very familiar with the work and the general method of operation of the Public Service Commission since January, 1910. It was in that year that the Commission really evolved some definite plans for the extension of rapid transit facilities, and in their consideration of those facilities and those plans it seemed to me was trying to set a pretty high standard of public service, or I was, and it seemed to me that the Commis- sion discharged its duties very satisfactorily. The question of how our subway system, and our rapid transit system could be developed was one upon w'hich there was a very marked division of opinion, among public officials and with the general public. Wow, th« Public Service Commission had a decidedly difficult task ; in the first place it was called upon to decide upon plans of the very greatest moment to all the people, and to so guard itself, or guide itself that the tremendous expenditure involved in those plans would be one which was agreeable to the people of this city. I do not believe that any public body has ever been called upon to discharge a duty involving a greater measure of financial responsibility, and I think I can say to that extent one of so much individual responsibility as the Public iService Commission was called upon to perform in deciding upon the plan for the extension of rapid transit facilities, and in any consideration of that work and in any appraisement of the value of those services I believe that due regard should be had through the momentous character 1416 Investigatioit of Public Service Commissions of this problem. The Public Service Commission as constituted in 1910 came up just as freely as that constituted since and has always shown the very liveliest disposition to co-operate with the city authorities. This was evidenced first when the question of just what particular kind of a system would be devised for the extension of our transit facilities. A plan had been proposed by the Commission which involved a contract with the Interborough Bapid Transit Company and there was a division regarding the merits of that plan, and there probably was a division in the Public Service Commission too. The Public Service Commission was at liberty as far as I could see to decide just what plans would be entered upon but it very cordially agreed to meet the Board of Estimate and Apportionment and discuss all the different ques- tions that were concerned in this great problem; and I think I can say that that was the beginning of the method or system of co-operation between the two bodies which has been continued since that time, and has been resorted to since that time whenever we had any very important question to consider. Of course, I am aware that the Public Service Commission has other duties out- side of the question of deciding upon our rapid transit facilities, but as to whether it has met Dhose questions I do not believe I am a competent witness. JSTow, there is one question in which per- haps I take a little more interest than other officials, because it is a financial one and I think it should be considered by your Com- mittee preliminary to any legislation, and that is that in the expenditure of funds for the work of the Commission the Board of Estimate and Apportionment should have the same authority to pass upon the propriety of the use of those funds that it exer- cises in respect to the work or expenditure of any city depart- ment. While I will not say that the absence of this authority upon the part of the Board of Estimate and Apportionment has led to any waste, and while it certainly would not be proper to charge extravagance, still at the same time I think that as a matter of policy the Board of Estimate and Apportionment should have the power to decide what moneys should be allotted to the Public Service Commission for its regular expenditures. Of course, as far as the expenditures for railroad purposes and subway pur- poses are concerned, the Board of Estimate has that authority because all contracts into which the Public Service Commission Final Report of Joint Legislative Committee 1417 desires to enter for the purpose of building rapid transit railways must be approved by the Board of Estimate and Apportionment, Now, as far as the general work of the Commission is concerned, I am prepared to say and wish to state it is my conviction upon the subject that it has not been an entirely unhealthy idea to have an independent body such as the Public Service Commission in a position to pass upon these questions of the extension of our rapid transit facilities. The Board of Estimate and Apportion- ment is one very gradually but surely becoming a more important body every year and the great tendency of our municipal system has been to concentrate additional responsibility in the Board of Estimate and Apportionment, and the tendency of our municipal system has been for the Board of Estimate and Apportionment to assume considerable responsibility; and it is my candid opinion that the Board of Estimate and Apportionment, no matter of what men it might be composed, even if it were composed of men very much abler than those who are in it at the present time, has really more to do than it can in justice do to the people of this city and with that alacrity that the disposition of the citizenship would seem to ask for. If the Board of Estimate and Apportion- ment were to have all the responsibility of supervising tho work done by the Public Service Commission, it is my opinion that it would involve a great deal of additional work upon the part of members of the Board, probably more on some than others, because looking after such work would probably be left to a special committee of the Board, but I think that the very existence of the responsibility would really prove a very heavy burden to the mem- bers of the Board of Estimate and Apportionment regarding their duties, as I am assured they would be very conscientious about their point of view. I want to assure you, Mr. Chairman and gentlemen of the Committee, and the counsel, in saying this I am expressing my own opinions only and nobody else is in any way committed by my opinion ; and I will say further that I have not conferred with anybody else upon the subject, even though I knew some members of the Board v^ere going to testify. By Senator Mills : Q. Mr. Prendergast, to-day on the contracts and the expendi- ture of such money the Board of Estimate and Apportionment has to pass ? A. It does. 1418 iNVESTIGATIOIif OF PuBLIC SeRVICB COMMISSIONS Q. So tbat that work has. to be passed upon by two bodies, the Public Service Commission and the Board of Estimate and Appor- tionment? A. That is true, the Board of Estimate and Appor- tionment has to pass or does pass upon every contract of every character and description that is awarded by any department of the city government; but that passing upon contracts is an entirely different proposition from having the responsibility of supervising all the work of this rapid transit matter which this Commission has to look after. Q. What would you say to appointing a rapid transit committee to go with the Board of Estimate ? A. Composed of members of the Board ? Q. ISTo. A. Well, composed of outsiders ? Q. Composed of outsiders in the city? A. Well, I can't say that would be any different from having the Public Service Com- mission, except it would be a city commission supervising the expenditure of the city money rather than a State commission supervising the expenditure of the city money, but the Public Service Commission is appointed by the 'Governor of the State but is to all intents a city commission because it is required in the law that the members of the Commission shall be residents of the city and they are all city men. Of course there has not, from the citizen's standpoint, apparently been a tendency on the part of some members of the Public Service Commission to do everything that they thought a public service commission ought to do in order to attend to its duties under the Rapid Transit Act, but to relieve them from that burden would be placing it on the city board a city matter that logically belonged to the city of New York and it would be a different proposition if you were starting out entirely anew and to a large extent it influences me in an expression of opinion I may utter here and that is that we are dealing with a condition which exists, and I am trying to regard it as one which exists and not anything as a hypothetical propo- sition. This Commission has been doing all this work, it has passed upon this work and has devised the system and it is a very serious question whether it would be advisable or whether it is necessary to abolish this Commission for the sake of creating some other. Final Report of Joint Legislative Committee 1419 Q. Would you say this Commissiou has been doing its work' well, as far as you have been able to observe it? A. I wish to say that as far as the rapid transit work is concerned, and you will remember I expressed no opinion upon the other part of its work, that is, the regulatory work, because I am not familiar enough with it to express an opinion, I believe the work has been well done in the main ; that there may have developed in that work some omissions, some errors, some derelictions of judgment or otherwise may be true, but whether you would find that there has been in its work any more derelictions, any more omissions than you could find in the work of most other public servants, I do not believe. In other words, I am trying to look at the people in public office just as plain mortals subject to all the frailities of human nature. By Chairman Thompson: Q. Have you kept in touch with the testimony of the Public Service Commissioners as they have come on the stand at all ? A. I have followed the veracious accounts in the newspapers, yes. Q. From that it is your opinion you will have to find a regu- lating body for the Public Service Commission in the First Dis- trict ? A. I do not express any opinion of the regulatory side of the iCommission's work. Q. Well, do you think if they didn't spend so much time in being successful administrators in constructing the subway, that they might have been more successful in regulating? A. Well, Mr. Chairman, I think I will have to say in answer to that that I am not prepared to say they have failed entirely as regulators. How far the Commission would succeed in regulating many ques- tions that have been presented to the Commission I cannot say, I do not know. It is very easy to try to regulate all of those matters once in a while but it seems to me it is rather difficult to enforce all your regulations. Q. In any event, to regulate them you think it is a pretty big job? A. New York is quite a problem, quite a proposition. Q. Do you think that it should take all their time to look after the business of the Public Service Commission? A. I think it would take all the time and the united energy of the Commission to regulate New York. 1420 Investigation of Public Sjsevice Commissions Q. Don't you think the Public Service Commission who are appointed for the purpose of regulating the public utilities should be required to spend all their time at that ? A. I certainly do. Q. Isn't that a very important consideration in the present state of the city, the present condition of the public service cor- poration ? A. I think it is. Q. Isn't that, from a governmental standpoint, Mr. Comptroller, more important to the oity than the supervision of your local utilities, or the improvements, rather, of dt? A. That depends entirely upon the subjects to which that regulation apply. I don't think that is any more important at present and has not been for a great many years than the improvement of the present facilities. Q. Well, it is important, as I understand it, second only to the construction of the Panama Canal ? A. And a greater engineer- ing proposition. Q. Would you have a board composed of three or five members ? A. I think it might be a safe statement in the regulation of public utilities the Board is small enough. Q. Well, would you have three or five, which of them? A. Well, I don't know that a commission of five members that devotes its entire time to the work ought to be very well up with the work it is supposed to do. There is such a thing as properly dividing your work. By Senator Mills : Q. Do you speak of splitting the Commission ? A. No, I mean dividing your work up in the Commission, give two men the rapid transit work and three men the regulatory work, something of that kind. Q. Do you think that the law could be so made as far as all the work that was to be done? A. Well, there would be a certain regularity to the work that you could entrust to certain members of the Commission and let them devote their time principally to that, and then the rapid transit work to other members of the Commission; then let the Commission meet as a whole and pass upon questions that have to be submitted to them, because in the last analysis you know, whether in the Public Service Commission, or the Board of Estimate and Apportionment, or the Board of Aldermen, the great work that is done upon every proposition is Final Eepoet of Joint Legislative Committee 1421 don« by one or two or three men who submit the product or the fruit of their work to those they represent, and those they represent study that product and pass upon it as to what they should do when public work is to be done. Q. Then you would assign two men to the rapid transit work •and let the other three handle the regulatory end and maintain the ■Commission as a whole? A. I think that would answer all the requirements. Q. And you think that three men could handle the regulatory work? A. They could, yes. Now, of course, as I have said to you, gentlemen, I want you to understand — and I am sure you will understand — that the opinion I am expressing is based upon existing situations. Q. As an original proposition, you are not prepared to express yourself as to where the power to build subways should lie? A. No, I am not prepared, but I am very much prepared to say that, if we did not have a Public Service Commission to build our rapid transit railroads, the Board of Estimate and Apportionment would either have to ask for 'permission, by some special agreement, to do that work, or it would have to create some power of its own to do the work ; and the men who would be put in charge of that power would never be principals. You understand, they would always be subordinate, and they would have to submit their findings and the result of all their work to the Board of Estimate and Appor- tionment, and furthermore, in the settlement of this great big transit question, I repeat that I think it has been a pretty good thing to have some independent minds operating upon it from the outside. The responsibilities are a little different with these men who are appointed officials. The members of the Board of Esti- mate and Apportionment are elective officials. Some elective officials are very brave and do exactly as they think they ought to do; and sometimes they are not so very brave and do exactly as some other people tell them to do. I am not so sure that the settlement of a big question like this would be as effective and as advantageous to the interests of the city if left entirely to one board as it has been in the hands of two boards, because no matter where the authority in law may lie, the fact is that the dual subway sys- tem is the child of the entire city government and the Public 1422 Investigation of Public Seevicb Commissions iService 'Commissioii, and there is entire agreement upon it, at least entire agreement so far as the majority of the Public Service Com- mission and the majority of the Board of Estimate is concerned. Now, we want to also bear in mind that the Public Service Com- mission has created considerable machinery to look after this work. I do not say that that machinery will not operate under some new Commission, or operate under the direction of the Board of Esti- mate just as advantageously as under the Public Service Commis- sion; but after you bave created a great machine, charged with such tremendous responsibilities as are there, in my humble judg- ment it is a most dangerous thing to rip open or apply a system that you have been following in the midst of the conclusion of a great piece of work. I cannot conceive — and I know you will not think I am arguing for tbe Public Service Commission except in the abstract — I cannot conceive that any great change will be made at this time, or in the very near future, that would result in tbe disturbance of the general work. You would 'have to deal — ^you must consider in a question like this — the human equation, the buman element, and you cannot transfer that over to some other body without filling the minds of the men who are responsible for the running of the machine with doubts and fears as to exactly what is going on or what might be going on. I am trying to look at this thing just as the ordinary man ought to look lat it. By Colonel Hayward : Q. Suppose just hypothetically that we conceive the theory at least that the rapid transit powers might better be transferred to some power or Commission like the Board of Estimate, as the dual subway contracts are going along, how long do you think it would be before that could be safely done ; conceding it should be done sometime, how near, in your opinion, has the time arrived for making that change? A. Well, of course, it is my opinion that the change should not be made. Q. I understand that, but if it were, what is the present status of subway contracts to be interfered with by this decision you suggested ? A. I should say, if it were going to be done at all, it should only be done when the contracts for the entire system have been awarded. FiiTAi, Eepoet op Joint Legislative Committee 1423 By Senator Mills : Q. When will that be, roughly speaking ? A. Well, that ought to be, in my opinion, within six or eight months. It might be a little longer than that, but I cannot say, because from experience I will say to that that the drafting and wording of important con- tracts usually takes much more time than most people think it should take. I have known of contracts that were going to be submitted, for instance, to the Board of Estimate next week, and did not get there for six or eight weeks afterwards; and I have known the Board of Estimate itself being almost prepared to act upon a contract next week, and it did not come to any conclusion upon it for some considerable time. By Colonel Hayward : Q. Of course, the supervisory work over the construction will take a great many months longer than that? A. Yes, until the construction was finished, and that, as you axe aware, cannot be until the latter part of 1917, or sometime in 1918. Of course, parts of the subway system will be finished long before that, but I mean the entire system. By Assemblyman McQuistion: Q. You have no doubt that, if the powers of construction were transferred to the Board of Estimate, that the work would have to be done by a sub-committee? A. Not the slightest. I have not the slightest doubt that a new bureau would have to be created for that purpose. I lotiow that the members of the present Board of Estimate and Apportionment cannot take on any more work than they are doing now. I know it is almost impossible for them to do, within the time they have to proceed with their work, the work that is before them, which they have to do. The Board of Esti- mate now has as many sub-committees as it can possibly handle, and those committees are finding great difficulty in finding the time to do their work. I do not want to give you too large an apprecia- tion of the duties of a member of the Board of Estimate and Apportionment, but I will say their work begins at a relatively early hour in the morning — not too early, and does not end until late at night. To-day it is hard to find time for the meetings of some of their committees. 11-24: iKVESTIGATIOISr OF PuBLIC SeKTICE COMMISSIONS By Senator Mills : Q. And you think there would be great disadvantages in taking over that work by this Committee if it had to give its entire time to that and report back to some other body that has not had a lot of time to judge, as the Committee had ? A. As I said, any com- mittee of that body would be subordinate, not as a Public Service Commission are or as the members of the Kapid Transit Commis- sion were. Q. Why not? A. They would be there by the power of the Board of Estimate and Apportionment, and they would not have primary power, unless you pass a law giving the Mayor appointive power. Q. You would have to do that? A. I was not asked that. I was asked if the Board of Estimate and Apportionment would be able to do that work. By Assemblyman McQuistion: Q. And for that reason, you think it would not be a good thing for the Board of Estimate and Apportionment to take that over? A. It certainly would not. By Colonel Hayward : Q. Mr. Chairman, are there any other questions of jurisdiction that you want to take up ? Assemblyman Donohue: Q. Is it not your opinion that an elective Commission would be better ? Would not an elective Commission be more or less sub- ject to the wishes of their constituents ? A. I covered that a little while ago. I said where a great Public Service Commission like this was before a community that I thought it was a good idea to have the responsibility between an elective body and an appointive body. I thought that the present system had really started out very well. Men elected to office, while, of course, as long as we are a representative democracy they will, I presume, act in a representative capacity, still, as a matter of fact, there are many local conditions and prejudices that must affect, and do affect, a public official in the performance of a duty. There is no doubt as to that at all, and to what extent the public interests — Final Ekpokt of Joint Legislative Committee 1425 the general public interests — would be impaired or hampered by such local prejudices, or the effect of such local prejudices, by a public official, I cannot say definitely; but I am prepared to say that I think it would have some effect. By Chairman Thompson: Q. Mr. Comptroller, the Board of Estimate and Apportionment; I assume — you say they work from a reasonable hour in the morning until Y or 8 at night. Do they all give their time to it ? A. I said late at night, Senator. It is much longer than 7 or 8 some times. Q. Do all the gentlemen give all their time to it ? A. Yes, sir ; so far as I know. Q. And the work they are performing and the results they are obtaining for the government are quite as important as the results of the Public Service Commission of the First District ? A. Even modesty will not restrain me for saying that I think they are more important. Q. What is the highest salary paid to the Board of Estimate and Apportionment? A. The Mayor receives $15,000. The Comp- troller, also, is the fortunate recipient of the same compensation. The President of the Board of Aldermen receives $5,000 a year, Avhich is a governmental anachorism. Mr. McAneny gives all of his time to the performance of the duties of his office. Most of his time is given to the Board of Estimate and Apportionment, and the city should be ashamed of itself to ask a man of Mr. McAneny's capacity and with his sense of duty to work for $5,0'00 a year. The borough presidents of Manhattan and Brooklyn, I think, receive seventy-five hundred dollars a year, and the other borough presidents receive $5,000 a year. (Applause.) Q. What I am getting at is this : President McAneny receives $5,000 a year. I assume from what you say and from what the assemblage echoes, he gives very important service for that, and, as you say, more important than that given by the Public Service Commission ? A. In a broad way. His duties cover a wide variety of questions. Q. It is possible we are paying the Public Service Commis- sioners too much ? A. ISTo. I think if a man does all the .work that comes to him as a Public Service Commissioner, he can earn J.*ZD INVESTIGATION OF JTUBLIC iSEEVIGE VJOMJMlHSHJXv o $15,000 a year for the city of New York. What I said is that the salary of the President of the Board of Aldermen is ridicu- lously small and should be increased. Q. I am going to ask you some time, privately as to your opinion of the salary of State Senators. (Laughter.) -A. Well, I will anticipate your question, Senator, by saying that it depends on who is the State Senator. (Laughter.) Q. You talk just the same as they do up in my district. ISTow, did you ever think about the question of the territorial size of the district, the question as to whether the First District could take in any more territory than it now covers ? A. I think we have all thought of that. Senator. The territory lying to the east of us, on Long Island, is so closely related to us in so many different ways, that is always seemed anomalous that it should belong to the upper district. By Senator Mills : Q. How about telephone companies ? Have you given that any thought ? A. I see no reason why they should not. By Senator Foley : Q. Do you not think they should be' out of the First District? A. Yes. I think that is because the telephone companies were not originally included in that jurisdiction. It took se-veral legis- lative years and fights. By Chairman Thompson: Q. The telephone companies have their lines not only in the city but outside of the city. It would be some use in getting in com- munication with your neighbors quickly, but it is worth something to get in communication with the farmers up the State? A. There are times when it is. Q. Election nights especially? A. Election days. Senator, rather than the nights. The damage is usually done by night. (Laughter.) Q. That rather makes it necessary to regulate the telehpone by one body. That is what they thought, anyhow, when they put it imder the jurisdiction of the Public Service Commission, when they gave it to the Department of the Second District ? A. Yes, sir. , ^ FiwAi Report of Joint Legislative Committee 142Y Q. Have you had any talks as to whether Westchester, or a part of Westchester, should be a part of this district? A. Well, I cannot say as I thought of Westchester very much. The same reasons — this should be said, of course — the same reasons that would apply to Long Island apply in part to Westchester. So many of our people live in Westchester and our lines run there. Q. One more question, and that is : The Public Service Com- mission now regulate telephones and telegraph and transportation and public utilities, like electricity, electric light, power and gas. In addition to that, are you willing to give us an opinion as to whether they ought to cover water companies and water transpor- tation ? A. Well, Mr. Chairman, if you go into that, that simply means an additional burden of work upon the Commission, and if you are going to give the Commission- regulatory powers over all these different sources of public comfort and public necessity, I think you would then really have to consider divorcing the regu- latory functions from the merely supervisory function. That is my belief about it. By Senator Mills : Q. Mr. Comptroller, have you given any thought to the sections of the Public Service Commissions Law w'hich deal with the regu- lation of stock and bond issues, and whether those sections could in any way be strengthened ? A. Well, Senator, I cannot say that I have given them any more thought than I have given many other questions of general public interest. Q. Well now, I think that perhaps even so that your opinion would be peculiarly valuable. There is no section in the present law which provides that the Commission may in anyway step in when it believes that a corporation is impairing its capital and compel the corporation to make provision for that. Do you think that such a provision added to the present law would be desirable ? A. Well, I suppose the National Trade Commission will do that before it gets through, if it ever gets to work. Well now, Senator, if I gave you an opinion on that question, it would be what is called a horse-back opinion. I think that is a question that raises a good many different issues, and I would hesitate before I con- ferred such power upon any public body, because looking at it quickly, as you merely utter the words, it seems to me there are 1428 Investigation of Public Seevice Commissions a good many opportunities for oppression and unwarranted inter- ference of all kinds, in any such power as that. Q. Let me ask you another question which is perhaps not quite so far-reaching, and that is the question as to whether or not there should be any provision for refunding debt discount, and when you issue bonds, w^hether the 'Commission should not provide for the amortization of any discounts ? A. I think that is something that could very well go in without danger to anybody. I think that is perfectly reasonable, yes. Q. Is it desirable? That is what we are getting at? A. I think it would be, yes. By Senator Foley : Q. Mr. Comptroller, your Finance Department has jurisdiction over the expenditures of the Public Service Commission ? A. It has, Senator. Q. And I trust you 'have got a force there that checks up all the expenditures by the city in connection with the subway con- struction ? A. Oh, yes. Q. And there is a careful checking of all sorts of disburse- ments ? A. There is. Q. Now, can you say from your experience and from the reports of your subordinates whether the city is getting a dollar's worth of material and labor for every dollar expended in connection with this work, so far as you know? A. Why, at all times in works of great departments. Senator, questions involving differ- ences of opinion regarding the legitimacy of every dollar of expenditure will arise. Q. That is the purpose of the auditor? A. But, generally speaking, there has been little or no complaint regarding the method of management or ex^jenditures by the Public Service Commission, and I do not recall any serious questions arising of that kind. There is a matter before me at the present time, how- ever, upon which I have not made a report yet, in which such a question arises, and at the same time, the report, when finally made, may indicate there is no difference of opinion at all. Q. Your department was created for the very purpose of pass- ing on differences of opinion over expenditures ? A. An auditor, such as a man who is an auditor in the Department of Finance, must necessarily be the devil's advocate. Final Eepoet of Joint Legislative Committee 1429 Q. You are the man who cuts down ? A. Yes. We do not cut down unduly or unjustly; but the man who goes in to examine goes in with the idea that he wants to reduce, if possible. That is his spirit. Q. And I suppose since the time of the appointment of the chairman, you have been in consulation with him about different matters? A. The present chairman? Q. Yes. A. Very often. Q. And the preceding chairman? A. Yes, sir. Q. Have you found that both of them had a pretty good grasp on the subject of the contracts and scope of the business under the Public Service Commissions Act? A. My experience has been that Chairman Willcox and Chairman McCall — both gentlemen — always seemed to have an excellent grasp of the question before them; and so far as my experience has gone with both of them, and I can speak as strongly for one as I can for the other, it has always seemed to me that they had always a very fine sense of public responsibility. I wish to say that. By Chairman Thompson: Q. Mr. Comptroller, we find that this Public Service Commis- sion in this district have an organization which costs, first and last about $2,90O,0'0O a year of your money in this city, all except $91,00'0, which the State pays. Has your office given that any investigation, as to whether it could consistently be reduced ? A. Well, the investigation — the special investigation — which I have given the matter was one made during the last year, and, of course, it showed that a good many salaries had been increased. How- ever, these are matters of public knowledge. The salaries of a good many of the leading employees of the Commission were in- creased about a year ago, or a little more, and I do not know that there was any division of opinion of Commission regarding some of those increases, in fact, regarding some of the most liberal of them. The Commission, due to Mr. Whitney largely, I believe, has had a system of ratable promotion, and as far as I have been been able to judge of the work of that system, I think it is a very fair one and one that ought to assure to the community a very good type of public service, because under it the employee has before him the realization that if he does his work well, after a WdQ iwVESTIGATIOW OF PuBLIO SeEVICE COMMISSIONS certain length of time and service he will be promoted. Now, that has accounted for a good many of the increases that have been made, that is, I mean the individual increases. Of course, there must also be borne in mind as the construction work has increased, it has been necessary to have a larger force, more engineers, more draughtsmen and more rodmen, and all of the other types of serv- ice that are required. Now, of that $2,900,000, $2-,300,000 is really chargeable as construction and is capitalized as part of the subway cost. Q. Do you desire to give an opinion as to whether or not you think their organization is too large, that is, thiat it has too many men ? A. I think it would be very unfair for me to express an opinion on that question, Senator. I do not think anyone can express an opinion on that unless you made a very, very careful investigation of the entire course of the Commission and under- stood in addition the magnitude of the work they are doing and the necessities of that work, and there are very few men in this city that would be qualified to express an opinion of that kind. I suppose it happens with all departments that, when there is a great deal of work to be done, a few more men than are needed are employed. That is a common sin, if you want to call it a sin. Q. We pay a little in inefficiency and incapacity of officials to some extent? A. Yes, sir. By Senator Foley: Q. I think the best illustration of that was the way you were ■abused after the approval of the dual contract. You certainly whipped them into shape and then there was considerable criti- cism? A. I presume there will always be criticism, no matter what a man does. Q. It went pretty far? A. Yes, sir. I understood the chair- man to say that on any public work there was always some waste due to the fact that it was public work, and there always will be. By Chairman Thompson: Q. You can take that into account and then place a line? A. You cannot draw the line. Some people draw it a little closer than others ; others draw it a little finer. Chairman Thompson. — Are there any otiher questions ? Final Report of Joint Legislative Committee 1431 Celonel Hayward. — Nothing more. Chairman Thompson. — Is there anything more, Mr. Comp- troller, that occurs to you ? The Witness. — Why really, I did not come here to tell a story. I thought you would ask me questions and I would try to answer them. If I had known you were going to ask me to give a dis- sertation on the undertakings of the Public Service Commission, and this one in the First District particularly, I might have made a more elaborate speech, but I do not know as I would have said anything additional to what I have said. I think I have told you my belief. I am not in favor — I am speaking as a citizen and as an official too — I do not think it would be a good idea to do away with the Commission. I think this Commission has ful- filled its required function, and as I have told you, my relation- ship with the different chairmen of the Commission has convinced me they have tried to look after their work in a very conscientious way. That has been my experience with them and I know it is a great big job. Chairman Thompson. — Well, it has been our custom since we have been sitting here that anyone who was a witness who had a different opinion over night, he could come in in the morning and express that opinion ; and you have the same pri^dlege. The Witness. — ■ Well, I would like to say that I will not have any different opinion over night, and there is not going to be any superinduced by any special causes. I know of no influences that would bring about a change of opinion. Senator Foley. — You have not a master to talk to you ? The Witness. — ■ Well, I try to be my own master. ■Chairman Thompson. — Well, Mr. Comptroller, we are very much obliged to you. We will be glad to take as much of your ■advice as we can consistently when we get together. The Witness. — Yes, I haven't any doubt, Mr. Chairman, that you will accept just as much of my advice as the exigencies of the situation warrant. 1432 Investigation of Public Service Commissions Chairman Thompson. — We will suspend now, gentlemen, until to-morrow morning at half-past 10'. Hearing adjourned until Thursday, February 25, 1915, 10 :30 A. M. FEBRUARY 25, 1915 Committee met at the City Hall in the City of ITew York on Thursday, February 25, 1915, at 10:30 a. m., pursuant to the adjournment taken from Wednesday, February 24, 1915. Present.- — A, quorum of the Committee being present. Appearances. — Colonel Hayward, for the Committee. Chairman Thompson. — Before proceeding I have a lefter from the Executive Chamber which I will read : " Hon. George F. Thompson, Chairman Legislative Joint Committee to Investigate the Public Service Commis- sions of New York, Biltmore Hotel, Neiu Yorh City: " Dear Sir. — If your Committee has ascertained from its inquiry thus far conducted whether the Public Service Com- missioners of the First District have been efficient and have performed their full duty, or have been inefficient and have neglected their duty, either separately or as a body, as shown by their official actions, I request that you communicate to me your conclusions. " Very truly yours, " CHAELES S. WHITMAIT." In answer to that communication we will have an informal executive session of the Committee at 5 o'clock at the Financial Room of the Board of Aldermen. ■George McAneny, called as a witness and examined by Colonel Hayward, testified as follows : Q. Mr. McAneny, you had one of the letters \yhich the chair- man sent out, did you? A. I did. Final Report of Joint Legislative Committee 1433 Q.- And it was read here yesterday as being an outline of what we wanted testimony on. Will you take it up, Mr. McAneny, and give us the benefit of your judgment and your opinion on those questions: First, say of the possible transfer of the rapid transit powers of the present Board of Public Service Commis- sioners to some city department, either the Board of Estimate or a bureau created by the Board of Estimate, or by the Mayor; have you given that any thought? A. Yes, I have from time to time. I feel very strongly that such transfer should be made, but the logical place for the control of the construction work is under the city government. I feel just as strongly that this is not the proper time to make the change, for reasons I will state if you wish. Q. I wish you would. A. The business of construction of the city's railways as part of the general system of municipal public works logically does belong to the central city government. The construction of the dual system will be an accomplished fact within the next two or three years, let us say. Following that time there will be a continuous need for a department of railway building and charged with the powers in relation to the ordinary business relations of the city and the operating company; there will be cause from time to time for extensions of the system, the determination of new routes and engagements, new contracts and all of that, and all of them it seems to me will belong to the ordi- nary course of the city's municipal work. If, however, a change of that kind would be made now while the work of construction of the dual system is about one-half finished it would mean a tear- ing apart necessarily of the present organization and would mean the separation of a good many of the men who have studied it and have developed it on their own ultimate plans of development in view, and it might seriously tend to delay the completion of the system. I feel, in short, it would be wise to complete the system under the present plan and then to make the transfer. An oppor- tune time for such transfer might be when we secure a new charter for the city governing that department. Q. I wish, Mr. McAneny, you would give us your views with reference to the adoption of a new charter and what your views are as to that particular matter of the transfer of the powers at 1434 Investigation of Public Sbevice Commissions that time and to other matters that ought to he taken np at the same time ? A. You mean the revision of the charter generally ? Q. Yes. A. There is no doubt we need a new charter. We have been attempting for several years by successive commissions to get one 5 but since the Commission of the city government has taken the matter up, and that Commission of which I (happened to be serving as chairman is made up at present of eight city officers, members of the Board of Estimate, members of the Board of Aldermen, and they will have the aid of seven civilians to com- plete its number. I have believed that the logical time for the new charter to go into effect would be the 1st of January, 1918; which would be the incoming of a new administration. We have got to take into account also tlie session of the Constitutional 'Con- vention which, no doubt, will present changes that will affect the city government as well as the government of the State at large. For all those reasons I think tbe opportune time to get this charter would be in 1917, in December, giving us a clear two years for our constructive work and for the study of the results of the work of the Constitutional Convention, and that would leave us co- terminous, as I have said with the completion of the subway work. By Chairman Thompson: Q. May I ask a question right here ? If this present city gov- ernment were re-elected, do you tbink you would have need of it ? A. Yes, I think it needs it without regard to that question prac- tically. I think the present plans need a good deal of improve- ment and of course you will get good government and good results wherever you have men who are determined to get such results no matter what the charter may be. Unquestionably the present charter needs revision to get the best results and to give the city a really up-to-date piece of charter work. Q. Well proceed then, Mr. McAneny. A. I think that answers Mr. Hayward's question as to my view about any imme- diate transfer. By Colonel Hayward: Q. We have had some opinions expressed here that a suitable time to transfer the powers, if they are going to be transferred, would be after the remaining contracts were all made. Do you Final Eepoet of Joint Legislative Committee 1435 think, Mr. McAneny, it would be inadvisable to make that trans- fer until all the construction work is completed, or do you 'think the idea I have suggested is a good one? A. I do think it would be inadvisable to make the change until that work is finished; the transfer might be then made and bring those func- tions into the general city government — might be indicated in the new charter ; it might not necessarily be the 1st of January, 1918. By Chairman Thompson: Q. What is the object of making the change? A. The com- pletion of the present lines will not be made, of the railway build- ing that the city undertakes — Q. But under the dual contract system all this is up to the Public Service Commission isn't it, to the present Commission? A. Yes; but already we have under consideration, at least we have proposed plans for further extensions, and I have no doubt that in a few years we shall be at the business of subway building again; and more than that, there are constant running business relations between the city and the operating companies, all of which in my judgment belongs to the city. Q. You have two plans now of eliminating grades of the 'New York Central on Eleventh avenue, have you not? A. Yes, but those are details really of the great general scheme of port ter- minal development which the Board of Estimate has handled. Q. The Board of Public Service Commissioners isn't in that? A. JSTot the present Commission. Q. It would require legislation to give them the rights. wouldn't it? A. As far as the construction of railways is con- cerned of course they have their usual supervisory relations to the New York Central as well as to the other roads. Q. That is the question; there is no idea of taking away from the Public Service Commission the regulatory powers. I don't think there is any attempt of taking away of their regulatory powers ? A. I think it is extremely important that those powers should remain vested in the Public Service Commission. I think that it ought to be a city -Commission of New York city alone. I do not believe that we should have one composite State Commis- sion. In the old days of the Railway Commission we found that they did not serve the purposes of New York city very well. If 1436 Investigation of Public Service Commissions you had two Commissions, each charged with regulatory and supervisory duties and the ultimate transfer of the rapid transit work to the city, it seems to me you will have an ideal plan. By Colonel Hayward: Q. Have you thought of what Mr. Ivins outlined yesterday of a Commission for 'New York city of three Commissioners and up- State of three with jurisdiction in their localities, and then the matters that affect both localities, a Commission of seven for the entire State? A. I read what the newspapers printed of Mr. Ivins' testimony. I am not sure that I quite got the point, just that way. By Chairman Thompson: Q. The point was of a Commission of seven, three in this locality and three up-State with one other in the locality wherever the Governor sees fit to appoint him, the three here to have juris- diction over all matters beginning and ending in this locality and up-State similar jurisdiction in any matters affecting up-State matters, the whole Board to consist of seven ? A. The chairman sitting as No. 7 ? Q. Yes, and the chairman necessarily to be an expert on inter- State matters and on trunk line matters; that would give you an opportunity to be heard on matters like telephone rates. A. Sub- ject to the possible question as to the proper number for New York city, at first thought that stands me as an admirable plan. The relationship between the two Boards, the Public Service Com- mission and the Board of Estimate, has necessarily been very close during the past several years. I think during the Mc'Clellan administration the two bodies did not get along very well together ; they were in constant conflict and for the time they were practi- cally deadlocked upon some matters of large importance;- that was the situation when we came in five years ago; but shortly after that upon the initiative I think of Mr. Willcox, the Board of Esti- mate appointed a conference committee, of which I served as chairman, and we went into every large matter then pending, as a matter of conference. The Board of Estimate and the Board of Public Service Commission — the Board of Public Service 'Com- mission and my committee sat for nearly two years practically as Final Report of Joint Legislative Committee 143Y one body, passing judgment upon the issues raised in these con- tracts and finally developing and putting through the so-called dual plan. It is not to be denied that there is a very close rela- tionship between that v^ork and that of the city government; nevertheless, I should continue the present basis even though we did not confer as frequently as we used to. Every change of plans, every proposed modification of this contract, every new route, this Board has passed upon such matters and we returned to the conferences, but of course those occasions are not so fre- quent. I should suggest that even though the transfer portion be deferred that the Board of Estimate might well be given the power at once to pass upon the budget of the Public Service Commission. As it is now there is no cheek upon the amount of moneys ex- pended by the Commission for maintenance. The Comptroller has power to audit the Commissioners' vouchers, but we have no power in the Board of Estimate to say what it shall or shall not spend upon its annual budget. For instance, I think the budget for this year is $2,800,000, or $2,900,000, I forget the exact figures, and of that amount $2,300,000' is charged to overhead work in connection with the building of subways; the rest is charged to their regulatory side. The Commission makes requi- sition upon the Board of Estimate for the sums of money it requires and we are required by law to honor those requisitions without question; I don't think that is a good plan. I don't say tlhat the Commission is spending more than it ought to, but I do say that we have no authority to go into that question or to deter- mine, as we ought to in cases of other city expenditures, whether there might be economies effected or reductions made as the result of our own action. By Colonel Hayward: Q. It is clear the law doesn't presume, as I read it, give you tJhat authority, and I presume you have no discretion, or no decision in the matter of allowing the requisitions of the Public Service Commission Board, is that true? A. We have practi- cally none. It has been our custom to vote the money for the Board en bloc, a million dollars for instance to be applied to their ordinary purposes. They do not present a budget or requisition for that million dollars. 1438 Investigatiojst of Public Service Commissions Q. If you should refuse the appropriations, the Appellate Division has the right to compel it, so it is really mandatory ? A. We could be compelled by order of the court to make provision. Q. Have you given the subject of the enlargement of the terri- tory of the jurisdiction of the Committee any thought? A. I believe that the Commission for this part of the State should have jurisdiction over everything south of the north line of Westchester county; in other words, the counties of Westchester, the city of New York, and the counties of jSTassau and Suffolk. There are many reasons, of course, for making a distinction along these geographical lines. Not only is the character of railway operation in the cities necessarily different, but conditions on the trunk lines are different within these territories. There is a good deal of similarity between their equipment and general operation and that of the subways. Q. Do you think it would involve any serious complications in the question of the territory of the Greater 'City and this new pro- posed district so far as the money is concerned, the appropria- tions to be borne by each for the new proposed Public Service Dis- trict lying outside of lihe Greater City? A. I am speaking only of a Commission charged with regulatory powers. I assume that provision would be made for the support of your two Commissions in the budget of the State and the city would be relieved of the • two millions of dollars which it now expends. Q. That does not solve that problem ? A. If it were your plan to distribute that cost over the territories regulated, I presume that through the county machinery you would have no difficulty. I have not given that_ particular side of it much thought. By Senator Lawson: Q. Mr. McAneny, do you suppose that the city of New York would raise any objection to supplying the money to the Public Service Commission, where it had authority and its jurisdiction extended to counties outside of the city of New York ? Has that question ever entered your mind? A. Why, the margin there would be very slight, no doubt. Koughly speaking, and without any special authority to go on record for the Board, I should say there would be very little probability of such a question being raised if it were agreed that the city should continue to carry the cost for the Public Service Commission of this district. riNAL Eepoet of Joint Legislative Committee 1439 Q. Then, if Westdhester, Queens, Suffolk and Nassau are in- cluded in the First District, you do not think that the cost would be so much larger that the city would object? A. I do not think so. By Colonel Hay ward : Q. What you you think about the telephone matter, Mr. McAneny, the jurisdiction of the two Commissions ? You think that the State as a whole should be a unit, or do you think there should be a separation? A. I hardly feel qualified, Mr. Hay- ward, to give any learned opinion on that. As to regulation, of course, as to just where the line of demarcation should come, I haven't any opinion. Q. Of course, now, the Second District, has exclusive juris- diction over the telephones, including the ones here in the city, have they not? A. Yes. I think so far as it is physically or legally possible that the jurisdictions over all of the public service corporations operating within the lower territory should be centered within the Public Service Commission for the city. Q. So that the plan suggested by the chairman, you think, of a joint Commission composed of two groups of three, would solve many of those problems which are now somewhat difficult? A. It would seem so to me, particularly if you have a floating chair- man, who brings the two Commissions together whenever there are any questions of appeal. Q. A connecting link between the two ? A. Yes, sir ; but, of course, centering the jurisdiction of these matters in a city Com- mission would afford easier access to the citizens who wish to present their views or claims or complaints. Q. Do you think there is merit in the suggestion that, under the present system, the Public Service Commission, having charge of the building function, provides an additional check that would not otherwise be provided? A. I do not think there is much to that. Q. Is there anything in the suggestion that there is duplication under the present plan ? A. Under the present plan there is not much duplication that is irksome, or that adds to our difficulties. Of course, the Public Service 'Commission, except in the matter of its budget spending, can hardly take a single move of any impor- 14^:0 IxvESTiGATio^ OF PrBi.ic Seevice Com:n[issioxs tance without the approval of the Board of Estimate aud Appor- tionment. "When a route is Laid out, which is the first step in the process, this Board and the Mayor separately must approve. the adoption of that route. When a conti-act for operation is sub- mitted, we must approve of that. When sub-contracts for con- struction are approved for letting, after public decision, we must approve of those contxacts before the Commission can proceed. In every respect of that of the ordinary routine spending, we check them up. The process of comparing notes, of going into conference over these matters, has not taken much time — cer- tainly not wasted much time — but if all of that were eventually in the hands of the city government, you woiild have substituted some other system of checks to balance that would be just as effective; the work of the Board of Estimate, for instance, through its power and through the action of the Mayor, and through con- stant publicity that is given its work, it is pretty well checked. Q. Do you think of any economies that would result from a change to this plan ultimately ^ A. It might well be that, in the forming of a new charter, some of the other departments, or powers, of the city might be amalgamated with your Department of Railroads, or whatever it is called. Unquestionably, at the same time, in the Engineering Department, opportunity would be found for bringing services together, and therefore, saving money. I think that in the ordinary operation of the city government, to have this work within its system, would be bound to save at some points. Of course, the character of the work itself would be con- siderably changed when the dual subway contracts are finally completed. It would mean a greatly reduced force of men and a simpler routine of duty ; aud that could all be knit into the scheme of city government, as I say, in a way that would be sure to result in economy. Q. Of course, on the other hand, you would lose the present joint work of tKe Engineering Department of the Public Service Commission, or whatever it may be, in both regulatory and con- structive work? A. In some degTee that would be lost, but the retention of the engineering force after the completion of this construction work would be such that perhaps it would not be m'aterial. At the present time, to tear that force apart, you might disclose a good many instances where one man, or one set of men, Final Report of Joint Legislative Committee 1441 are doing work under both heads. There would be less of that afterwards. The continuity of the suborganizations of the Public Service Commission has been practically unbroken since the First Commission was appointed by Governor Hughes. I think we have got to keep that well in mind. I think you will find that the changes in the personnel of the Commission, that have gone on during the past four or five years, have not resulted in a single change made — let us say, for political reasons — the staff has been kept intact. When natural vacancies have occurred, I have no doubt that some of the appointments might be colored as politi- cal ; but it is a matter of importance to the city that the staff has been kep£ intact, and I, in mentioning that fact, feel rather bound to express my appreciation of Judge McCall's attitude in that respect. Now, if any changes that now occur were to hurt the organization and lead to further changes down the line, either in this tearing apart process or otherwise, it would inevitably retard the completion of the work. The work is going on now in a very satisfactory way. I do not think that a better piece of engineer- ing is being done anywhere on the globe. Q. You mean the rapid transit work ? A. Yes, I mean the construction of these subways. Of course, in a piece of construc- tion work involving the expenditure of $325,000,000 for new lines and equipment, there are bound to be little delays here and there, and bound to be readjustments that take time, but allowing for all of that, I am bound to say that the work is being well done. Now, I trust that it will not be disturbed until it is completed. After that, it opens up a new view of the subject. Colonel Hayward. — Mr. Chairman, are there any other lines of inquiry that you had in mind other than those we have taken up ? Chairman Thompson. — Just a question or two. By Chairman Thompson: Q. How much of an organization does the Board of Estimate have, made necessary on account of your requirements to check the work of the Public Service Commission? A. It has a so-called Bureau of Contract Supervision. There are two or three engineers, two or three sub-bureau chiefs, to whom these contracts 46 1442 Investigation of Public Seevice Commissions are sent — these construction contracts — for checking up; but these same men handle everything else of that nature that oomes from any department. Q. That comprises the Engineering Department of the city government ? A. No, it is not known as such. It is practically an auditing and checking department. Q. How much of an organization have they got there? A. We have no Engineering Department that has general jurisdic- tion. Each of our departments of public works has its own engi- neering corps. Q. Each one has an Engineering Department of its own ? A. YeSj its own engineering corps. These contracts that come from the Public Service Commission are not sent to any established corps, but to our Bureau of 'Contract Supervision within the Board of Estimate. As I say, we have two or three engineers there who pass upon these matters and, of course, they have their staff. They pass, at the same time, upon every other matter that comes from any other department. My committee in the Board has no staff of its own, no staff for transit purposes. Its work is largely one of conference and of talk around a table. It has no expense account of its own. Q. Now, I understand, Mr. President, that you have taken to yourselves — the Board of Estimate — this manner in which you have granted some franchises of the regulatory functions over the operations of those franchises ; is that correct ? A. Franchises for street railways, service railways? Q. Yes. A. They are under the law. The process is reversed. An application for franchise originates in this Board, and all we require from the Public Service Commission is a certificate of public necessity for the establishment of the line, and we fix the terms here, and in a sense, maintain a regulatory attitude. We charge them an annual rental and they are under the supervision of our power. Q. I understand some of those franchises contain a clause to the effect that they will submit themselves to the Board of Esti- mate, notwithstanding any law on the subject, or any Public Service Commission requirement on the subject, or lose their franchise if they do not submit to that regulation in the future? A. That practically is the case. Final Eepokt op Joint Legislative Committee 1443 Q. Do you think that it is proper to liave the regulatory func- tion in the Board of Estimate when you have a Public Service Commission for that purpose ? A. Those regulatory functions do not extend to operation. For instance, if we give a franchise to a stage line, we fix the terms and we collect the annual rental. There is an implied regulation in the original terms, but the operating regulation is in the hands of the Public Service Com- mission. Q. But, for instance, the rate of fare they should charge, do you think you should have that in the Board of Estimate, to regu- late, or do you think the Public Service Commission ought to do it ? A. I should prefer to do it where it is, in the Board of Esti- mate. There must, of course, be some authority charged with that power. We establish rates of fare as a condition of a grant of the franchise, and the whole business deal there is made right here in this Board. Q. There has been a whole lot of criticism at Albany because they say that the manner in which we conduct the business of the State is expensive and unprofitable. Do you know of any other way to reduce the expense and increase the benefit except to re- systematize it on a proper theory and give each function of the government its own function to perform? A. I think that is true. "When I say that I prefer to leave it where it is, I have immediate reference to this situation, but if we come to a change later on, under which the city secures the control of construction work, it might be well to transfer to the Public Service Commis- sion the power that we now exercise over these franchises. Log- ically they do not belong together. There is no question of that. Q. If Public Service Commissions are for the purpose of regu- lating, and if they were required by the law to give all their time to regulating, they might regulate better, do you not think so? A. Yes, decidedly so. The city can never relinquish part of its power in the granting of franchises as a constitutional function. Q. Do you not think that it is entirely inconsistent, that a board of that kind, with regulatory powers, should be given power to construct subways, which is an ordinary administrative func- tion ? A. I would put it that way. Q. I am only speaking in the abstract. I do not know what you need in New York city. A. Putting it in the abstract, I 1444 Investigation of Public Seevice Commissions would say that, under any redistribution of these powers, that the control over rate-making might well be vested in the Public Serv- ice Commission. There are other details of a franchise that might better remain in the Board of Estimate and Apportionment. Q. I was talking, Mr. President, in relation to the administra- tive functions of digging a subway, as to whether or not that ought, as a matter of governmental policy, be given to a regulatory board ? Ought it not be an administrative board having that duty, if it were possible to bring it about without too much damage? A. I think as a matter of correct theory it should. Q. But you think now it might cause damage in some way to divest it of what was given to the Public Service Commission to do? A. It would not disrupt anything here practically if that were done now, but I presume if the transfer of the other func- tions from the Commission to the Board be deferred, that it might be better to defer this also, so that the entire readjustment might be made at the same time. It is a minor thing in importance compared with the other. Q. It was the other I was taking about, the work of construct- ing the subway, as to whether or not that ought not to be trans- ferred to some other city department, the Board of Estimate or some other city department, and let the city build its own sub- ways? A. I have said that I do think that should be done, but I think it should not be done at the present time. Q. There is no difference between that and the construction of city sewers or a city water system ? A. In principle, not a bit of difference. By Assemblyman Knight: Q. Do you not think, Mr. President, that the divorcing of these two powers should be put off until the completion of the contracts ? A. I have said that, Mr. Assemblyman. I have felt that very strongly. Q. Do you think that it would be inadvisable to make the change now ? A. I do. By Senator Foley : Q. Mr. President, based on your experience as a public official, do you think this Commission is doing its work as efficiently as Final Eepoet of Joint Legislative Committee IMS they can with the problem in mind, with the problem before it, the building of subways, in the constructive side of the question ? A. I have also said, 'Senator, that I believe that the construction work is proceeding in a very satisfactory manner. It is being efficiently done. Q. Are you prepared to make any statement on the other side, the regulation side? A. I know so little of that that I would rather not undertake it. Q. That would not be brought under your duties as a member of the Board of Estimate ? A. Not at all. 'Chairman Thompson. — Is that all, Senator Foley ? Senator Foley. — I think that is all. By Assemblyman Knight: Q. If this proposed uniform statute provision were made for the making of complaints by the local government of the city, town, or other municipalities, do you think that provision should be contained in the statute? A. Complaints directly to the Public Service Commission ? Q. 'Complaints of transfer, complaints of service or similar com- plaints? A. I should say yes. If your Commission is to have comprehensive regulatory powers affecting those things, the operation in which the city is concerned, the city ought to have the right to present the case as well as an individual. By Senator Lawson: Q. President McAneny, do you consider there are any duplica- tions of functions by the Board of Estimate and the Public Service Commission at the present time? A. There is no duplication of functions, except as we exercise — we act concurrently. I have outlined that, and just so long as you continue this system, we must act concurrently. It takes some of our time and it takes some of theirs. In that sense it is a duplication of time and of effort, of course; but there are no other acts of administration that are duplicated. Q. You both maintain separate engineering forces? A. Yes, but the engineering force that we use in checking the Public Serv- ice Commission contracts is almost trivial compared to theirs. 1446 Investigation of Public Service Commissions Q. It would not cost much additional money ? A. No, and, of course, these contracts come to us after public advertisement. They are upon standardized specifications. They are protected at every stage by the law, so that our checking in many cases is almost perfunctory. It does not require a large or important staff. Q. Well now, coming back to my previous questions relative to including Long Island and Westchester county in the First Dis- trict, would you consider that objectionable mandatory legislation? A. Personally I doubt whether it could add any material sum. Q. We have heard a great deal recently about mandatory legis- lation? A. Of course, the Commission would talk with officers of the companies right here in their own offices, no matter where the complaint might arise. The only added expense would be for certain extension work in the new territory. I do not think it will amount to much. I do not think the city would cavil about that for a minute. Q. So we may be permitted to consider that that would not be objectionable mandatory legislation ? A. So far as my views are concerned, most certainly. By Senator Mills : Q. Mr. McAneny, the Comptroller told us yesterday it would be possible in a way, while not actually splitting up the Commis- sion, to assign three members of the Public Service Commission to the regulatory end and assign two to the constructive end until the subways were completed, rather than have the whole Commis- sion attempt to do that. Of course, the responsibility would still remain. What do you think of that suggestion ? A. I should question the advisability of making that a matter of statutory re- quirement. I should imagine that such a division might naturally be made by the Commission itself for its own convenience. Q. What I had in mind was this — it is not anything very definite — but assuming that it was found wise by this 'Committee to reduce the number of Commissioners to three up-State, three for New York city and one chairman at large, do you think it would be advisable to keep two of the members down here as really a Rapid Transit Commission? A. Well, it would be possible. Of course, by far the greater part of the Commission's work at Final Eepoet of Joint Legislative Committee 1447 the present time is the construction work. That does require more or less specialization. I am not entirely familiar with the way in which they divide their labors at the present time. I imagine that the time of the chairman is given chiefly to construc- tion matters. He holds few hearings, for instance. Chairman Thompson. — I think I can answer both of you gen- tlemen there, the inquirer and inquiree. Recently, in the case of the Court of Claims the Governor was given the power to appoint two additional members to the court. There are three members and the Governor was given power to appoint two additional members to the court, until such time as they needed that addi- tional help. Of course, that could be done here with reference to the First District. Of course, the Governor could do that here. The Witness. — That would fit into any plan for ultimate transfer. Senator Mills. — That is what I was getting at. You have had a good deal of experience with the Public Service Commission along constructive lines, and I was wondering what your opinion would be on that particular point, whether it would work out or not? A. I think it would work out in the practice of the Com- mission very well, and perhaps ought to be done. My only ques- tion was whether it ought to be required by law that any particular two should devote themselves exclusively to one division of the work. By Senator Mills: Q. But you think that Senator Thompson's suggestion, that a Commission of three, with two extra members until the subway is completed, is a good suggestion ? A. I should think very well of that. Incidentally, it would be a promise of that transfer that I think should be made eventually. Of course, when the transfer is made — there has been questions as to the duplication of the work — there is no doubt that a good deal of net time will be spent between the Commission and the Board of Estimate, because a good deal of time and thought of this Board is given to public service matters. I say there is no duplication, because it is a 1448 Investigation op Public Seevice Commissions separate exercise of concurrent powers. When the transfer is made, that will be done away with. The Board of Estimate would then have complete control so far as supervision goes, and whether they have a separate department of railroads or not, it would have complete control of all these matters that are now taken up in conference. But the same rule under which there would be less need for men in the Public Service Commission you could put men in there temporarily, who would not be needed after the transfer. I should think that that might work very well. By Chairman Thompson: Q. There is no doubt, Mr. President, that this district ougit to include the whole of Long Island ? There is not much doubt about that, is there? A. I think there is no question about that. Practically all of that territory is suburban to New York and serves New York city. By Senator Foley : Q. Mr. President, what do you think of the plan of transferring the subway functions from the Public Service Commission to an administrative department under the head of the city government, with the combination of bridges, docks and subways, that was sug- gested by one of the 'Commissioners ? A. I think that, when the transfer is made, it ought to be an administrative department, and not to the Board of Estimate as an administrative authority. Whether or no it could be amalgamated with the two departments you mentioned, I am not prepared to say at the moment. That is a question that will undoubtedly come up in the course of our studies of the charter. Q. The suggestion was made that the transfer be made immedi- ately? A. I do not think that would be wise. I think the process of making the new charter should take all of the time I have indicated it is likely to take. Q. It really ought to wait until after the Constitutional Con- vention? A. Yes, that is my conclusion, although we are going to get to work right now on the charter ; but I think the question as to which departments and functions should be exerted, even including these rapid transit functions, ought to be settled while we are making the charter. FiisrAi. Eepoet of Joint Legislative Committee 1449 Q. You do think it would be inadvisable to make the transfer now ? A. I do. Q. It would probably delay the subway completion? A. I thimk unquestionably it would. Anything that would work any delay to the subway, however slight, it would not be popular. The people will find it out sooner or later. Chairman Thompson. — Are there any questions any other member of the Committee desires to ask j\Ir. McAneny? By 'Senator Cromwell: Q. Mr. President, if there is any uncertainty as to the exact line of demarcation between the functions of the Public Service Commission and the Board of Estimate and Apportionment, that have been evidenced for the last three or four years, of having a special committee of the Board of Estimate confer with regularity with the Public Service Commission on these matters — has that tended to produce harmony ? A. Very much so. Of course, during the two years of the negotiations, perhaps half the time of those members of the Board of Estimate, who served on that com- mittee, was taken up with rapid transit work. As you will know, Senator, having served as a member of that committee, it did tend to establish harmonious relations, and although the process was necessarily tedious, we got results that would never have been possible under the old plan of regulation at long range. Q. It was quite a revolution? A. It certainly was, and that basis of work has been continued ever since. Q. Tending to bind together the two bodies permanently and harmoniously? A. Yes, sir. Q. And resulted in harmony? A. Undoubtedly. By Senator Lawson : Q. I do not suppose, Mr. President, you can throw any light on that subject relative to the Eastern District Subway situation regarding that question of the depth of the river ? A. I under- stand that the plans were approved upon the assumption that that depth will not obstruct the work. Q. You think that some day we will have that Eastern District subway ? A. I think there is no question on that. If we do not, a certain railroad company would have a right of action against the city. 1450 Investigation of Public Sekvice Commissions Q. And have you any idea — I do not believe you were on the Board at the time the dual subway contracts were passed, were you? ■Senator Foley. — Oh, very much so. The Witness. — Oh, yes. Senator Foley. — Such is fame. Senator Lawson. — I had forgotten. I have been very much interested in the Broadway-Lafayette Avenue route. I think it was Eoute No. 9. A. That is part of the old Tri-Borough route ? Q. Yes. Can you give any idea or throw any light on why the plans were drawn for that, and maps, and considerable expense gone to and the entire thing was given up ? A. They were drawn before we came into office. They were drawn five years ago upon the then cry that the so-called Tri-Borough system might be applied as a competitor to the Interborough system. When we got down to the liniking together of the various routes, the Lafay- ette Avenue route was rejected, for the reason that others were put in its place; that is, other means of service. Q. In that same locality? A. Yes. So you take the third- tracking of the Myrtle Avenue line, for instance, and not only that, but the Lafayette Avenue line, which was part of the route around and over Williamsburg bridge. We found that, if the Williamsburg bridge were used for both subway and elevated purposes, the capacity would be thirty trains an hour instead of sixty. We knew that would have affected the systems back and over in Brooklyn, so we decided to use the bridge entirely for the elevated traffic supplemented with the third tracking, and put this new tunnel from 13th street over Yth street in Brook- lyn, as a substitute service for the Eastern District, which we believed would be a much more satisfactory service. The Lafay- ette Avenue route was dropped, therefore, as not belonging to that kind of a system. There was no place for it in the new plan. Q. That was pretty well advertised, was it not? A. Adver- tised ? Q. Yes. A. Every route question is very well advertised; especially by its own loving friends. Final Repoet of Joint Legislative Committee 1451 Q. I mean that the people of the Eastern District figured that was really coming and that they would have that Broadway- Lafayette subway ? A. I think it was no doubt deduced from the operation of our predecessors that it would be built. Q. You haven't any idea how much money was spent? Af Upon the plans? Q. Yes. A. I am sure I have not. Q. I would be very much interested to find out just how much money was spent on the plan at that time, which was then dropped? A. Your information, of course, would have to come from the Public Service Commission. I have no knowledge of it. By Assemblyman Burr : Q. Mr. McAneny, the Fourth Avenue-Broadway-Manhattan route, as originally planned, was intended to go to 9th street, Brooklyn, was it not? A. The first route went to 99th street, as a part of the old Txi-Borough plan. Q. And at present it is to be discontinued south of 88th street ? A. The route is still there. There has been no interference with the route. Q. There is no work being done there? A. ISTo, but, as in the case of a good many authorized routes, the city has provided for the construction to a certain point, leaving the rest for considera- tion later on. The present work stopped at 8'6th street. Q: The people down in that section are under the impression that the Public Service Commission are entirely responsible for that condition, the route not being completed. That is not a fact, is it, Mr. McAneny? A. The decision to stop at 86th street was made at the conference between the two Boards. I think it was the unanimous agreement of both. Q. But it was principally on account of the city not having the money at the present time to let them do it ? A. Yes, that is a question, using what moneys were available for that particular extension while others were more urgent. Q. You would like to remove the impression that those men were responsible for the delay? A. That the Public Service 'Commission were responsible? Q. Yes. A. Very cheerfully. The Board of Estimate was equally responsible. 1452 Investigation of Public Seevioe Commissions Q. As a matter of fact, the people held the purse strings ? A. We held them. i Senator Foley. — Is that all, Mr. Chairman ? Chairman Thompson. — Mr. MoAneny, we are very much ■ <)bliged to you, and if you think of anything else you want to bring out, we would be glad to hear from you. The Witness. — I think not, Mr. Chairman. Chairman Thompson. — If there is anything else that occurs to you, will you write us a letter ? The Witness. — I shall be very glad to, Mr. Chairman. Chairman Thompson. — We shall be very glad to hear from you at any time. The Witness. — If you wish me again at any time, you have only to command. Chairman Thompson. — If there is anybody here representing the Public Service Commission of the First District, I hope they will communicate with the Public Service Commissioners, and say that, if they have anything to offer during the day, I shall be glad to hear from them. The Committee will meet informally in executive session in the Finance Room of the Board of Aldermen at 5 o'clock this afternoon. Colonel Hayward. — I understand Mr. Bassett is here, Mr. Chairman. 'Colonel Hayward. — Mr. Chairman, would you say over again what you said about the Commissioners of this District? Mr. Whitney is here. Chairman Thompson. — I received a letter from the Governor, that I have given out this morning. I wish the Commissioners would each get a copy of this letter, and I also announced that we would have an executive meeting of the Committee at 5 o'clock this afternoon in the Finance Room of the Board of Aldermen, and if there is anything that the Commissioners desire to bring to our attention at this meeting, we shall be glad to hear from them. Final Repokt of Joint Legislative Committee 1453 Edwaed M. Bassett, called as a witness, testified as follows : Direct examination by Colonel Hayward: Q. You were at one time a member of the Public Service Com- mission? A. Yes, sir. Q. For a full term of five years or longer? A. JSTo, I was on about four years. I was one of those members that lapped over in order to bring it out with th« five years even. Q. And when did your term begin and when did it expire? A. My term began July 1, 190Y, and it expired February 1, 1911; but my successor was not appointed for quite a number of months after. . ^"^^%i\ Q. Reference has been made, beginning with the other wit- nesses, to a letter that the Chairman of the Committee sent out. I think you had one of those letters!, too, did you not? A. One was sent to me yesterday, yes, sir. Q. Regarding questions of jurisdiction ? A. Yes, sir. Q. Would you oare to express an opinion about what is pro- posed about the proposed change, or transfer, of the construction powers, of the rapid transit powers, to a city department, to the Board of Estimate? Have you given that any thought? A. I thought thut over for a good many years, and if you would like to have me express an opinion, I am not unwilling. Q. I should be glad to have you give it, based upon your ex- perience and the thought you have given to it. A. The object of the Public Service Commission was regulation of public service corporations. All other functions of the Commission were sup- posed to be secondary to that. The rapid transit matters and the administration of that act were added to the duties of the Public Service Commission in its origin, because there was desire to do away with multiplicity of commissions, and also feeling that the expenses of the Public Service Commission of New York City should be borne, to a considerable extent, by the city itself. On that account the city, under the law, was made to pay all of the expenses of the Public Service Commission excepting certain salaries that are enumerated in the act, of the principal officials. The fact that the city was specified as the paymaster of the Com- mission brought it about that the First District Commission was for the city itself and no more, and that was the primary reason 1454 Investigation or Public Seevice Commissions why Westchester and Long Island were left out of the jurisdiction of this Commission. If it is desired, I think it would be very useful that the suburban locality extend to the end of Long Island, and, taking in Westchester county, should be under the First District. It would, therefore, mean a rather fundamental rearrangement of the method for financing the Public Service Commission, and I suspect that all of these questions which, at the time, I know, were very fully considered would have to be gone over again. The trouble with the Public Service Commission in this district has been that it has not been able, as was intended, to carry on the business of State regulation. In my opinion, that is quite largely due to its being overwhelmed with great responsibilities in the way of planning rapid transit lines and the attention to the enormous sums of money that are involved therein. The Public Service Commission Act was intended as a means for the popular thrashing out of the issues of discontent between the public service corporations and the people. The act provides that any citizen may complain to the Commission on any matter that he considers he is aggrieved by, and that thereupon that complaint shall be forwarded to the public service corporation complained against, who shall remedy it or else notify the Commission that they are not willing or 'able to remedy it, after which there shall be a hearing and the matter — the issue being formed — shall be tried out, and, if desirable, an order shall issue. Those orders are entitled to be enforced either by penalty or by proceedings for a misdemeanor. Wow, that intention of the Public Service Com- mission has never been so fully carried out as it was intended, or as I think it should have been done. I confess that perhaps I myself was to some extent to blame for that, for I was nearly four years in the Commission, although it always seemed to me that the trial, as a safety valve for these public service complaints, should be made a great deal more of than ever was. The whole subject of secretarial correspondence on regulatory matters came up as a buffer to protect the Public Service Com- missioners themselves against the enormous mass of detail work that would have been involved in the trial of those complaints and to relieve the Commissioners so that they could give attention to the vast amount of rapid transit work. I say that without the ilightest reflection on the secretary's department. He did what Final Repoet of Joint Legislative Committee 1455 seemed to him to be the right thing, and with the best of motives ; but I do say that the result of that was that, instead of carrying all regulatory functions of the Commission by forming an issue and having a hearing where both sides were heard by one of the Commissioners or all of the Commissioners, many of those things became the subject of protracted correspondence. The public Jias not been satisfied with that method of taking these matters up. The companies, themselves, I susfpect have not considered that they had the kind of day in court that the law intended that they should have. However, that may be, the result has been that the people of the State do not appear to be at all satisfied with the regulatory work of the First Commission; and I submit, also, that the corporations have set criss-cross to a much greater extent than would be the case if the method outlined by the Public Service Commission Law had been followed out. Of course, that does not mean that every detailed issue must be tried out at length. Precedents would gradually be formed so that the secretary could pass a great many answers upon issues already brought and de- cided, and there would have arisen up much more of a body of fixed and well-thought-out law on the subject than has been done. I think that is the great misfortune about public service regula- tions and is the fundamental reason why there is so much dis- satisfaction on the regulatory work of the Commission. As to the possible remedy, would you like to have my opinion ? Would you like to have me speak of that? Others have spoken a great deal upon that. Chairman Thompson. — ■ Yes. A. It has always seemed to me that, for basic reasons, the State should have charge of regulation and that the city should have charge of the building of rapid transit lines, just as in a water- works, as you said a few moments ago. On the other hand, when the law was framed, the best was done under all the circum- stances, or intended to be done. There had been no consecutive governments in the city for some time, and it looked as though these rapid transit improvements would be carried on with con- tinuity, and it was thought that a Public Service Commission having continuity by one man going out each year would be able to carry that on. I think that people of both parties would say 1456 Investigation of Public Service Commissions ttat, in the last eight years, there has been a development of public insistence in this city that its great public improvements should be carried on quite regardless of party matters, and in a very accurate and honest way ; and we have come, or are coming, to a situation when the fundamental requirements of these two laws me a construction law, as rapid transit, and the other a State regulatory law — can be made separate. I would be inclined to say that that can be done with safety, and our rapid transit con- struction would be better. Of course, there will always be objec- tions that it will interfere with certain local work. Nevertheless, the city is just now in the most intense period of its rapid transit work, and it undoubtedly would be wise to postpone an immediate transfer, I should say, entirely from one year to three years; but a person has got to spend more time in working out the details than on this short notice a witness would be able to. The ques- tion of State civil service and city civil service must be kept in mind, because here is this splendid engineering force, taken from all quarters of the State and country, doing its work in a highly efBcient manner, that would be thrown right out if the civil service of the city were made to apply to its work instead of the civil service of the State. In the Legal Department of the Public Service 'Commission there is a highly specialized group of men who have a broad knowledge of rapid transit matters, and it would not do to bring the axe down without a period of readjustment and careful istudy. By 'Colonel Hay ward: Q. Why would that be, what you said about the State civil service and the city civil service ? Why would you say that would throw all those people out? A. Unless some arrangement were made, as probably would be done, when the transfer was made, that the employees en bloc would be transferred to the city civil service. Q. That would be a very simple matter? A. That would be rather simple, and yet it is only an illustration of a good many things that must be kept track of and provided for at the time. The day might come — and possibly through changes might come sooner than one would think — when there would not be the co- operation between the Public Service Commission and the Board Final Eepoet of Joint Legislative Committee 1457 of Estimate that has existed the past four or five years. Prior to the election of Mayor Gaynor and Mr. McAneny, there was a battle-door and shuttle-cock game, with almost no progress made and everywhere hostility between the two Boards, and there is no saying but that would come under certain conditions. It was on account of the seizing of an opportunity, largely I think by Mr. McAneny, that the transfer committee appointed by Judge Gray- nor — intended to be only temporary — became a permanent in- stitution and acted as a connecting link between the Board of Estimate and the Public Service Commission. Without that con- necting link, no such progress would have been made as has been made. The result, however, Mr. Chairman, has been a constant moving over to the Board of Estimate of a greater amount of detail for attention and decision on rapid transit matters than was ever attempted by the Rapid Transit Law. It has been said that the Board of Estimate would be overwhelmed by taking the duties of rapid transit. That is undoubtedly true, but one reason why it is overwhelmed is because it is so largely taking care of these rapid transit matters. It has come to the point where the Public Service Commission, in many cases, will send over to the Board of Estimate to learn whether an amount of money will be available for a certain thing, which immediately brings the Board of Esti- mate into a consideration not only of the money but also of all of the engineering features of that thing ; whereas, the Rapid Transit Act intends that the working out of the matter should be done in the first instance by the Public Service Commission and submitted to the Board of Estimate for its approval. Wow, it is likely that if there was a Rapid Transit Board appointed under the city gov- ernment — either by the Board of Estimate or by the Mayor — to take over this rapid transit work after a time — not immedi- ately — that it would result in a lessening of work and responsi- bility to the Board of Estimate. It always works that way, where a body holds the purse, as the Board of Estimate does, and another body, especially entirely separate from them, does the work that the decision to a great extent in both matters comes upon the Board of Estimate. To-day the Board of Estimate is being over- whelmed because it is absorbing rapid transit functions that it was not intended to work the details of, and the Public Service Com- mission is overwhelmed because it is doing both the city and State 1458 Investigation of Public Service Commissions regulation work, and among 'all of the things that is being neglected, public regulation is being neglected the most. Perhaps I have already talked more than I should, Mr. Chairman, on that point. I should have waited for more questions to be asked. iChairman Thompson. — The answers to the questions have been much more intelligent than the questions all the way through. Go as far as you like. Colonel Hayward. — I hesitate to ask another question after that. By Colonel Hayward : Q. Did you go into the question of territorial jurisdiction of the Long Island - — you did, did you not ? A. I referred to that, Mr. Hayward. Q. Have you thought about the jurisdictions ? A. It seems to me entirely anomalous that the Transit Commission should have charge of telephones and telegraphs in this city. It should probably be done by a single commission covering the whole State. That is the logical and fundamental thing to do. Q. Are you in favor of a single commission for the entire State ? A. When the time comes, I would be in favor of a single commission for thB entire State, but there must be a punch right here in the city of New York, because of the nearness of the great public service corporations. If the real mainspring was in Albany, it would be too remote and public regulation would not be sufficiently effective. Q. You were here when the plan was gone over? You were here when Mr. McAneny was on the stand ? A. I did hear him. He is the only one I have heard. Q. With three, with a connecting link, a chairman at large. Did you hear that? A. I heard what you and Mr. McAneny said about that. And it was along in that line, ^as possibilities; but in the long run there is no more need of two public service regulations in the State of New York than there is in any other State, and we would think it queer in any other State; but New York city is the fixed point and the mainspring and the punch must be right here in New York. Final Eepoet of Joint Legislative Committee 1459 Q. Your idea of one commission is predicated upon the idea that the construction powers and the rapid transit powers would at that time be run in some department of the city government? A. That is mv idea. May I volunteer one other point, Mr. Chairman ? Chairman Thompson. — That is what we got you here for to volunteer all we can get you to. A. One reason that the Legislature can regulate public service commissions quickly and effectively is because when it passes an act that act is final, if it is constitutional, and is not subject to any review whatever. The Public Service Commissions of this State, however, find more of the burdening of the act in the decisions of the Court of Appeals, to be subject to review by certiorari; the review of the court by certiorari has tended to pass on matters of fact as well as on matters of law ; the result of that has been that the public service corporations have an easy method of delaying the matter of when they shall obey the order. They do not have that way of deferring the time when they will obey a law passed by the Legislature. Now the Inter-State Commerce Commission is not subject to review by certiorari of the United States Court; its conclusions regarding facts are final ; that is on account of the limited jurisdiction of the United States courts. It has seemed to me for many years that it is worth while to study a method of making the orders of both Commissions in this State more imme- diately effective, a better way of doing that would be for the courts to recognize review by certiorari only on questions of law ; and it is quite possible that an advantageous amendment to the Public Service Commissions Law could be made modifying the right to review by certiorari. By Senator Foley : Q. Would you do that with rate cases, Commissioner? A. It could be done with rate cases where they are not confiscatory; where a rate case is held to be confiscatory that involves a consti- tutional point and is not capable of prohibition. Q. Well, the usual grounds upon which a corporation appeals, is that it is confiscatory, that the order is confiscatory? A. That is true, and to that extent you are correct. 1460 Investigation of Public Sekvicb Commissions Q. If they didn't accept tlie rates of tte 'Cominission how could you make your order final in those cases ? A. No, I don't think they accept the rulings of the Commission in this State in cases where they urge nothing but that it is confiscatory, and they ask for a review by certiorari no matter what the amounts. Q. The particular case I had in mind was the Brooklyn case. And that was on the ground, I believe, it was confiscatory; that certain elements were taken into consideratiron, and therefore the rate fixed by the Commission was not reasonable? A. Yes, I think it was the case in that. By Chairman Thompson: Q. What do you say as to the reason for having the power in the Public Service Commission to fix emergency rates, or to sus- pend schedules, or to have the right of enforcing reparation from the time complaint is made ? A. By giving them the right which they have not now there would be much in those points I have just suggested that are not now in the act. Q. The suggestion was made to bring them in, and as to whether or not it would be wise to put that in ? A. I think that there should be an amendment along that line, something should be done, Senator, in order to give efficacy and quickness to the de- cisions which now inheres in legislative enactment. Q. Then you think by going back to the time of the complaint to make reparation would have considerable to do with expediting the proceedings ? A. It would, Mr. Chairman. Q. On the part of corporations ? A. Yes. Q. Proceed, Mr. Commissioner. A. I think I have said all I care to on that point. Senator. Q. With reference to the enforcement — I assume you are quite familiar with the model act of the Civic Federation, the ISTational Civic Federation? A. I had considerable to do and I have worked a good deal on that. Q. You understand then, of course, about the penalty, that instead of a misdemeanor as the law now provides that it should be a penalty of five thousand — with five years' imprisonment for violation of certain things and no discrimination on the penalty for a felony of five years' imprisonment, and also having the right to go into court and get an injunction or otherwise to enforce their Final Eepoet or Joint Legislative Committee 1461 orders. What is your idea with reference to that, do you think that the penalty is too drastic? A. Of course, intention in a felony as in a case of misdemeanor you must prove intent, and where there is proof of intent it seems to me that the orders of the State should not be disregarded; that there should be sufficient punishment in some cases of misdemeanor which, as inflicted on the subordinate of a corporation, is not sufficient punishment. Q. 'Sow, with reference to franchises, I find a provision sug- gested with reference to giving municipalities the right to take over public utilities in the municipality, subject of course to the jurisdiction of the Public Service Commission and subject to requiring them to condemn or purchase the public utilities then operating in the locality, or in the municipality rather. What is your idea of that? A. The method outlined in that act for that purpose does not meet my approval. It was urged by the corpo- ration representative who would like to have a law in this and other States fixed so that the city must allow them to continue their perpetual franchises forever, or else buy their property at an adjudicated figure. My own idea is that the so-called per- petual franchises are not in fact perpetual for a thousand or a million years; that it lies within the power of the State to say that the so-called perpetual franchises shall be given a period within which the company can amortize its earnings and its prop- erty and then that that shall be considered to come to an end. Q. I think your idea is entirely hostile to that outlined just now if it be incorporated in this act you think it would be probable to add to the trouble ? A. I think it is. Q. The idea is you wouldn't like to have the act, if it were amended with this in view, and permit it to require the State to give these corporations an unending franchise ? A. So, sir. Q. Otherwise the idea was to have them pay whatever the physical value of the property was ? A. Oh, yes. Pay the value. I think invested capital must be considerately treated, and given a period to amortize, but not forever. Q. That is, it wouldn't be hardly fair to put a corporation out of business ? A. Exactly. Q. The electric light companies, water works companies and other corporations, do you think water works companies ought to L462 Investigation of Public Seevice Commissions )e brought in ? A. I see no reason, no reason of importance why :hey shouldn't be brought in here. Q. How about water trans;portation ? A. There is a question iere of United States jurisdiction that should be thought over rather carefully. I am rather in favor of extension of control to vater transportation, with, however, full recognition of the juris- iiction of the United States. Q. There is a question with reference to telephone and tele- ^aph, telephone company connections, and I am going to have someone up-State speak about that problem, but I would like to jsk your idea of it. Up in my town we have a large number of ;elephones operated by the Home Telephone Company and a small lumber operated by the Bell System, which has extensive trunk ines over the whole country. Now I can't communicate with my louse because I have a Home telephone in. Now should there 36 a requirement for a possible connection, especially between that ■ocal telephone and the Bell System? I see that is provided in ;his model act? A. Telephones are natural monopolies. In the ong run natural monopolies will either be taken over by the gov- ernment in the first place, or else the States and cities, or the lational government are going to run them. The time will prob- ibly come, I don't know whether it may be a hundred years from low, when the government is going to run the telephones and ;elegraphs, and in the meantime every possible step should be :aken in order to make a greater convenience in that field that is 1 natural monopoly. By Senator Foley: Q. Did you make a study of the order of the Department of Justice in connection with or bearing upon the American Tele- phone & Telegraph Company? A. I have not, Senator. Q. I think that order required them to connect where the dis- :ance was greater than fifty miles. By Senator Thompson : Q. Senator Foley is our expert on telephones. There is one jther question I would like to bring to your attention, .and that is, [ find this act provides for a sort of an automatic continuance or jxtension of franchises, and I notice that they had disagreed over Final Report of Joint Legislative Committee 1463 it. As I understand it, a corporation is granted a franchise in a particular street of a city, -and tlie limit of the street may be ex- tended, that it is suggested it be incorporated in the law that on filing a certificate that the franchise be extended in that street without the concurrence of the local authority, am I right about that? A. You are right in your statement of the suggested law. Q. What is your opinion about that? A. My opinion is that that is wrong. Q. And dangerous besides ? A. And very dangerous. Q. The local authorities ought to retain, as they have now, the entire f ranchi^se-granting power ? A. Yes, sir. Q. Whether piecemeal or as a whole ? A. Yes, sir. Of course, in the case of electric light companies it is a little harder to say when the company once gets a franchise in a village it should afterwards be given succeeding additional franchises for a new street; but in the case of street railroads or steam railroads, or anything of that sort, surely the right to extend must be reserved in the government. By Senator Mills : Q. Mr. Bassett, what would you think of the plan of allowing the Commission to appoint a referee to take testimony rather than to assign individual Commissioners to take testimony in cases? A. I think the result would be that it would save the Commis- sioners' time and allow them to give more study to important problems; on the other hand, I think that the public that gives the testimony wouldn't be so well suited as to give the testimony before one or more 'Commissioners; I think if that is done at all it should be in a rather limited class of cases; but there is great opportunity for extension of doing that, especially where it is done at a distance. Q. Wouldn't it be better where there are these long cases that take month after month and year after year, to .assig-n a referee to the case to take the testimony of the parties in the matter and then submit it to the Commission, to the entire Commission ; wouldn't you get much greater speed? A. You are correct, Senator; nevertheless ipeople usually like to have their testimony up before a judge or a jury and not taken down by a master, and depend upon its being read by the judge; I think the point in- 1464 Investigation of Public Seevice Commissions volved is the point of popular satisfaction and to do what is pos- sible to do to save constant irritation between the public and public service corporation. By Assemblyman Knight: Q. There is one question I think you have not touched upon, and that is whether the statute should provide a time in which the order should be made by the Commission after the final sub- mission of the case. What do you say as to that? A. Yes, within a time limit. Q. "What would you place it at? A. That is not so easy to answer. If a time limit is fixed and there is no power to extend that time limit then the body having it to pass upon would lose all the benefit of taking testimony and the case would have to be tried again if the time limit was passed. I would say that it should be fixed so that there should be some time limit fixed in some way, and I notice in the act the chairman has referred to a suggestion of improvement, there is a method outlined for that. Your ques- tion is an extremely important one because big cases might require a good deal of time to write a decision ; yet there is no doubt that there has been great delay in both Commissions in deciding cases. Q. Would a year be long enough ? A. Yes, indeed, I should say it is too long. A case that is capable of decision after the testi- mony is in should never take a year to decide, in my opinion. If the Commission is applying $325,000,000 to a rapid transit sys- tem, however, it has got to devote some of their time to that. By Senator Mills : Q. What would you say to having your orders date back to the time of the original complaint ? What I have in mind is this : a complaint comes in before the Commission and before the Com- mission can investigate it the corporation remedies the situation and then no order is issued, and then after a while things go back to the original situation, wouldn't it be better to have the order as of the time of the original complaint so that the order could be enforced? A. I am inclined to think not, for this reason: That the law now makes a violation of the order of the Commission as to lack of safe appliances, lack of adequate service, unlawful, and immediately on the violation of that law the person or corporation Final Report of Joint Legislative Committee 1465 has committed an unlawful act and the violation of the act is made a misdemeanor under the act. Q. Is there a time when they could ever get a conviction for a violation of the order? A. I confess it would be doubtful, nevertheless I fell that in extreme cases, I am inclined to think a verdict might be given in extreme oases when it was shown there was a deliberate intention to violate. Q. But don't you think there would be a good deal of delay and procrastination on the part of some corporations, if they knew that the order wouldn't be entered of the final date of the hearing but as of the date of the original complaint ? There would be no rea- son for any delay then? A. Yes, but the penalty provisions are retained and the amount for each day the corporation would be mulcted in each day after the beginning of the action or the com- mission of the offense. I think there would be many complica- tions in doing that, if the Commission were compelled to date their orders back to the date of the offense. It would make a great deal of trouble. Senator. On the other hand, there is a great deal in what you state in keeping them in obedience to the law and not inviting them to disobey the law, with some days of grace within which to come in without any special criticism. By Senator Foley: Q. Commissioner, what do you say about the suggestion of a small money penalty for each day of the violation of the order to be summarily imposed on the corporation, the same as our Tene- ment-House Law, rather than the larger penalty? A. I think that the penalty is so large for a series of days that the courts are not at all apt to enforce it and I would think your suggestion was a wise one. Q. Would you put in a provision to permit any aggrieved party to sue for the penalty in personal actions in New York State? You remember the history of the Metropolitan Railway, their being sued over transfers and the fifty-dollar penalty could be collected on every refusal to grant transfer ? Do you think we should go as far as that? A. I should be inclined to say no. I think as the public regulation becomes more effective and better fixed as to its rules it will be found that such a device is not neces- sary. It hardly seems right to give deliberate people the right to 1466 Ihtestigatio>" of Public Seetice CoMMISSIO^•s run up a large bill of fines and then go to court in collecting tliem ; that became a business in tJiis town, and although it did reach the desired result, Senator, it doesn't appeal to me as qtiite right to have ambulance chasers in the State, which no doubt will result. Q. Commissioner, what particular function or duty did jou have charge of while you were on tie Commission '. A. I was engaged a good deal in the amendments to the Eapid Transit Act preliminary to their being used by the comprehensive system, and I also gave a great deal of attention to amendments to the Public Service Commissions Law; outside of that I rather specialized in rapid transit matters. Q. There were not many amendments to the Public Service Commissions Law between 1907 and 1011, were there' A. Yes, I tiink there was quite a number of amendments t43 the Public Service Commissions Law. Q. Strengthening the law I A. Strengthening the law, yes, sir; making it more workable. Q. Was the law strengthened with r^ard to the enforcement of orders; A. Xo. sir; it was very strong. Q. So that in connection with you duties of recommending st^atute amendments did yoti recommend any increase of penalties where the company had failed to submit to the enforcement of the order ? A. Yes. I think that occurred to tts and we suggested an amendment in that regard, and I think there were but two amend- ments made since its original passage. Q. Yoti were on the Commission when the celebrated Whit- redge case went to the Appellate Division I A. Yes. sir. Q. What was your idea about the order in that case l A. The order itself? Q. The whole procedure which resulted in the reversal of it. Do yoti remember that car fender case? A. Xo. Q. I mean whether the order was not sigiied by the Commis- sioners? A. Yes. I remember about that case and I think the case went off on technicalities and I gave considerable attention to it. I was much disappointed in that decision. The work done by the Commission, and especially by Commissioner Maltbie in regard to fenders has been among the best regulatory work of the Commission and has resulted in saving a great many lives; and Final Repoet of Joint Legislative Committee 1467 we were all sorry not to see the courts recognize, at least the power and benefits of the work, to a greater extent. By Colonel Hayward : Q. What do you mean by saying that the courts did not to a great extent recognize at least the powers of the State in this case against Whitredge ? A. I thought at the time that the insistence on technical proof was greater than is frequently insisted upon by the courts in regard to the admission of the order which was pro- duced ; there was no doubt that the order was made but the result was extreme technicalities as to the method of certification. Q. Well, we won't go into that because it is a matter of differ- ence of opinion? A. Well, I confess, Colonel Hayward, that my knowledge is not extremely recent on that point. I was not the sitting Commissioner in that case and that happened a very little time before I went out, and that was I think after my term had expired, and my impressions are only general. Q. I think if you should read the opinion of the Appellate Divi- sion you -would change your mind on that subject possibly. What do you mean when you say it couldn't be beneficial to change the amount of penalty, that it is fixed too high and would be more workable if it were lower ? A. This law now says that there shall be a penalty of $5,000 for each day of default. Q. That is what Judge McCall tells us, that is the maximum ? A. But that is not the maximum so far as the Commission is con- cerned ; the Commission can go to court and let the court say what shall be the maximum, but the Commission itself has no power to collect any penalty except $5,000 a day, and it would seem to me that the Commission should be given some discretion between $1 and $5,000. Q. Where did you get the idea that the Commission must sue for $5,000 ? A. Well, it has been interpreted as being in the words of the law, which you have before you. Q. By a court, by a court decision on that? A. No, Judge Blackmore looked it up and looked at it that way when he was counsel for the Commission. Q. Well, listen to it: " Any railroad corporation or street rail- road corporation which shall violate any provision of this chapter, 1468 Investigation of Public Service Commissions or shall fail to obey, observe and comply with every order made by the Commission * * * shall forfeit to the people of the State of New York a sum not exceeding one thousand dollars — not to exceed the sum of five thousand dollars for each and every oifense," and make each of them continuing, that is, section 56. By Senator Foley. — That is the joker in there, Colonel, to leave to the jury the question of how much the damage shall be. Colonel Hayward. — Well, I am reading from it and it is under this provision of the law that the fine is fixed at the maximum, and it enables the court to assess a lower fine. Do you mean that the Commission could sue under this statute for $500? Senator Foley. — Of course, that is the only statute 1 know of which leaves to the jury the question of the amount of penalty, that is usually left to the court. Chairman Thompson. — The court does have some discretion, but the Public Service Commission doesn't have discretion, the court has and the jury has, and so it is practically a question of the humanity of juries and it is very hard to enforce too drastic penalties. If the penalties are too drastic you will get a verdict of not guilty, and in smaller penalties it would be very un- wise to — Colonel Hayward. — Do you think under this statute you would have to sue for $5,000 ? Senator Thompson. — 'No, it isn't that. Colonel Hayward. — Why can't they sue for $500' under this statute? I think they can, I am frank to say. Chairman Thompson. — Well, there is nothing in the law that gives them that authority. It is a statutory provision and must be construed strictly, the courts require that it be strictly con- strued. But that is something that we don't need to bother over. The Witnesss. — I think it oiight to be arranged the way the Colonel suggests, so that that can be done. Chairman Thompson. — Is there anything further ? Final Kepoet of Joint Legislative Committee 1469 By 'Senator Lawson : Q. Do you recall tliat prior to 1909 while you were a Commis- sioner the Public Service inquired in a number of hear- ings relative to additional stairways on Lexington avenue and Gates avenue and Hakey street and Broadway ? A. In a general way, yes. Q. Do you recall the fact how long those hearings extended over, how long a period of time ? A. I do not recall. I remem- ber distinctly that we got wider stairways in one or more of those stations. Q. Do you recall that the order was afterward modified? A. I do not recall that, Senator. Q. Do you recall that the hearings were reopened by the request of the railroad company and afterwards changed, do you recall that ? A. I do not recall that ; no, sir. Q. Do you know that those additional stairways to be built at those stations have never been built? A. I remember very dis- tinctly that in at least one station that there was a wider one, a wider stairway ordered and the order was complied with, but the others I do not remember. Q. Can you tell us now, not to go back too far, what the reason was for never fully carrying out the original order to have a stair- way at the west end of the Gates Avenue station and a similar one at Halsey Street station ? A. My impression is as I remember it that we pushed constantly for greater stairway space and more stairways in certain crowded stations in that locality, and my remembrance is with such success that the railroad to a consider- able extent agreed to put in stairways there. There might have been some alteration traffic or the crowded traffic that may have justified the Commission in making some alteration after I left the Commission. Q. Well, while you were on the Commission the hearings were reopened, as I understand, according to the record of the Public Service Commission, the hearings were reopened by the request of the B. R. T. without any notification to the complainant, the original complainant, and were prolonged thereafter, and there- after closed and the orders modified. I wondered if you could throw any light on the reason for that? A. I was always quite 1470 Investigation of Public Seevioe Commissions apt to write my reasons for anything where I was the sitting Commissioner, and I shall be a little surprised if I didn't write my reasons and put them in the record at that time; but that is a little difficult after these six years for my mind to cover all the details of those cases. Q. I just simply wanted to know; we have never been able to get any reason why those stairways haven't been built ; the records of the Public Service Commission show that the hearings were extended over a period of years and the orders were modified and changed and that the present status of those stairways at these stations are just as they were with minor exceptions at the time complaint was made. Chairman Thompson. — What is your trouble, are you asking for better service in Brooklyn ? By Senator Poley: Q. You didn't have charge of the B. K. T. case while you were on the Commission ? A. What B. E,. T. cases. Senator ? Q. The service, those thousand complaints that Colonel Hay- ward referred to ? A. I undoubtedly had some of those cases, I remember I had one or two fare cases, and I had a good many service cases, and on the line of the Brooklyn Eailroad I had a series of cases, and I think my remembrance is that we put the road in three times as good shape as it was before we started in on it. Q. Was it especially a matter the orders you had of compliance with the direction of the Commission for improved service? A. Yes. Senator Lawson. — And the road now is part of the B. R. T. By Senator Lawson: Q. Mr. Bassett, while you were a Public Service Commissioner did you find time to practice law ? A. No, sir. Q. You have read the record regarding such happenings, you have heard of such happenings? A. I have been reading the newspapers. Q. But you couldn't find time to do that ? A. No, indeed. I worked vacations, part of the nights, long part of the nights on the riNAL Repoet op Joint Legislative Committee 1471 Public Service Oommission work, and it was a particularly press- ing period, as Senator Cromwell knows. Senator Cromwell : Q. Those were the days of the conferences with the Board of Estimate and Apportionment? A. Yes, sir. By Senator Lawson : Q. It would be your opinion, I presume, that there was suffi- cient for a Public Service Commissioner to do in attending to his duties on that Commission to prevent him from practicing law? A. I think a Commissioner should give all of his time to the work of the Commission, not only when they are having hearings but that he is expected to give all of his time. By Assemblyman Knight: Q. Just one question along the line of my prior questions. Do you think that there should be some time also fixed within which a case should be finally submitted, after the filing of the petition the case should be finally submitted and disposed of and be so fixed by statute j wouldn't that do a great deal toward accomplish- ing one of the prime purposes of this act ? A. In the discussion that Senator Mills carried on it seems to me that the same reasons would apply to that. There are dangers in bringing down the acts of jurisdiction to any given time. Now, take the case of the Municipal Court of this city, it used to be required that judgment should be given I think within thirty days after the trial of the case or the judge would be functus officio; it was one of the great- est nuisances that there was with the trial of cases. But take a big case there are dangers in bringing the acts of jurisdiction down, and what the State wants is to jack up the speed of the work and not overburden the workers. Q. Wasn't the suggestion in this iproposed uniform statute that such a time be fixed and with certain cases provision be made for the Court of Appeals to grant an extension, or some such sugges- tion somewhere in this proposed statute? A. I have heard that suggestion; it is not, however, in the suggested law. Q. What do you say as to the propriety of such a provision? A. No, I wouldn't even go as far as that. I think it must be 14Y2 Investigation of Public Seevice Commissions the intention to get results and get them quick, and it seems to me that time cannot take the place of the intention. Q. Then to go back to the original question, you wouldn't fix any such time within which a case must be finally submitted? A. Well, I wouldn't say any fixed time established, but I should say by all means a year is long enough. Q. For the submission of the case? A. The filing of the petition until its final disposition should be done within one year — ought to be done within a year, and indeed there ought to be sessions three or four times a week in order to get these things through faster. Q. The statute ought to prescribe that ? A. Perhaps ought to. It has been the bane of these things that the evidence has been held along for months, and it has taken a long time to get the matter disposed of. Chairman Thompson. — We will suspend now until 2 o'clock, and that means 2 o'clock sharp. (Recess until 2 o'clock p. m.) AFTER RECESS, THURSDAY, FEBRUARY 25, 1915, 2 p. m. Chairman Thompson. — Does anybody wish to ask any further questions of Mr. Bassett ? If not, the Legislature of the State of New York extends its thanks to Mr. Bassett for coming here. If you have anything further to offer, we will be glad to hear from you, Mr. Bassett. We are very grateful to you for your advice, and we will take just as much of it as we may feel is desirable. Colonel Hayward. — I have been requested by Senator Lawson to ask Mr. Bassett some questions. Chairman Thompson. — All right, Mr. Bassett, if you will just as soon take the stand again. I do want to say to the members of the Committee that we have a certain number of people whom we have got to hear, and this Committee desires to get faith with the community, and we have got to hear these people; and we have Final Report of Joint Legislative Committee 1473 also agreed to give some length of time to people whom we have notified, and who perhaps may desire to ask further questions. For that reason we have got to be careful of our time, and I hope all the members of the Committee will take that into account. Edward M. Bassett, recalled, testified as follows : Direct-examination by Colonel Hayward : Q. The first question is : I wish you would state, if you know, why the Broadway and Lafayette Avenue route, or loop, was abandoned and not built? A. The reason for that is this: The Lafayette Avenue subway was part of a circular line that would go out Lafayette to Broadway and through Broadway and across the Williamsburg bridge to the Center Street loop. It was de- signed when the Tri-Borough routes were being pushed forward and before either of the operating companies had signified a willingness to come in as an operator. The plans were about perfected. I think it might be said that the outline plans were entirely complete. Then the dual system, so called, got on the ways and was pushed to the front involving, as it did, the third tracking of certain elevated routes in Brooklyn, among them the Broadway-Brooklyn route. After that, the Lafayette Avenue subway was omitted. A person at the corner of Lafayette avenue and Broadway, after the blue-prints were put on the ways, would be able to ascend to a Broadway-Brooklyn station and for a five- cent fare across the Williamsburg bridge, go around the Center Street loop and to the spot where we are now sitting, thereby accomplishing the identical thing that he would be able to accom- plish if _ the Lafayette Avenue subway were built. Of course, to go out to Brooklyn Borough Hall could not be done so quickly by rapid transit; but the Lexington Avenue line is nearby, the Myrtle Avenue line not far away, and the trolley cars will make that distance in ten minutes or one-quarter of an hour. The reason, therefore, why the Lafayette Avenue subway was omitted was that it would be an unnecessary expense to the city — that the city would be put to — to duplicate transit conveniences. Q. I have this other question : You know, do you not, that this Broadway and Lafayette Avenue route was unanimously approved by the Board of Estimate and Apportionment as early as January 47 1474 Invksticjation of Public Service Commissions 18, 1907, and tlie membei's of the Rapid Transit Board, before the appointment of the Public Service Commission, requested to enter into a contract for its construction, and that the Public Service Commission, after its appointment, approved of this route to be used in connection with the Center Street loop, and the Rapid Transit Board, before going out of office, had let the contract for building part of the Center Street loop for $10,000,000, and that the Public Service Commission superintended the building of this Center Street loop, and after making thorough investigation of the Broadway and Lafayette Avenue subway loop, approved of the plans, maps, books, modes of contracts and other works inci- dental to the building of the Broadway and Lafayette Avenue subway loop ; and that a release had been secured from many of the abutting property owners, waiving claims against the city for the occupation of the streets for the subway, and that the Public Service Commission published a booklet calling particular atten- tion to the Tri-Borough subway loop with a map which included the Broadway and Lafayette Avenue subway; that bids were re- ceived for the construction of said Tri-Borough Rapid Transit Railway, including the Broadway and Lafayette Avenue subway, and that a great deal of money was expended in and about these preparations, and that speeches were made by the Public Service Commissioners, and it was said that this Broadway and Lafayette Avenue subway loop would be built, and that this subway loop would have afforded accommodations to nearly 2,000,000 people, where the same was most badly needed and in the most congested and thickly-populated resident portion of Brooklyn, and to ac- commodate the people living in the Seventh, Eleventh, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nine- teenth, Twentieth, Twenty-first, Twenty-third, Twenty-fifth, Twenty-sixth, Twenty-seventh and Twenty-eighth wards of the Borough of Brooklyn, and the East New York, Queens, and Ridgewood Heights section and the Oreenpoint section, where more manufacturing plants exist than in any spot of 'Greater New York, and where the wage-earners employed in these factories greatly need additional transportation facilities? A. In general, that is quite accurate. Q. Why, then, was this Broadway and Lafayette Avenue route of the subway abandoned and other subways built in sparsely- Final Eepoet of Joint Legislative Committee 1475 settled sections of BTooklyn and The Bronx to accommodate less people and bring less returns by way of patronage ? A. Because every person tbat lived in the belt, in general, that is there de- scribed will be able to have a rapid transit ride at five cents to Manhatt-an, and not only to Manhattan but up in Manhattan to either Fifty-ninth street or farther. Q. Why is it that all the other parts of the dual system of the subway are progressing with the exception of the Eastern District route ? A. Well, that is all a matter that has come up since I was on the Commission. In my opinion, the Eastern District route is perhaps the most necessary route of the manufacturing side to let up on the congestion. Senator Foley. — Much obliged, Mr. Bassett. Chairman Thompson. — Any other question ? Colonel Hayward. — No. Chairman Thompson. — Thank you, Mr. Bassett. Feedeeick W. Whiteidge, called as a witness, testified as follows : Colonel Hayward. — Mr. Chairman, we have not administered the oath to any of these witnesses. Do you think it is necessary ? Chairman Thompson. — No. I wrote you a letter, Mr. Whit- ridge ? The Witness. — I got it yesterday afternoon. By Chairman Thompson: Q. I wrote you a letter, which simply asked for your thoughts, and we do not think it is necessary to swear you as to your thoughts in this matter, and unless you see some cause for it, why we do not. A. As you have given me so short a time for any prepara- tion, Mr. Chairman, you will have a talk from memory about what advice you want. I think I could get at that better by briefly stating to you my experience with this Commission. The law which as originally passed was for four main purposes, desirable in themselves and perfectly simple. They were, first, to prevent the watering of securities; second, to provide an adequate service; 1476 Investigatiu.\ of Public Service Commissions third, to see that complaints should be answered, and fourth, that there might be prescribed a uniform system of accounts. Those ■were the purposes of the law. In the enforcement of this law, the Commission appointed by Governor Hughes made the law ridiculous. The Commission which has succeeded that I have nothing to say about so far as Third avenue is concerned except that they have been courteous and sensible. The original Com- mission, as I say, made the law ridiculous, in the first place, by undertaking to do a vast number of things which the law did not call for and did not, prescribe and did not authorize. They had given to them by that statute very large powers in making orders and so on, and it always seemed to me that the original Commis- sion looked upon those powers as playthings. They were like a boy with a great deal of power, to whom somebody has given a pistol, and who was so pleased with the noise of this weapon that he fired it off as rapidly as it could be loaded in every possible direction. (Laughter.) There were no end of unnecessary orders. When this Commission was organized, the properties here were in the hands of receivers of the Federal courts, who were the public servants, like themselves; not as intelligent, per- haps, but at all events zealous in the endeavor to do their duty. Within five weeks after I took the Third Avenue Railroad — it was handed to me as a mere shell, without anything but a few cars - — I began to receive orders from this Commission directing me to turn out six cars a day or six cars a week, or do various other things Avhich were absolutely impossible to do. I asked the Com- mission to come and look at my shops and see for themselves. I never could get any one of them to look at them. Those orders were not obeyed because it was not possible to obey them. But they became so infatuated with the pleasure of issuing these orders that, in three cases I know, the receivers of the Metropolitan let it be known that they intended to take a certain action, and. the Commission called them up and said : " Do not do that until we make an order." The general theory was that if an order was is- sued, all kinds of things happened because of the order. They came to believe that anything which happened after an order had been made was in direct consequence of that order. Sometimes these orders were violated. One of the orders is being violated every Final Eepoet of Joint Legislative Committee 1477 day now. It was made six years ago, and it will continue to be violated as long as cars are run in this city. By Colonel Hayward : Q. What is that order that you refer to ? A. That is the order with respect to service, I think the length of runs, something like this : " Ordered, that everyone of these companies shall, during every fifteen minutes of the day, iprovide seats for 10 per cent, excess of passengers carried and offering to be carried." That excludes the weather, it excludes clouds, it excludes all kinds of things which affect the people. I tried to talk with the Commis- sion about these things at one time. There was one particularly glaring case in connection with that order. There used to be a ballfield at 162d street and Broadway, and when the games were over, people came out there. A great crowd of people came out at once. In order to accommodate that crowd I got permission to lay a track; on one occasion I had 127 cars waiting to take care of the crowd, and when they came put, the whole 25,000 people tried to take the first car; and I ipointed out to the Commission that that was a thing which could not be followed and that it was foolish to make an order about. It was foolish, and very foolish ; and if they made an order and pasted it on the back of every man who came out, it would not have made any difference. In connec- tion with that order, they started a system and used to send me blue-prints containing long statements, which were computed by somebody, whose name was given ; which were observed by some- body else and were checked by some other person ; these blue-prints purporting to contain a statement of the number of passengers which were seen to stand in the cars at a certain place during fifteen-minute intervals. I pointed out to them the absurdity of any such computation. The observations were made while the cars were in motion, and, as I said, no man has ever lived except gome Frenchman, who could observe things which were moved rapidly in front of him, and however that may be true in the broad daylight, that your computer and checker and observer may get some results, it is quite impossible that it can be done after dark, and still more impossible while your observer is standing in the doorway after dark talking with some young woman, or when he has retreated, on a hot July day, to the shade of a fence 150' feet 1478 Investigation of Public Sekvice Commissions away. Those things, I say, finally became so exasperating that I called a detective agency and had the observers observed, and the results were ridiculous, and were so reported to the Commission to the great wrath of Mr. Willcox, who said that I had insulted the State of New York. I said that these gentlemen were blamed for nothing but leading .comparatively leisurely lives, which my re- ports show. That is one instance of the. order I speak of. They rained upon me for the first few weeks. Here is the first order I received after I had been in this place five weeks. I had been in office but a few weeks when I received this notice that all cars should receive a thorough inspection regarding car bodies, electric wiring, trucks, and that said cars be overhauled and prepared so that they should be in a first-class operating and substantially new condition, poles, car bodies, field coils, armatures, trucks, brakes, controllers, car wheels, gear wheels, pinions, etc. I had been in this job two weeks. I had a shop from which everything had been removed. I did not attend that hearing, because it was perfectly silly- Chairman Thompson. — There are some of those things I pre- sume you did not know what they meant? A. I did not doubt that, because I knew I knew as much about them as the Commis- sion. Finally, I got to work. We employed the best engineers that could be found, and I got- up the kind of a car that seemed to be suitable for our purposes. There was a rain of orders com- pelling me to do this and that and the other thing before I had any money, but finally I did make up my mind to get a car and we ordered a lot of them. Before that, the Commission had made an order, or request, that every purchase to be made by any one of these traction companies should first be submitted, with plans and specifications, to the Commission ; and I went down personally to see the Commission, and I said that that would not do ; that it was a pretty how-d'ye-do when they would tell we what I was going to buy. They did not attempt to do that in that case, but changed it and permitted plans and specifications to be filed after the things were bought instead of before. Anybody with com- mon sense would have known that beforehand. These plans were filed, and after a few months I received a long report saying that the Commission has disapproved of those cars. They have now Final Repokt of Joint Legislative Committee 1479 become almost the standard car in the United States. I replied that they would go into service the 1st of January. They went into service the 1st of January and they are still in service. That is one instance. Then the 'Commission attempted a whole lot of notions. 'Someone in this Commission got this germ of valuation in his head. This property was in process of reorganization. Whatever value it might have, it was absolutely of no value in the course of reorganization; but to my amazement, I found that a large force of engineers were brought here from Chicago and some of them were moved in one of my buildings,, with a lot of furniture, for valuing my property. I ordered them into the street. The consequence of that delusion, however, has run through the work of the Commission from that time down to now. You take the Fifty-ninth Street road, for instance. I bought the Fifty-ninth Street route twenty-three months ago. I paid for that road $2,400,000 in money, and when it came up to the capi- talization of that road, Mr. Maltbie, who has succeeded Mr. Will- cox in these matters, said that the value of the property would not justify the issue of more than a million and a half of securities. I have only to say to you that we got that altered and they author- ized the issue of $2,100,000 of securities, and in the last twelve months I have earned 5.9 per cent., after having laid aside for depreciation. That shows the, judgment of that Commission. After the Third Avenue was completed, there were two plans sub- mitted to this Commission. They were rejected. I went and said: " If that one will not do, what do you want ? " They would not tell me. Another plan was made up and it was rejected in an opinion by Commissioner Maltbie of no less than seventy closely- written pages. Chairman Thompson. — How many years did it take him to get that up ? A. Oh, he only took a few months to do that. I have forgotten how many; but it was an interesting thing to me, be- cause I found that John Marshall had never entered an opinion of half that length, and that the Supreme Court of the United States had decided the Legal Tender, Standard Oil, and Tobacco cases in opinions of considerably less than that length; and when they got to the Court of Appeals with that opinion, nobody men- tioned it. And I want to say — this is not strictly germane to 1480 Investigation of Public Seevioe Commissions this matter — that the printing of that opinion cost the people of the State more than all the joy rides that the Commissioners ever had. Then they took up the question of smell. Somebody made a smell somewhere and they proceeded to have it stopped. There was some yard or somehody up there who did that, and they usurped the power of the Board of Health. They have been very much agitated about things in my case, and the main difficulty with them has been that they seem to think that the collection of statistics is of great value, and in all of their work apparently there is no earthly object except the collection of statistics; and it reminds me of nothing more accurate than the statement of the German : " Here is to the pure mathematics, the only human science which is totally inapplicable to any human purpose." Then the doctor of philosophy, whose business it is to prescribe the form of accounts. I am called upon to make a monthly statement of that sort (indicating), a quarterly statement of that sort (indi- cating), and an annual statement of that sort (indicating). I will leave those with you, because they are curious, and nothing like it has ever happened in the business of the world since the begin- ning of time. 'Chairman Thompson. — The stenographer will take them for the record. (Form of statement for Annual Report received in evi- dence and marked Exhibit No. 22 of this date. This form is copied in the record. See index.) (Form of statement for Quarterly Report received in evi- dence and marked Exhibit No. 23 of this date. This form is copied in the record. See index.) (Form of Monthly Report received in evidence and marked Exhibit No. 24 of this date. This form is copied in the record. See index.) (Report of Third Avenue Railway Company — report of the President — for the year ending December 31, 1912, dated January 1, 1913, received in evidence and marked Exhibit No. 25 of this date. This report is copied in the record. See index.) A. I do not want you to go to the expense of printing it, but you will see what we had to do. After these reports are made. Final Report of Joint Legislative Committee 1481 they are scrutinized. After six montlis, these reports having been filed, I have this quantity of questions from the Commission ask- ing about them. (Indicating.) In many cases I not only have my own force and an auditor, but I employ an outside force of accountants, and those reports are made in accordance with their advice. Here are pages and pages and pages of questions asked after six months about the reports, and the reason, my auditor says, they were not answered satisfactorily is because no one on earth knows what the questions mean. Chairman Thompson. — Do you mean to include the Commis- ion in that ? A. I include the Commission in that. They organ- ize those things in the beginning, with this Board, and some gentle- man as secretary, and I do not know how many more people have the right to sign in the name of the Commission and write letters in the name of the Commission and make orders in the name of the Commission; and I think if you asked any particular Com- missioner, he would say: " I do not know anything about it." Chairman Thompson. — Do you know the doctor of philisophy ? A. I have never seen him, but his name is Weber, and from all accounts he seems to be a curiously inefficient person. I had one little experience with him. We were interested in Brooklyn in a railroad company, to which we had made large advances, and wanted those advances repaid and asked that the stock should be issued. We went to him ten months ago, or at least some long time ago, and it took him ten months to decide. The matter had been referred to him as to whether this forty thousand dollars' worth of stock could or could not be issued ; and if the rest of the business is done in that same way, there is no use of discussing whether a part of it should not be removed from the Commission. I have that in mind in respect to the subways, where contractors are employed at large sums of money, and it is necessary that prompt action should be given, and judging from this experience, I haven't any doubt about it. I am speaking only from my ex- perience in the Third Avenue matter. This business of valuation also affected the minds of these people so much that they used to write opinions. They had a passion for writing opinions, and in this connection I recall the words of the Colonial judge. Judge Mansfield, who said : " Bender your decision, because they must 1482 Investigation of Public Service Commissions be right ; but do not write opinions, because the most of them will be wrong." But they never took heed of that counsel. In the course of these opinions they essayed to say — the Third Avenue Railway matter had been passed upon by the Court of Appeals, and they were angry because this seventy pages of learning from Maltbie never got a look-in, and these bonds were sold at a dis- count of $16,000,000. The property was capitalized at several hundreds of thousands of dollars less than it was worth. That went on imtil finally I called the attention of the Commission to the fact that, while I did not care what they thought, that the people who held securities were very nervous about it, and there was a section in the Penal Code that said that a man circulating false statements was guilty of a misdemeanor, and when I called that to their attention. Brother Maltbie shut up. I want to say, in the first place, that the judicial functions of this tribunal should be taken away from them. They have demonstrated that they are unfit to discharge any judicial functions whatever, aside from the general doctrine that a man may not be a judge of his own cause, and Lord Cook said, 200 years ago, that, if a Judge could hear a case in his own cause, that would not be law. Their own counsel advised them, standing up and talking to them on the bench, and they deciding the question. That is not judicial. It has not the first element either judicial, equality nor of common fairness, and I would deprive this Commission of the exercise of any judicial functions whatsoever. Some of them, it may be emphasized, have curious notions about what a judicial function is. After these hearings and orders I speak of, Mr. ilaltbie went out West some- where and delivered a long and solemn address on the question of abolishing any judicial review of any order of any such Commis- sion; that is, the members of this Commission should have full liberty to exercise all their powers and no man should have access to any Court for a review of it. That was delivered before the Economic Club of Chicago on March 1, 1912, and is entitled: " The Judicial Review of Public Regulation Backwards." It is very much along the line of his testimony here the other day — if it is correctly reported — that in strengthening the Commission it should be provided that wherever the capital of a corporation had been depleted, the Commission should have power to have it re- stored. Whether you are going to restore depleted capital by an Final Eepqrt of Joint Legislative Committee 1483 order, lie did not say ; and any other way of restoring a depleted capital, I think he did not mention. I should abolish that judicial function of the Commission absolutely, and I should take away the power of the Commission to construct — the subway I mean particularly — the subways are important. There is a great deal of capital locked up there, and I am certain that the job is not being done right on their side, although I know nothing about it to my own knowledge. Why not get Colonel Goethals to build it ? Some years ago, before the subway was constructed, I looked at the force which they had employed, and there were at that time 347 engineers on their pay-roll. At the same time. Colonel Goethals, on the Panama Canal, bad a total of 244, including rodmen. Chairman Thompson. — Do you think it would help to put a colonel in charge of the affairs ? A. They would get the subway constructed in half the time, at less expense, with that particular Colonel. I am not giving any suggestions about the whole race of colonels. Chairman Thompson. — I might explain for your benefit that we have a colonel here in charge of our department. A. You had better discharge him and get another. He should be our counsel. I think your counsel is a very intelligent fellow, although I judge from some of your questions, that he has an undue belief in the efficacy of orders. 'Colonel Hayward. — I have a belief in not issuing an order or else enforcing it after it was issued. A. I agree with you there, and in that connection I want to say this one thing, because this has been mentioned as a case where the Commission might make some order. Somebody made a complaint about cross-over on Third avenue. A new cross-over was ordered, and it was received only two weeks ago, and as soon as the frost gets out of the ground it will be laid. Chairman Thompson. — Isn't it laid yet ? A. No. you cannot lay it until the frost is out of the ground. By Colonel Hayward: Q. I do not know how familiar you are with that record, but the examination of the correspondence and the record itself shows 1484 Investigation of Public Service CosisassiONS that perhaps there Tvas no need of a cross-over there at all, and the relief originally asked for by the complainant was entirely sep- arate and apart from the installation of a new cross-over, and was simply the removal of the spring in the end of the switch, which your engineers said could be done immediately ? A. It was done immediately. Q. Well, the record does not show that. A. "Well, the record is incorrect, because it was done immediately. Q. We have nothing but the record to go on. A. Well, now you have something. I made particular inquiry at that time, and I pretend to be a zealous public servant, and no man has ever made a complaint to me without I look it up. Xot only did we take out that spring, but we have ordered a new cross-over, which we have only just got. Xow, there is one other thing that should be done in amending the law. I do not know whether it is in the Public Service Commissions Law, but it is in the Stock Corpora- tion Law : Under the law of this State, you may sell bonds at a discount, but you may not sell stock at a discount ; and that is a mistake. I think anybody with any business ability will teU you that is an error, and causes companies to mount up their indebted- ness to a dangerous degree, and in some cases it would be im- possible to get the money from the sale of the stock without in- creasing the fixed charges of the company. Chairman Thompson. — Tour idea is to amend the law so that stock could be issued at less than par ? A. Yes, because the bonds and stock are not compulsory. Some people think so, but they are not; and if you can get $1,000,000' by selling a lot of stock at ninety, you are a great deal better off than if you have to sell a million dollars' worth of bonds at eighty or ninety. That, I do not think, needs any explanation. It is obvious. Then, in any further change of the law, I should add to the functions of this Commission, if this Commission is to be returned after it has been thoroughly fumigated and aired, Westchester and part of Long Island. We have a hearing next week as to part of the Yonkers Eoad. and I do not know whether the Commission will agree, but Dr. Weber wrote me a letter and said: '"You have failed to credit the Yonkers rental. This is another way in which you failed to show the character of the business vou do." I said that Final Repoet of Joint Legislative Comjiittee 1485 the reason I did not credit myself with that rental was because I did not get it. He said : " The receiver of the Yonkers Road charges you with it." I said: "When he charges himself with something he did not pay, or that I failed to receive, is something I do not know." I never got an answer to that. Those are my general views about this thing. As I say, they are rather at random, because I had no time since yesterday afternoon to pre- pare any formal statement ; but if there is anything else you want of it, I shall be glad to give it. Maltbie referred to the necessity of giving the Commission power to fix depreciation. After this decision was rendered in the Court of Appeals, this Commission made an order, directing this company over which I preside to lay aside a certain amount of money as a depreciation fund, and second, to lay aside a further amount of money as amortization of bonds, to make good the figure at which they were issued under the decision of the Court of Appeals ; and I had some rather sharp correspondence with him in respect to that, that they had no au- thority to make that order, and I asked them to consult with my counsel if they wanted to test it, and if they kept it open for a few months and sued me for penalties, they would be subjected to further humiliation; and I gave them some further views on de- preciation, and this is contained in the report which I hand you. They know nothing about depreciation. Depreciation depends on the way the thing was done. Colonel, I think I have run down. By Colonel Hay ward: Q. Just what, Mr. Whitridge, in your opinion, should be the powers of regulation given to this Commission if we are going to have a Commission at all? How far do you think the powers should go ? A. I think the powers of the Commission should go as far as may be confined to giving the utmost publicity. Nobody can stand publicity who is not straight, even a Commissioner. It is quite evident from the litigation you have seen and the record in here that the Commission we have had so far is not to be trusted with the power of punishment. The Commission can accomplish a lot by publicity, and they will cut down the expose, and if you turn the completion of the subway over to Colonel Goethals and say that this 'Commission cannot spend more than $300,000 or $400,000 a year — which I will guarantee the work can be done 1486 Investigation of Public Service Commissions for — then you have got a working body which will do all that the law requires, and if you find somebody in half a million who is recalcitrant, who does not heed publicity, then you have got to have power to ask for a compulsory order to remove him; but I would not give this Commission the power to issue a compulsory order, because the way in which they have exercised that power in my case I believe to be a scandal, and in one case I think it was malicious. This was the fender case, the life-saving apparatus. I came back here one autumn and gave an order to a concern for a sufiicient number of wheel guards to equip the whole of my cars. That was November, sometime in the autumn. Along in Febru- ary, the Commission made an order directing everybody to have the same facilities, and I went ahead. They send me an order. I said : "I do not suppose that applies to me because I have already done the thing." They said : " Yes, it did apply to me." It appears that some of my cars had got out without this fender, two or three of them, and a man had been killed, and three or four months after that, without any warning, without any notice, they brought an action against me for $5,0i00 for 160 odd days, amount- ing to eight hundred and sixty odd thousand dollars; and, of course, the order had been given outside of them, and as I had done everything I could, and as it was a pure accident and had happened through a fire, that case resulted in their being kicked down the steps of every court house in the State. Mr. Willcox made a speech about the way he was treated. He was up for contempt and got off by saying he had forgotten his manuscript or left it in the bar down there. I think he was not punished. The Court accepted his story. Chairman Thompson. — Anything further, Colonel ? Colonel Hay ward. — I think not. A. The detail which this Commission gets up is marvelous. I will show you the questions they ask every six months. Here are 628 questions, or instances, which they show me of repairs to the tracks which are necessary, being repairs which, I suppose, in the case of the whole 628 would not average $6 apiece. Of course, that is a pure waste of time. Any corporation that is alive would take up those things and at- tend to them, and the idea of having a force of people going around Final Kepoet of Joint Legislative Committee 1487 making investigations of that character, it seems to me to be very foolish ; but these questions are made up on an impossible standard. Chairman Thompson. — Does any member of the Committee want to ask Mr. Whitridge any questions. By Assemblyman Knight: Q. Xow, if you take away the judicial functions of the Com- mission and also take away the subway construction work, there would not be a great deal left to be done by the Commission, would there ^ A. There would be enough left to occupy two or three active men continuously if they would attend to their business. Q. You think, then, that three would be enough? A. Plenty, and put a financial limit on them. The tendency is, as soon as a man gets into office, he begins to build up a machine, and some philosopher tells him it is necessary to collect statistics. If you can do away with nine-tenths of their statistics and get them to confine themselves to their business, you will accomplish a great work. Q. I understand you advocate the abolition of the authority in the Commission to promulgate any order? A. I would not go quite so far as that, because I have not had time to think about it. It is conceivable where cases might arise where an order ought to be issued. I should prefer to have that made by the Court. Q. That is as I understood you. A. Yes, but I should recom- mend not allowing these gentlemen to make an order on their own motion. They act as grand jury, prosecuting attorney and judge, all three. Q. You mean, then, "that in the case of controverting matter, that the application would have to be made through a Court ? A. I think so. I would have them make a report about it and then let the Court act. By Senator Foley : Q. I -would like to ask you how many proceedings you have taken to review the orders of the Commission ? A. Only one. The only proceedings I took to review the action of the Commission was in the Third Avenue Reorganization case, and that was really not taken by me, but by the Committee. The way they brought that up was to file a report, and it came out in the trial of that 1488 Ihvestigation of Public Sekvice Commissions •action, and they withdrew. The other was for $70,000 penalty in having begun the construction of the Fort George Loop. Fort George was a great place of resort. It was disorderly, and the city was anxious to have us make a loop and carry it around, and granted a permit to begin this work. They called me up presently and said that I had opened the street without their authority. I said that I did not know I had to have their authority. I asked for a permit and they were very much outraged at that. I had the permit of the Board of Estimate and the Board of Aldermen, and said that if there was any other permit necessary to bring it along. They brought an action against me for $75,000. They first stopped the work. That was brought to trial and the jury gave me a verdict of $1, and the foreman said : " We gave you a ver- dict, Mr. Whitridge, because we thought you would rather have that than that they should have a right to appeal." The third was this $868,000', for failing to do something which I had done, and that was laughed out of Court, practically laughed out of the Court, and the other cases they brought against me I do not think they took counsel on. In the other cases, I do not believe that the counsel of the Commission ever advised the bringing of those cases against me, and I should like to know whether that was the fact or not. By Senator Lawson: Q. They were all brought previous to 1912? A. Yes, sir. Q. So the law had been pretty well established by that time? A. Yes, sir. By Chairman Thompson: Q. What do you think of the qualifications of that juror to be- come a Public Service Commissioner? A. I have forgotten his name, but it seems to me he had more sense than any Public Service Commissioner I have seen. He struck me as being a pretty level-headed fellow. Q. I always like a jury to bring a verdict in in my favor. A. This is of great importance, because the Commission has the bill framed up in their office as the only thing they ever got by litiga- tion, or they had it there a while ago. Q. Mr. Whitridge, I assume you think that if the Public Ser- vice Commission ought to be continued that we ought to exercise Final Eepoet oi Joint Legislative Committee 1489 that governmental function ? A. Well, I am sorry to say that I do think so. You must remember ^that the condition of things in this country had resulted in a scandalous condition in respect to a great many of these things. The people who managed these prop- erties are now dead and it is not for me to say anything about them, but at all events, the result was disastrous and disgrace and ruin, and while I think that, with honest men in charge of these properties, no such danger is eminent or at all likely, the experi- ence of the last few years shows, I think, that the government should exercise some sort of supervision over these matters, al- though there has been all through this country, I think, within the last ten years, a great ethical revival. Q. You say " supervision." Do you mean " regulation," too ? A. I mean regulation or supervision, or something or other which will enable the public to get the facts straight before them. Q. It would be hard to regulate, would it not, Mr. Whitridge, without having power to make orders and have those orders en- forced? A. I do not think it would. If I was a Public Service Commissioner and wanted some information out of a corporation, I think I would get it. Q. How would go about it? You say we have got to have a Public Service Commission, or ought to have one; now, assuming you, with your experience, were made a Public Service Commis- sioner, how would you go about it -to regulate this condition? A. I would not do anything at all until some complaint was made, or some citizen complained, or I had, through my inspectors, received something' to indicate it was wrong. Then I would look for the party responsible for it and say: " That is wrong. What is the fact about it ? It has got to be remedied." Q. Supposing he did not pay any attention to it? A. I would say : " We will have a hearing and have all the newspapers in." I cannot conceive of a case where an honest examination presented to the whole public, through the press, would not be effective. I may be quite wrong, but I am a firm believer in the power of pub- lic opinion. I am a great believer in the power of public opinion. Q. Well, supposing the people you are trying to reach are the people who control the public opinion ? A. Nobody controls pub- lic opinion. That is a delusion which I have frequently heard preached, and people say that. Well, I cannot say how many 1490 Investigation of Public Service Commissions times during the past three months newspapers have appealed to me for contributions, and I never have given five cents to any newspapers for publicity, and I get all the publicity I want. (Laughter). By Assemblyman Kincaid: Q. Is it fair to say, Mr. Whitridge, that during the time the Public Service Law has been in effect, there has been no- new rail- road propositions in the State outside of New York City ? A. I do not know. I do not know what is happening outside of the city. I know what is happening in this city. There are some things very curious which are happening here. The change in the character of property, if it continues as in the case of my system, will result, in a number of years, in the absolute abandonment of my property, because it would not pay. Ferries have shifted and bridges have come in, and properties which used to be very highly thought of will presently be in a shape where they will have to be scrapped and the investment will have to be wiped off. By Chairman Thompson: Q. Mr. Whitridge, I was interested in your suggestion that the engineering force necessary to be employed by the Public Service Commission, or whoever has charge of the construction of the sub- ways would be able to carry on the work on a salary list of $300,- 000 or $400,000' a year. Did I understand you correctly? A. No, I did not indicate, when I said $300,000 or $400,000, the Public Service Commission in that way. I was specifying the Public Service Commission engaged as a Public Service Commis- sion alone and not as a constructor of subway. I do not know how many engineers are necessary in the construction of subways. I know this: That if you go to Mr. Barclay Parsons' office and look at a diagram of engineers there, you will find when he went out of ofiice the line that represented engineers went up like that (indicating), and is going up yet. Q. Have you got any idea on the subject, that you would be willing to express, regarding the necessity for the increase ? A. I believe it to be perfectly ridiculous — not that I know anything about it — but I know the tendency of a Board of this kind is to increase the number of inspectors. As I told you, through my de- Final Eepoet of Joint Legislative Committee 1491 tectives, I found a lot of those instructors were leading leisurely lives. Q. That is the general custom in 'New York, is it not? A. They try to live as leisurely a life as they can, but if you come down here and live with us, you will- get some new views on that subject. That is the trouble with the Public Service Commission. They got a lot of people who have never been engaged in earning their own living, and when they got those choice salaries, it went to their head. Q. Have you got any idea what it costs for the engineering force on the Panama Canal? A. Colonel Goethals had on the Panama Canal 244 people. At the same time, they had up here 347 engi- neers. That was before there was any subway construction at all. What they have now, I do not know. Q. Now they have over 2,€00, have they not ? A. I think that would be a moderate estimate, and I do not believe they destroy much grey matter. By Senator Lawson: Q. Mr. Whitridge, your cars run to Brooklyn ? A. They run across the Williamsburg Bridge and Queensborough Bridge. Q. Can you tell us anything about the transit conditions^over there ? A. I know nothing about them except that it has been a m.atter of curiosity with me why the Queens County Koad did not pay- , ^ Q. Do any of the roads pay over there ? A. I suppose they do. They pay dividends. Chairman Thompson.— Is that all. Any other questions ? Well, on behalf of the Legislature and the Committee, I wish to thank you. We are much obliged to you. The Witness. — You must excuse my informality. I only got your letter last night and I have no time to prepare a statement. Chairman Thompson.— If there is anything else that occurs to you, put it in a letter, and we will be glad to have it. 1492 Investigation of Public Service Commissions John Pueeoy Mitchel, called as a witness and examined by Colonel Hayward, testified as follows : Q. Mr. Mayor, you have a copy of that letter which the Chair- man of the Legislative Committee sent out outlining somewhat the scope of inquiry ? A. I did", yes. Q. With regard to amendments in the law ? A. Yes. Q. I shall not attempt to interrogate you about those things, and the other witnesses who preceded you have gone on and made such recommendations as they did without being interrogated par- ticularly, and I thought perhaps you would prefer to follow that plan ? A. Do you prefer to have me follow that plan ? Q. Yes, I think so. A. Perhaps I better follow the order of the letter, then. One of the questions is " Whether the Public Service Commissions Law as enacted in 1907 and since amended to date, providing for two commissions in two districts of the State has proved to be a satisfactory organization of the Commis- sion and whether the Public Service Law has proved substantial and sufficient legislation on the subject?" I should answer that question, yes. In my judgment two commissions are both desir- able and necessary. I do not believe that commissioners from the upper part of the State would have that familiarity and under- standing of New York City problems to enable them to deal ade- quately with the local situation; nor do I feel that a New York City man would be as well able to deal with the problems of the upper part of the State drawn from this portion of the State. As to amendments of the law — Q. Yes, we have been having suggestions here and one and per- haps more witnesses have suggested a commission of seven mem- bers, three in this District, three from the District outside Greater New York within the State, with a chairman-.at-large, if that is the correct term, as a connecting link between the two commis- sions, each to exercise jurisdiction over its own particular terri- tory and joint jurisdiction on State-wide questions ? A. I am not quite sure I understand what joint jurisdiction would be, and without that I doubt if I can answer that question. I think I would prefer say a commission of five dealing with the local situ- ation, I think that is large enough to require all of the time every day of five men, and I am sure the situation in the upper part of Final Eepoet of Joint Legislative Committee 1493 the State is big enough to require like service ; but whether a con- necting link such .as the one you state would be advisable I shouldn't be prepared to say. It strikes me the plan is a good plan, but it is a new proposition to me. Chairman Thompson. — The jurisdiction contemplated for the two commissions would be jurisdiction of the trunk lines, and telephones and public service matters that affect the whole terri- tory of the whole State. A. Well, the telephone situation was the one that suggested itself to my mind when the question was put. In settling the telephone question you would have members of the Public Service Commission, all who were to participate in the settlement of the questions and I should say at first blush it would strike me as a good plan; but I should like to consider it rather carefully in the details of the plan before I express final judgment on it. On amendments of the law, I shall not undertake to sug- gest anything ; it seems to me that the law is adequate as it is and it is a case of administration; given a Commission thoroughly efficient in personnel from the public point of view, addressing itself day in and day out to the solutions of its problems vigor- ously, without influence of any considerations except the public advantage I believe the law is effective as it is ; but I have never had occasion to make a careful study of it. Perhaps I might state in that connection that to have the administration as effective and as desirable we established early in the present administration a Bureau of Franchises in the office of the Corporation Counsel in order that citizens who desired to have matters of public concern pressed before the Public Service Commission might have the services of such bureau and its representatives to present more effectively than they could through private means at their own dis- posal, matters of complaint or other causes that they might care to bring before or press before the Public Service Commission ; that bureau is in existence and is available to the citizenship. Q. Have you had occasion to use it ? A. We have, yes at times ; I think there has been little, if any use of it by citizens or citi- zens' organizations. Q. Is that generally known? A. I don't think it is; but an- nouncement has been made several times, but not very widely published. 1494 Investigation of Public Seevice Commissions By Senator Foley: Q. You have had them working on the telephone service? A. Yes, they have been, working on that, Senator. They have worked on several matters before the Public Service Commission and have appeared there numerous times. Your second question is the granting of a possible, concerning a possible, separation of the administrative functions of the Public Service Commission from its regulatory functions ; in other words, the work done by the Rapid Transit Act from the rest of its work. Speaking first from my own point of view, as Mayor, I should not be at all anxious to see the separation of functions made now, and the work of administering these great contracts, the work of constructing new lines, thrown onto the city government now. I feel we are pretty heavily burdened during the present construc- tive stage, the stage of a certain amount of reorganization; the business of the Board of Estimate is very heavy and we are not anxious to take on ourselves new duties, or- new burdens ; but logically speaking, from the point of view 'of home rule, I have always believed, and do now, that ultimately the function of negotiating, planning for the extensions of the rapid transit sys- tem of the city and the work of construction, administering con- tracts ought to be in the local city government. It does seem to me that the best time probably to transfer, if a transfer is to be made, would be when our new charter is adopted ; I hope the new charter will be adopted some time during the life of the present administration. Perhaps if the Legislature were to enact legisla- tion now providing for the transfer at that time, or if legislation is enacted providing for the transfer then that would meet the idea I have expressed. I should suggest that such transfer should go into effect, the time it should go into effect would be about the 1st of January, 1918, namely, at the expiration of the present city administration. If the functions are transferred it would seem to me that there should be this division : that the negotiation of contracts and determination of plans and policy should be in the Board of Estimate alone; that the work of construction and administering of the contracts should be in a department of the city government similar to other departments, other great depart- ments under the jurisdiction of the executive. Final Repoet of Joint Legislative Committee 1495 Q. Perhaps, consolidated, would you say, with some of the present departments which require engineering facilities, etc., that might be possible ? A. No, none of these that occurs to me on a moment's consideration, except possibly the Bridge Department that could be effectively consolidated ; it is possible that that might although there are certain functions discharged by the Bridge De- partment that are not altogether similar to those of administering the Rapid Transit Act. Q. In the m.ain, Mr. Mayor, would you say that after the pres- ent dual subway system is practically completed that would be a better time to consider this transfer than now, be considered more comprehensively than now ? A. You can consider it now I should say but a better time to have it go into effect would be after the plans 'and specifications for the various contracts for construction have been prepared, and the contracts let. If you wait until the completion of the entire dual subway system it would mean con- siderably longer than until the first of January, 1918, in my judg- ment. That will be the time when the construction work can be taken over if such transfer powers were made without any disturb- ance ; I do not mean that consideration of the matter be postponed, I am simply talking of the time of transfer. Q. I mean if action was taken it could be taken much more in- telligently perhaps then than now, don't you think it could ? A. I think we know about as much about it now as we will a year from now. Q. Do you think if you know about this, then the proposed new charter wouldn't be necessary ? A. We won't know as much about the new charter and the things so closely related for one need or another; we won't know as much about the new charter, and the Board of Estimate made provision last year for a charter revision committee, or commission, whose personnel is to be drawn, from the Board of Estimate, the city government and partly from citi- zens, and that Commission has not yet been fully organized; it will certainly not take up the final preparation of any draft form of charter until after the session of the constitutional convention, because the feeling of many of us is that out of that convention should come for the city of New York a measure of home rule which will profoundly affect the charter makers. If that hope is realized and we get that measure of home rule we would go about 1496 Investigation of Public Seevice Commissions charter-making in a different way from what we would if wu didn't have it. Q. I was wondering, you say they are so related, if it would be better to consider them together, that is, the charter and possibly the proposed transfer ? A. I don't think it would make much diiference. Colonel Hayward. I suppose if we were convinced of the first, and our impressions are correct, the Legislature now might provide for the transfer of the function on the first of Jan- uary, 1918. Personally, I would prefer that they should not be transferred before that date. Q. You are speaking of your preferences. You mean you think it would be for the best interests of the State that they be not trans- ferred before that date ? A. I think that it would make little dif- ference whether they are transferred after the contracts have all been let and all the construction work under way prior to the 1st of January or that we wait until the 1st of January for the actual transfer. Q. Is it your opinion that after such transfer had been effected that the department of the city government provided could work more expeditiously under the rapid transit lines to secure rapid transit facilities than the Commission ? A. I think that the ap- pointees of the local administration is as responsive as the local administration is and always should be to public opinion in the city and will be more likely to proceed pretty expeditiously and effectively. Now, the fourth question has already been partly covered, whether the organization and maintenance of the Public Service Commission of the -State has proven itself a proper and satisfac- tory and necessary governmental function of the State, which the State ought to exercise, I should answer decidedly in the affirma- tive, I think it has, and should be maintained. The next part of the question is whether the organization should be maintained in two departments. I have already answered that in the affirmative ; I think it should. And if so, ought there to be any territorial change in the boundaries of the district. I think not. I should prefer that the Commission were confined to the boundaries of the Greater City, and I think it is advisable that the territory of this Commission be confined strictly to the limits of the city. EiNAL Eepoet of Joint Legislative Committee 149Y Chairman Thompson. — What do you say about Long Island, didn't you in answering the question rather assume that the Public Service Commission has administrative authority to construct sub- ways and didn't you rather assume that it was an important part of their work, a very important part of the work, not necessarily the most important ? A. I am not assuming that in answering the question. I am answering your question from the facts as they are to-day. AYe don't know any specific reasons why even after the constructive work -was transferred to the city government, Long Island should be included in the territory of the First Der partment. There might be reasons for it but I can think of none specifically and we wouldn't want them any more than West- chester and I think we better keep within the counties of the city. Q. You don't like Westchester as well as you do Long Island ? A. No, I am not trying to distinguish between them, I much pre- fer to see the territory confined to the Greater City without either. By Senator Lawson: Q. Mr. McAneny said this morning he thought the extra cost would be so slight for those counties it wouldn't materially affect the city, and we also asked him if he thought it would be objec- tionable mandatory legislation ; how would you answer that ? A.. Well, I can only answer as I have already, that I believe that we would do better to confine the First Department to the Greater City. Now, there may be some specific reasons that haven't been drawn to my attention for the inclusion of Long Island, and there may be some for the inclusion of Westchester, I have not heard them. There may be reasons that would overbalance them, but I think it is best to keep the First Department co-terminus with the limits of the city. By Chairman Thompson : Q. The principal, reason that they give for it is that the people of Long Island in order to get to the Capitol of the State and get in touch with the Public Service Commission at Albany that they would have to go to New York City ; that seems to be an objection. A. Well, I doubt it, it wouldn't strike me as being sufficient reason. Chairman Thompson.— Nor me, either, after the last four weeks' experience. 1498 Investigation of Public Service Commissions A. The fifth question is whether in the present administration of the Public Service Commissions Law there is a duplication of functions either between the Public Service Commissions and the city administration? Does that mean to relate to the Eapid Transit Law, that question ? Chairman Thompson. — 'No. A. In the case of the Public Service Commissions Law I don't know ; in the case of the Eapid Transit Law there was a good deal of duplication during the negotiations leading to the adoption of the dual subway contracts, in fact the final policy was always determined here; and that is necessary because wherever on© body has financial control the other has not ; so that there was a good deal of the work duplicated. Q. How about duplication here, isn't that safeguarded? A. I think now we are very rapidly coming to the time, if we haven't arrived, when elective public ofiicials and the City Board of Esti- mate may be entrusted with the discharge of these functions. There is publicity, of course, a very effective check upon their operations. Chairman Thompson. — Accountability ? A. Accountability. Q. Accountability back to the people where they were elected? A. Accountability through publicity and otherwise. By Senator Foley: Q. You think a public service commission ought to be elected? A. 'Ro, as a State commission I think they ought to be appointed. Q. You 'think that would involve direct responsibility to the people ? A. Yes, I know it would, but I think that you get more effective results from keeping the executive functions of the Gov- ernor in the case of commissions. The second part of the ques- tion is, " Between the Public Service Commissions and the pub- lic service corporations." If there is duplication I think there is an effective check that the Public Service Commission maintains on the operation of the public service corporations. By Chairman Thompson: Q. How about statistics ? There was some question about there being railroad statistics and then the Public Service Commission also has statistics on their own account? A. There is statistics and Final Report of Joint Legislative Committee 1499 statistics ; some of them are reliable and some of them are not ; if they came from the staff of the Public Service Commission I should scrutinize them with a great deal of care, and I should test through my own staff the statistics that are given me. Q. You didn't hear, I assume, the last gentleman who preceded you, Mr. Whitridge, as to his idea of statistics ? A. 'No, I hadn't the pleasure of hearing him. Q. I think he said in effect that the Public Service Commission ought to have courage enough to go over and destroy all they had up to date. A. What does he mean, destroy all he had? Q. No, destroy all they had over there. A. Of course I have no knowledge of the accuracy or sufficiency of the statistics of the Public Service Commission, but I have had some experience in the accuracy of corporation, public corporation statistics, and T speak from the point of view of that experience. " Or between the separate districts of the Public Service Commission," I don't know of any. " Between the Public Service 'Commission of the State of New York land the Interstate Commerce Commission of the United States ? " I don't know of any. I don't believe that there is any. The sixth question you ask is with reference to suggested amendments to the Public Service Act in the interest of perfecting the law in consistent or isolated instances which may occur. I can offer no advice to the Committee because I have not made any careful study of the law, and know of no instances of that kind. The first question that is put in this letter is to give an opinion about the personal efficiency of the first public service commission of this department at the present time. I should pre- fer to be excused from expressing such an opinion, except perhaps in the case of one member of the Commission with whom I have come into exceptionally close personal contact and with whose work I have been particularly well acquainted, namely. Commis- sioner Maltbie. If you would like it I have got an opinion on Commissioner Maltbie's work on the Commission, and that is that it has been exceptionally efficient; that he has made a very, un- usually capable public officer; that he has displayed exceptional, ability from a public point of view. His position on the Public Service Commission during the time I have been acquainted with his work has always been in the interests of the city wherever 1500 Investigation of Public Seevice Commissions those interests came in conflict with the interests of the public service corporations or others. By Chairman Thompson : Q. How about the State ? A. How do you mean ? Q. The interests of the State ? A. I know of no conflict of in- terests of the State and I have never known where they did. I have no knowledge of the existence of a conflict' of such interests, and I speak from the standpoint of course of the city's department, they are the same to all intents and purposes. By Oolonel Hayward: Q. There is one question, Mr. Mayor, perhaps you can clear up for us, along the line of the expeditious handling of rapid transit matters in the event that they were under a department of the city government; haven't there been some matters that have been in conflict in the Board of Estimate, the 'bus line, for instance? A. Do you mean the granting of a franchise for a 'bus line? Q. Yes, a 'bus line and such matters, they are pending now? A. They are. Q. Can you tell us about those briefly? A. I cannot give you the dates and I may be wrong in some of the details of my answer; but my recollection is the matter came up on the application either of the Fifth Avenue Coach Line or the new ones for a franchise over some of the streets of the city. It was to all intents and purposes, ^a brand new field and the Board of Estimate deferred it to the Franchise Committee of the Board, to the Franchise Bureau for the purpose of considering and re- porting on the new routes, and for a form of contract. That re- port was rendered and the Franchise Committee if I remember correctly accorded a public hearing or two public hearings upon the application for the franchise and a great many citizens made a great many objections to the form of contract and a great many objections to some of the applicants for a franchise. After those hearings, which were held, roughly, a couple of months ago it was referred back to the Committee on Franchises which has since been considering it. It is a matter of very considerable importance and very considerable intricacy, and it would be fair to say that if they are to be established, the new motor bus lines, Final Repoet of Joint Legislative Committee I'SOl that the time that we most need them is prior to the operation of the new subway facilities; I think that we need them and I am not sure that we need them more than we will after the beginning of the new subway system. Q. 1^0, I am not sure about that, I haven't got the record but simply the report showing that one company filed its petition with the Board December 19, 1912, another one June 2, 1913, the third June 5, 1913, and that the applications were made for nine routes having a total length of 17% miles. Another one October 9, 1913, with a total length of about seventy miles. Those were all filed according to this during the period of the late administration and not during yours ? A. Yes, and this administration has been giv- ing quite constant consideration of the application. Moreover the mileage named there does not measure the extent of the proposi- tion because the Board of Estimate does not propose to grant a fragmentary franchise; it proposes to go through this question in a comprehensive way and when it does adopt a policy it will be one that covers the Borough. Q. Well, it has really been before the Board of Estimate about two years altogether ? A. If I answer your question yes I may be incorrect, because I do not know what disposition was made of those first applications, or whether they continued to have life before the Board. It has been under active consideration about a year. Q. Then, Mr. Mayor, didn't the Board of Estimate at one time under special statutory authority undertake to do something with the New York Central over on the west side of Manhattan Island ? A. It undertook to negotiate with that company under a very in- effective statute which was enacted by the Legislature after a pro- test from the Terminal Committee of the Board of Estimate, of which I was then Chairman. Our Committee pointed out to the Legislature that a mandatory bill would have given us that lever- age upon the railroad company that would enable us to make a settlement satisfactorily favorable to the city. However the Legis- lature gave us the other bill, and we proceeded under it as best we could and after the Terminal Railroad filed its plans, after con- sideration of those plans they were quite unsatisfactory and we proceeded to attempt to negotiate a settlement. The railroad of 1502 Investigation of Public Service Commissions course wouldn't agree to what the city wanted and tlie city could not agree to what the railroad wanted, and a compromise was effected and reported to the Board of Estimate and was considered in a series of public hearings before the Board of Estimate, and it was, as the committee had more or less anticipated, unsatisfac- tory in a number of respects. After that public hearing it was referred back, and that was the time I left the Board of Estimate to go to the Custom House as collector and I don't know what happened following that to the 1st of January, that was in June Q. There was a report filed by your committee? A. Oh, yes, filed with the Board of Estimate. Q. I never saw the report. A. A voluminous report was filed. By Senator Thompson: Q. Is that the attempt by the people of 'New York to get legis- lation to remove the tracks of the Eleventh Avenue, is that it? A. That is only part of it, that is only part of it, Senator. It was a settlement with the ISTew York Central which we have been trying to effect. By Senator Eoley: Q. There was no complaint of the statute? A. Yes, Senator, and we went to the Legislature and asked them to give us a statute, and we protested against the permissive statute and asked for a mandatory bill compelling the railroad company who owned the ground that we might use that leverage and have it for a park and compel a satisfactory settlement, whereas with the permissive bill the railroad company filed its plan with the Board of Estimate and they disagreed with those plans and suggested substitute plans and the railroad company disagreed with the city's substitute plans, and nothing happened; that is, what we wanted didn't happen. By Senator Foley: Q. The railroad didn't disagree with your report ? A. No, not that they rendered. The railroad drew up a report as rendered to the committee and in the light of the public discussion and local criticism it was referred back for reconsideration to the committee, and that very important committee feels that its report did not embody a settlement that ought to be satisfactory to the city. Final Repoet of Joint Legislative Committee 1503 'Chairman Thompson. — What has this got to do with the Public Service Commission of the First District? A. I don't know, I think I better finish my reply to the question. Colonel Hayward. — Mr. Chairman, I don't of course want to go outside of the proper scope of what is pertinent. Go ahead, if you will, Mr. Mayor. Chairman Thompson. — I don't think it is pertinent to go into that branch of the inquiry. The Witness. — Mr. Chairman, I have been asked — Chairman Thompson. — We are investigating the Commission, the Public Service Commission, we are not investigating the city. The Witness. — Mr. Chairman, I should like to answer that question, I have begun an answer and I should like to finish it. Chairman Thompson. — Very well. A. In order to bring this matter up to date. I told you that the matter was referred back to the -committee and when the present administration came into office the matter continued to be in the committee, the new Ter- minal Committee, of which I believe the Comptroller is Chairman, and the President of the Borough of Brooklyn and the President of the Borough of Manhattan are members ; that is the best of my recollection. The Dock Department also took up the active study of it and conducted a series of negotiations with the railroad, and the result is that the views of the Dock Department and the rail- road are not the same and the Dock Department has prepared cer- tain tentative suggestions in the form of plans and maps and its purpose is to place this before the Terminal Board and Board of Estimate which is now considering those negotiations and the preparation of those plans will consume a- very considerable amount of time. They have been before the Terminal Committee of the Board of Estimate I think about one month and they ought to be ready for presentation to the Board of Estimate within a ^ ery short time; meaning by that a limited number of weeks at the most. Q. Would you say, Mr. Mayor, that the relocation of those tracks was to include passenger-carrying facilities, additional fa- 1504 Investigation of Public Seevice Commissions cilities for passenger traffic, wasn't that considered as one of the prime reasons for all this relocation over there? A. Oh, no, not as one of the prime reasons, but I do believe that it will be fore- sight and the part of wisdom for the city to contemplate a pro- vision for facilities for carrying passengers on the west side in the future. It is to be taken into consideration now if the settle- ment is effected, because if it is decided one way it will foreclose the city from the other decision later. The prime purpose in this whole matter was to protect life and property and promote the convenience and comfort of the people of the city on the west side, to protect life by getting the tracks off the streets of the city where they now run and maintain the safety of property, and pro- tect property and promote the convenience and comfort by putting it either under ground and keep the tracks as far as possible out of the highways, to the last degree in the railroad operation on Riverside and Washington Heights. Q. So that those matters have gone on with greater speed and more expeditiously than they moved with the Public Service Com- mission, for instance? A. I think that the Board of Estimate is the logical body to handle matter of that kind in its present or- ganization, and that it has gone on just as expeditiously and prob- ably more satisfactorily, and probably more expeditiously. I be- lieve that the Board of Estimate is the proper body to determine such questions, as to whether or not a railroad shall be permitted to operate over an elevated structure on the west side of the city, and whether or not the railroad shall be compelled on Riverside, shall be compelled or permitted to operate in the open air ; whether or not we should reclaim to the city the expense for a certain amount of land now occupied by the railroad, for park purposes. and whether or not the city should contribute several millions of dollars to secure Washington Park from its destruction by the railroad company by the widening or the building of a roof over the railroad tracks and whether or not the city will establish a park along Inwood Hill, if the railroad should open in that dis- trict. Those are questions that the city must decide, and if the matter had been in the Public Service Commission instead of the Board of Estimate, there would have been an exchange of views and a passage back and forth and no more rapid action probably ; probably much slower action. Final Repokt of Joint Legislative Committee 1505 Chairman Thompson. — Has any gentleman of the Committee any questions ? By Senator Lawson : Q. You were in the Board of Aldermen prior to the consum- mation of the dual subway system ? A. Yes, sir. Q. I have been trying to find out, and perhaps you can tell us, just why that eastern district, the Broadway-Lafayette Avenue subway was abandoned, can you tell me? A. No, I cannot give you now out of my recollection all the reasons that led to the drop- ping of that part of the dual subway system. I was not a member of the Transit Committee, at least the Transit Conference Com- mittee which considered most of those questions. Q. You were a member of the Board of Estimate? A. Yes, but the Transit Conference Committee was the body which con- sidered most of those questions of route. The best of my recollec- tion is it was lack of funds to do any more than we did. Q. All the work was mapped out ? A. As I recollect it, it was. Q. And advertised ? A. My recollection does not go as far as that. Q. And part of the work was started, according to the record. A. Are you referring to the subway which was designed to run up and connect with the Centre Street Loop ? Q. No, the Broadway-Lafayette, No. 9, Contract No. 9 ? A. No, I can't tell you, my recollection is at fault in that matter, I have forgotten. Q. You are familiar with that part of the city of New York ? A. Fairly, I must say I get confused at times in those streets over there. Q. You have been over there at times prior to the date when you were elected and you know that is a largely inhabited section of the city ? A. Yes, that is my recollection. Q. I wanted to ascertain, if possible, whether you knew why it had been abandoned, if you did know, and whether you thought in your opinion it was discrimination against that part of the city ? A. I am quite sure I can answer positively that it was not dis- crimination against that part of the city, because it was not in that spirit that any member of the present board acted on this or any 48 1506 Investigation of Public Service Commissions other matter, but my recollection is entirely at fault as to what those reasons were. Q. Well, as I glean it from one source it was that they wanted the dual subway in the eastern district at Flatbush avenue and they didn't have the money for both and they adopted the Xostrand Avenue line ? A. I don't recollect that. I suppose you are on the saone line with some of them. Chairman Thompson. — You are partial to the eastern district The Witness. — Do you mean the district as such ? Chairman Thompson. — Yes. The Witness. — I might very well be, Senator. Chairman Thompson. — If there is no objection we will certify that they are properly represented in the State Senate, anyhow. The Witness. — You know the city of Xew York has not com- pleted the building of the subways when the dual system as now laid out is finished ? By iSenator Foley: Q. Can you specify the progress of it? A. It seems to me it ought to be done some time in the fall and I know that every effort is made to build it as fast as it can be built ; the Commission has had some difficulties to contend with and I understand it is going to have another, very shortly. Q. Do you think there should be any time limit in the disposi- tion of matters before the Public Service Commission along the suggestions of the model law submitted by the Civic Pederation for a time limit ? A. I think it would be very difficult to fix a fair time limit; there are some matters that are going to require very much more time than others, and some matters that might suffer irretrievably. Chairman Thompson. — A time limit on what, Senator ? Senator Poley. — A time limit on the disposition of the com- plaint. Chairman Thompson. — In rate cases ? Senator Foley. — Every kind of a case. Final Eepobt of Joint Legislative Committee 1507 The Witness. — I have in mind particularly such work as the negotiation of these contracts. Senator Foley: Q. You found great difificulty in the Eleventh avenue situation, and a lot of details to be worked out, and it takes time to work them out? A. It does. By Assemblyman Knight: Q. Mr. Mayor, do you think one year would be long enough for most any complaint ? A. A complaint ? Q. Yes, brought to the attention of the Commission ? A. Well, if I answer your question I will have to answer it without any more detailed knowledge of the situation than anyone else has. I should say generally, yes, I think there may be some complaints which affect the whole conduct of the business of a corporation and involved in the inquiry to any conceivable extent it is a matter of more than a year; perhaps the rate cases with the Commission might have been initiated with a complaint. Q. Don't you think a better way in the interest of reasonable expedition of these matters is to have some time fixed by statute, even though you had to have some provision in it that an extension might be granted by the Court, or some such proceeding? A. You might fix a time limit for a report, a report that would be published through which a check might be maintained upon the operation of the Commission. Q. Do you mean by report an order for submission after a time to the Commission ? A. Well, I think any kind of report with the authority which the Commission has and responsible to the Gov- ernor, where they are required to report annually. Q. You suggested a time limit, for instance, in dealing with a complaint, after a complaint rested before them without action for a certain period, longer than a certain period, would you have a specific report upon the matter explaining the reason for the delay beyond that time ? A. Well, I thought any right disposition or any matter of these complaints even if extended that there should be some time fixed that would be of benefit to the com- munities and the people. You might work out such a thing but you cannot compel effective administration by detailed provisions 1508 Investigation of Public Service Commissions of law of that kind, in my judgment j yOu can compel effective administration by securing a proper personnel. Q. I don't know that I understand you, did I understand that you do not advise a separation of the subway work now from the other duties of the Commission ? A. I do not advise that they be transferred as of this date. Q. Would you advise that the statute provide for the transfer of the subway construction work of the city at some future time ? A. I should say no, until the contracts are let by the city of New York, if the Committee does recommend it. Q. And not undertake to continue the power as now of the Coia- mission ? A. Yes, of course, I C9,n't help but be influenced some- what by personal consideration on that matter and I should be sorry to see the city administration just now have to deal with the great problems it has to handle burdened with those duties in ad- dition. I think the date for making the transfer is at the date of the termination of the present city administration; it will achieve all it has desired, and I am very strongly of the opinion that such transfer should be made on the Home Rule principle. By Assemblyman McQuistion: Q. Mr. Mayor, have you given any thought to the proposition as to whether the Board of Public Service Commissioners should have a larger salary ? A. You are not paying them too large a salary now; you can't get men who are capable of discharging those duties and doing it effectively and efficiently and continue in' the discharge of those duties for any less, and I think they should be paid at least that salary. Q. Do you think that there should be any qualifications pre- scribed by statute in the way of technical training, or anything of that kind? A. Why, I doubt it. I don't know that anything would be effected by that, I think you can leave that to the Execu- tive to choose proper men. By Senator Lawson : Q. While I think of it, didn't the city provide in the new Municipal Building quarters for the Public Service Commission ? A. Why, my recollection is not clear ; there was such a proposition up and we considered it; I think that was the plan at one time Final Eepoet of Joint Legislative Committee 1509 and then it was determined not to do it because we determined to bring into the Municipal Building the city departments, as we have done ; you know we have a lot of city departments that never had been up in that building, and we felt it was better to have those departments there than to have the Public Service Commis- sion there. Q. Well, the expense to the city, that the city is under for the Public iService Commission, the amount of money that it costs to maintain it is large and I understood it was originally intended to have them housed in the Municipal Building? A. Well, if we did house them there we would have to house other departments elsewhere, and it is as broad as it is long. By Chairman Thompson: Q. You didn't mean a check on their expenditures for the or- ganization anyway, did you? A. We have no check on their ex- penditures at all except for construction; of course the Board of Estimate had to have supervision of both of the Public Service Commissions. I don't care whether it is Public Service Commis- sion or any other body, or the Board of Elections or any of the other numerous agencies we have here whose budgets are deter- mined under the provisions of the law; I have always found that when such an agency spends its money and it has no budget and that budget supervised and analyzed and controlled by the finan- cial control such as the Board of Estimate; I shouldn't want any of the departments under our jurisdiction to have the independest power of making its own budget, and I know it is much better for the Board of Estimate to revise the budget. By Senator Foley: Q. Have they turned over the entire financial control to the Board of Estimate to fix the local budget, the local authority. A. No. Q. That remains with the Governor, if it be not unconstitu- tional? A. I hadn't thought of that; I haven't looked into that question but I think if we provide for the payment of the Com- mission by mandatory act to meet the appropriation for the staff, subject to review. Q. I think that was in the minds of Governor Hughes and the Legislature when it passed this law ? A. Well, it may be. 1510 Investigation of Public Seevioe Commissions The Witness. — Decide it is good government anyway ? Chairman Thompson. — Yes. The Witness. — I think it is. Chairman Thompson. — Anything more ? Mr. Mayor, have you anything further to offer? The Witness. — Nothing that I can think of. Chairman Thompson. — If you think of anything further, that you feel would be of interest to this Committee, we would be glad to have it. The Witness. — I have given everything you have asked me, and that is all I want to say. Chairman Thompson. — There is only one thing I want to say. You spoke of five men. I wondered how much thought you had given that, or really whether you had an opinion on that, that you would give way on? A. Why, of course, a good many of the opinions I have expressed this afternoon have been without any mature consideration. Mr. Hayward asked me one or two ques- tions that came to me as new. I expressed that opinion because it seems to me that the regulatory work of the; Public Service Com- mission is such here as to consume the time of five men if they give themselves to it. I feel there is a very Iwoad opportunity for usefulness, and it has not been by any means covered. Chairman Thompson: Q. Are not the four men you have on a body of that kind — for instance, the administrative body, anyhow — does it not tend to inefficiency, the more you have ? For instance, five men have five different opinions that have to be thrashed out ? A. If it is purely administrative, I agree with you. The regulatory work of the Public Service Commission is not purely administrative. It is quasi official. Q. If there were five heads in a business, it would not pay much of a dividend, would it? A. That is a different matter. I do not believe in two or three-headed commissions for administrative work. Final Report of Joint Legislative Committee 1511 ■Chairman Thompson. — Mr. Mayor, on behalf of the Commit- tee, I wish to extend our thanks for your appearance here, and if there is anything else you have to offer, we would be pleased to have it. The Witness. — Thank you, gentlemen. Good afternoon. Chairman Thompson. — We will now take a recess of five minutes. Recess. William McCaeeoll, called as a witness, testified as follows : Direct-examination by Colonel Hayward: Q. Mr. McCarroU, you have a copy of the letter which has been mailed here? I read the letter this morning and you said you had a copy of it ? A. Yes, sir. Q. Will you briefly outline your views on these questions that are covered in the letter ? I thought perhaps we could get through this afternoon and it would spare you the trouble of coming down to-morrow ^ A. Thank you. I think I can give you my reply to the questions suggested in a very few moments. With your permission, Mr. Chairman, I will take them up seriatim, and I will come at once to the second, omitting the first, with your per- mission, Mr. Chairman, the second one being " Whether the Pub- lic Service Commissions Law as enacted in 1907 and since amended to date, providing for two Commissions in two districts in the State has proved to be a satisfactory organization of the Commission and whether the Public Service Law has proved sub- stantial and sufficient legislation on the subject ?" To that I would say yes, I believe that the present law is adequate and I believe in the main it is very satisfactory. I think «o both from the standpoint of the public, in whose interests the legislation was enacted, and also for the interest of the public service corporation. I thoroughly believe in the regulation by law of public service bodies, and so far as my experience went, the Public Service Commissions Law was an adequate one. Of course, Mr. Chair- man, it depends a great deal upon the attitude of the public service 1512 Investigation of Public Service Commissions corporations towards the k-w what progress is made by this or any other law. If the attitude of those who are subject to the law is such as -was indicated by Mr. Whitridge, for instance, while on the stand this afternoon, I should say it would be very desirable to arm the law with even sharper teeth and larger power ; but I think that ordinarily it will be found that the law is sufficient and satis- factory. The third question is as to whether the Public Service Commission is exercising inconsistent functions, quasi judicial and administrative. To that I should say no. I should say that,, rather than being inconsistent powers, they are supplementary powers, and that they are quite consistent in both respects as to the administrative functions and 'also as to what is called the quasi judicial function. The remainder of the third question somewhat anticipates the fourth, the question being whether there ought to be legislation, either in the interest of the proper exercise of public utilities regulation by public utilities board, who may, in order to effectively regulate, the better perform their duties by not being required to perform some other inconsistent official act, taking a great deal of their time, or in the interest of a proper administration in the construction of a local improvement and an acknowledgment of the theory of home rule, ought adminis- trative functions, now exercised by the Public Service Commis- sion, First District, be transferred to the city of New York, or to the Board of Estimate or some proper department thereof. I should think that experience has demonstrated that it ought not. The Mayor considered the question in his observations as to the overlapping of the duties of the Board of Estimate, or a local department, and those of the Public Service Commission. The experience of the Commission, I think, was that there was very little of that, and that the one was really supplementary of the other, and the one a check upon the other, and a desirable check one upon the other. And to both the third and the fourth questions, I would say that I do not believe it would be in the interest of efficient administration to separate the two functions, the admin- istration under the Rapid Transit Act and the administration under the Public Sendee Commissions Act from the one Comm^is- sion. Those remarks anticipate the answer to the first of the MQt question, as to whether there is duplication of the functions. Final Eepoet of Joint Legislative Committee 1513 Assemblyman Maier: Q. What is your idea in regard to the territorial change in the boundary? Should it take in Long Island? A. I think, Mr. Chairman, that Long Island City should be added to the Public Servi«e Commission for this reason — Assemblyman Donohue. — You do not mean Long Island City ? A. !N"o, I meant Long Island. The city is extending so rapidly, particularly the freight business, but the travel is so much that of commuters and residents of the city, practically the whole length of the Long Island Eailroad, and practically under the jurisdiction of the Commission, that it is really bound up so closely with the city, that I believe it would be in the interest of the citi- zens of iN'ew York to have the jurisdiction extend over Long Island. By Assemblyman Donohue: Q. What about Westchester? A. I thinlt the same thing ap- plies to Westchester. I do not think it is so necessary with the upper part of Westchester county, but I think as the city grows the same facts will prevail, and that Westchester might well be included, and if a change in the law of that extent were contem- plated, I should say that it would be a proper thing to consider it now. The next is whether there is a duplication between the Public Service Commission and the public service corporations? I think to some extent there is in the matter of reports and inves- tigations and observations of service. I think there is some dupli- cation on the part of the companies and the Public Service Com- mission. I do not know that that can be wholly avoided, but I am inclined to believe it might be avoided to some extent by putting the burden of reports, of detail, upon the corporations, their re- ports to be checked up from time to time by the employees of the Commission, and not carrying on such a detailed investigation. The next one is as between the separate districts of the Public Service Commission. It was not the experience of the Commis- sion, to my knowledge, that there was any substantial duplication of the work between the Commission of the Pirst and Second Dis- tricts. It was very rarely that we had subjects in common, but when we did, we either made a concurrence decision or consulted 1514 Investigation of Public Seevice Commissions witli the 'Commission of the Second District and agreed upon a policy to be adopted by both Commissions. The next one is as to whether the Public Service Commission of the State of New York and the Inter-State Commerce Commission of the United States, whether there is any duplication. I cannot speak so much as to the Second District Commission, but that did not occur with any matters that came before the First District Commission. There was no conflict at all and there would not likely be in the ques- tions that were dealt with by the First District Commission. Passing to the sixth question, which is as to the suggestion for perfecting the law, I have only one recommendation to offer, and that would be, Mr. Chairman, that telegraphs and telephones should be under the jurisdiction of the Commission of the First District. I think the reasons for that are manifest from the fact that they are most largely in the territory of the First District Commission, and the members of the Commission in the locality would be more apt to be familiar with the general situation than those in the Second District. By Colonel Hayward: Q. Do you know what the idea was that the telephones were given over to the Second District at the time? A. I think the only reason I know of, the only consideration I know of, Colonel, was that the work of the rapid transit, the subways, so occupied the First District that the telephones were perhaps more than they should assume at that particular time; that is, the legislation took effect, if I remember rightly, at the time that the dual contracts were taking up so much consideration. I do not know that I have anything further to add, Mr. Chairman. Assemblyman Maier. — Have any members of the Committee any questions? Does any member of the Committee desire to ask any question? By Senator Mills : Q. Do you think the Commission would have time now to take up the telephone matter? Is the situation now such that they could take it up ? A. I think they would have more time at their disposal now, with the progress that has been made in the inaugu- ration and continuation of the dual contr'acts. Final Repoet of Joikt Legislative Committee 1515 Q. You think they could handle it? A. I think they could handle it quite as well as the Second District. By Senator Cromwell: Q. The most confining and engrossing work of the Commission was during the time that the dual contracts were under negotiation and finally executed, and probably since that time, when the plans and specifications were under consideration, and the contracts for the construction of the subways were under way, the work has not been so great. There were large appropriations and the work is now completed, is it not? A. I think so. The authority has been determined and the work is progressing so that now it is a matter of almost routine consideration. Q. So that the relief from those considerations would give time for the telephone matters? A. I think so. By Assemblyman Knight: Q. I see in those questions which the chairman has addressed to you in this letter inquiry is made as to whether you would say that there is any duplication of the functions between the Public Service Commissions and the public service corporations. Wow, how could there be any duplication of the functions of those two bodies in any event? A. I do not see how there could be except in such an instance as I have suggested; that is, in observations of service of the public service corporations, which are made by the corporation itself — or should be — and are also made by the Commission. Q. There would not be any impropriety in that, would there be ? A. N'ot at all. Q. It would be a most proper thing, would it not ? A. Yes, sir. By Chairman Thompson: Q. Except that the people pay ? A. Yes. Q. And the expense falls on the people at large? A. Cer- tainly. By Assemblyman Knight : Q. The people do not pay for the service of the employees of the public service corporations ? A. Not directly. 1516 Investigation of Public Seevice Commissions Q. Except those that are concemed in this dual contract ? A. (No answer.) By Chairman Thompson : Q. If the people do not pay, I would like to ask another ques- tion. If the people do not pay for wanting these public service corporations, why do we regulate them or have anything to do with them? A. It is only a queetioa as to whether they pay in service. By Assemblyman Knight: Q. The point is this: As to whether a duplication of those two bodies, the public service corporations and the Public Service Commissions is any point of criticism ? A. I do not think it is at all serious. Q. You would rather expect there would be a duplication ? A. Yes, sir. Chairman Thompson. — Mr. Commissioner, have you anything further ? The Witness. — I have not, Mr. Chairman. 'Chairman Thompson. — If anything further occurs to you, we would be very much pleased if you would call it to our attention in writing. We will be in existence for the next several days, but we will probably not be in iiSTew York after this week. The Witness. — I just got the intimation last evening that you wished me to attend, and I have not had time to give it very great preparation. 'Chairman Thompson. — On behalf of this Committee and the State. I thank you. The Committee is requested to be here at 10 o'clock in the morning and everybody else at 10':30. Mr. Travis H. Whitney. — Judge McCall asked me to submit, for the record, two matters that have been asked about. Chairman Thompson. — Have those matters been submitted to you, Colonel? Colonel Hayward. — Ifo. Final Repoet of Joint Legislative Committee 1517 diairman Thompson. — Submit them to Colonel Hayward. (Statements referred to received in evidence and marked Exhibits Nos. 27 and 28, of this date, as indicated below. These statements are copied into the record. See index. ) (Statement of orders adopted by the Public Service Com- mission for the First District, during the year 1913, which directed that certain acts be done, or which closed proceed- ings, together with a note as to whether the orders have been accepted and complied with. Exhibit No. 27.) ; (Statement of orders adopted by the Public Service Com- mission for the First District, during the year 1914, which directed that certain acts be done, or which closed proceed- ings, together with a note as to whether the orders have been accepted and complied with. Exhibit l^o. 28.) : (At this point, certain notes of witness Frederick W. "Whitridge were received in evidence and marked Exhibit ' Xo. 26 of this date. These notes are copied in the record. See index.) Chairman Thompson. — I have received from Commissioner Maltbie a letter in which he says : " I have received through Mr. Whitman your verbal request for a submission of any data, which, in my opinion, should be before the Committee before it meets this afternoon at 5 o'clock to consider the request from Governor Whitman, sent to you under date of February 24, 1915. As I have not expected such a request, as I have not read the record of my testimony, and as I have three hearings to conduct this after- noon, I shall be unable to cover the matter fully. The principal point which I wish to make is that the record is not a complete picture of what has been accomplished by the Commission or in- dividual Commissioners since 1907. In my own case, I know that that record is largely devoted to minor points and many things which are not important. Doubtless this is due to the limited time at your disposal, but anyone reading the record would not understand the condition under which the Commission had worked or the important results that have been achieved. Yours sincerely, (signed) ' Milo E. Maltbie, Commissioner,' " That is his idea. I have also received from Commissioner Cram, a letter, 1518 Investigation of Public Service Commissions which I just received a moment ago, and which I have not had time to read ; but this deals with a seriee of explanations of what he did with the Commission's automobile, giving his idea. There ■are four pages, and without in any way binding the Commission or Colonel Hayward or anybody else, I will put it in the record. Colonel Hayward. — Mr. Chairman, I do not know whether these informal communications sent over here in letter form should be put into this record without any opportunity for cross- examination. Chairman Thompson. — Then I suggest that these records be submitted to Colonel Hayward over night, and that to-morrow morning, if there is anything he wants in the way of explanation, he can examine into them at that time, and we will put them in nunc pro tunc. Is that right. Senator Lawson ? Senator Lawson. — I do not know as I will object. I think we should read them before they clog the record. Chairman Thompson. — They are going on the record, and the Colonel shall have the privilege of cross-examination. They will be submitted to him over night, for examination. Hearing adjourned to Friday, February 26, 1915, 10:30 a. m. FEBRUARY 26, 1915 Committee met at the City Hall in the city of New York on Friday, February 26, 1915, at 10':30 a. m., pursuant to the adjournment taken from Thursday, February 25, 1915. Present: " ; A quorum of the Committee being present. Appearance : Colonel Hayward, for the Committee. Seth Low, called as a witness, examined by Colonel Hay- ward, testified as follows: Q. Mr. Low, you have the letter that Chairman Thompson sent out, he sent a number of them ? A. Yes, sir. Final Report of Joint Legislative Committee 1519 Q. Outlining the scope, etc., of tlie inquiry ? A. Yes, sir. Q. "Will you tell us what your views are with reference, first, to the suggested transfer of the construction, the constructive powers of the Public Service Commission and the other powers, which may not readily present themselves, to the Board of Esti- mate or some department created and part of the city administra- tion? A. I think it would be impossible to transfer the con- struction Avork from the Public Service Commission to the city at present, without more or less movement and delay. I agree with the thought that the construction work belongs to the city more than to the Public Service Commission ; they ought to be a super- visory body, not a constructive body. I would like to make this suggestion for the consideration of the investigating Committee: That the Board of Estimate be empowered to name one of its members to sit upon the Public Service Commission, and that that would give the city oversight and opportunity to pursue the work of construction with energy without its breaking up the organization that has been created for the conduct of that work, and at the same time that would be a very rational way of dealing with the problem raised by your question. Q. Do you mean to empower the Board of Estimate to appoint one of its members to the Public Service Commission or simply to sit with them as a member ex-officio? A. It seems to me he would have to be a member of the Commission if he was to be useful. I suppose the form would be to allow the Board of Esti- mate to nominate one of its members to the Governor for appoint- ment. That detail is easily managed, in whatever way it seems best; but what I 'Would like to make clear and emphasize very strongly is that I share the views that the city's interests in the construction is and has been very vital; it is furnishing all the money; it is suffering all the inconvenience for all the delay that occurs. I think that if the city as such had someone representing the Board of Estimate a member of the Commission it would result in pushing forward that work very likely more rapidly than other- wise. The time will come, I daresay, when that sort of work can be given to the city itself ; at the moment it cannot be done with- out great disadvantage. Q. This member would of course sit and vote with the Public Service 'Commission and then again on the same matters in the 1520 Investigation of Public Seevice Commissions Board of Estimate, perhaps as the Mayor now does, ■where he acts both as a member of the Board and later as Mayor ? A. Pre- cisely. It is not at all an unusual thing for public officers to be members of boards in the public interests, as you know. Q. Have you given any thought to the possible enlargement of the territory over which the Pirst District 'Commission has con- trol ? A. I like the suggestion that I have heard, I think it was made here last week while I was away, of making a commission, one commission by the State. The city is one entity; it is not divided now and it is highly important that the policy pursued in one district should be the same as that pursued in the other so far as the matters dealt with are the same; and therefore I like very much the idea of reorganization which shall give one commis- sion for the entire State, divided in parts of three and each one to take in hand the work of the Pirst Commission of the Pirst District over and the Second. There are three elements that ought to be dealt with by such a commission. In the first place there is its touch upon the Inter-State Commerce Commission on all questions that arise from inter-State business, and it is highly important that our local State commission should be in sympa- thetic co-operation with the national commission. It seems to me it is impossible to get that same co-operation when you have got two distinct bodies, and yet you must unify them. The sugges- tion that there should be an odd member to be chairman of the commission and give his special attention to questions that con- cern inter-State commerce and co-operation with the national com- mission seems to me a very -wise one, which if that were followed by the usual changes in chairmen as it usually does, you have two boards there, two subdivisions looking after the two districts and meeting together in general; I suppose if an appeal were ever needed the appeal could be heard from the one board to the whole body ; I think there are very many advantages in it. As to the geographical distinction I am not quite so sure. A desirable dis- tinction would be to give the Commission of the Pirst District control of everything within the city and over suburban travel. That would give you all of Long Island, for practically it is all suburban; it would include Westchester, except where the travel which starts here goes beyond Westchester and turns around- the tracks that run into Putnam, and I think as a matter of theory it Final Eepoet of Joint Legislative Committee 1521 would be better to give the Commission of the First District jurisdiction over everything within the city and over the suburban traffic; then give to the other district, the Second District, every- thing outside of that. Q. Have you thought about the telephone jurisdiction, Mr. Low? A. I think the telephones ought to be under the jurisdic- tion of the supervisory body. Q. Do you think — the Second District, now, of course, has exclusive jurisdiction over the telephones of the city, do you think there ought to be a modification of that provision of the law ? A. I should think that the First District ought to control the tele- phones within the city ; that is the whole theory of the division. Q. I presume tie answer, the reason for that was the claim that the telephone organization in the State was a unit ? A. Well, yes, and that is the reason why the new organization of this Com- mission I think is a better one than the one as it now exists. It is very difficult to cut the State in two; there is one order as to all at the present time and we have no unit of control or any regula- tion of the public service business. By Chairman Thompson : Q. Any gentleman on the Committee any question they would like to ask Mr. Low ? If not, I will ask him a question. I think you were — I have here a report including a draft bill published by 'the 'N^ational Civic Federation and I understand you are very prominent in it and I assume you had considerable to do with the investigation preceding this report, the report drafting the so-called model law ? A. I am president of the I^ational Civic Federation and have been for a number of years, and I think that the committee which was appointed to deal with that subject was appointed by me. As a matter of fact, the draft bill was drawn by the executive council and it was not approved by all of the members of the department, and therefore we had to have or go before the ISTational Civic Federation itself for action, and it was referred to a sub-committee consisting of Mr. Willcox and myself and we reported upon it as set forth in that document; we made an exceedingly careful study of that whole question, and in order to present the matter in the most useful form we not only wrote one report commenting upon some of the main principles involved, 1522 Investigation of Public Sekyice Commissions but we also asked Mr. Kerr, when he was an assistant director of the committee which drafted the bill, to draw up a statement of all the questions that had been raised in connection with the draft bill as suggested there, and to present the argument pro and con upon every suggestion so that anyone wishing to could see the bill was drawn as it was and could understand it by reading that document. Q. You made an investigation by sending committees to various parts of the United States and also all of the States that have public service laws before making this report? A. This commit- tee worked for a year to get together all the lines of the United States bearing upon this question, and they were all collected in a volume. Q. And even went as far as to send personal representatives to the different States to ascertain how the law worked ? A. Yes. Q. In actual practice in those States ? A. We did. Q. Most of the States now have a Public Service Law ? A. I think only two are 'without them or were when that report was made. Q. When our Public Service Law was enacted during the administration of Governor Hughes in 1907, there were only two States that had a Public Service Law at that time? A. I don't know that; but I know there were very few then. Q. So this report we have is the product of years of study, years of investigation and years of actual contact with the prac- tical application of the different public service laws in the several jurisdictions of the United States? A. It is the product, Mr. Chairman, of two years of study; the first year was given to get- ting together material in regard to actual legislation in existence; the second year was given to the preparation of the draft bill, and I would like to call attention to the fact that upon that committee there were men who represented public service commissions for some of the States, men engaged in the actual operation of public service commissions, public-spirited men who had given study to the question, and it is my own belief that no such study of public service regulations has been made in this country and I doubt if there ever has been made anywhere, and I think you will find in the two publications of the committee, and reports, all the infor- mation available in brief form ready for use. riNAi Eepokt of Joint Legislative Committee 1523 Q. It has been obtained at considerable expense ? A. Yes, it cost over $60,000. Q. That was undertaken by the jSTational Civic Federation for some reason, of course? A. Yes. Q. Why ? A. About seven years ago, or six years ago, as I re- member it, we sent a commission to Europe to study into the ques- tion of public ownership. That commission was made up, as all of our undertakings are made up, of representatives of employers' organizations, labor men, representing the public, and we were also careful to put upon it men who believed in public ownership and men who did not. That commission made a very careful report the substance of which was that municipal government in this country was not yet of a character that justified public owner- ship generally, and it pointed out that in the absence of that, and preferable to that result should be public regulation. Therefore, the I^^ational Civic Federation called a second conference to con- sider that report when made; and that second conference was national in its scope and asked for the appointment of a commis- sion to study into public regulations and report how it could be best carried out. Q. It must have been assumed at that time that the law in respect to public utilities regulation was not perfect? A. Well, it would have been very strange if at one blow a perfect law could be struck and up to that time we had very little experience; I think in the main the law has justified itself very well, Mr. Chair- man. I would like to call attention to the fact that since this law was passed there never has been a financial scandal in any part of the city in connection with the public utilities. Q. I suppose the passage of the law was brought about by the fact of financial scandals ? A. Partly that, and my own belief is that we have a far better service as a result of this Commission than we ever had before, and the old Commission appointed by Governor Hughes really performed a herculean task in connection with the preparation of the plan of the dual subway; that was a work of co-operation between the Public Service Commission and the Board of Estimate about the general routes after all the agree- ments had been reached with the parties that were to co-operate, the actual work of reducing that contract, reducing that to a con- tract was done by and we'll done and carefully done by that old 1524 Investigation of Public Service Commissions Commission. And I would like to say as I am on the stand, Mr. Chairman, a word in connection with Judge McCall. I was entirely averse to his appointment when that appointment was made, because I thought it was due to Mr. Willcox that he should remain on the Board until those contracts were signed, and I felt that it involved a very great public hazard to change the chairman of the Board while everything was still in a state of flux. If the new chairman had said he wouldn't approve of these plans the work of years of labor would have been thrown away. Judge McCall took two weeks to study the plans, and that involved that delay, and when he was done he signed them, saying that his only criticism was that these interests of the city were even too well protected. Q. You think Judge McCall thoroughly understood it at the end of two weeks, do you ? A. It is impossible for me to answer that question. I simply want to say, and I will say that he had the good sense not to insist upon what he could have insisted on whether he understood it or not. One other thing which I would like to put on the record, because I think it is due to him, I never have known one public officer who succeeded another who so gen- erously acknowledged that he was profiting by the work of those who had gone before him. Q. Well, I might say here before this Committee that what I attempted to suggest was that it would be hardly fair to assume that it took two years or a year and a half of continuous labor and consultation to perfect these dual subway contracts that one man could after a supei-ficial study, or a study of them, absolutely understand it all in two weeks ? A. I never favored it. I thought it was a mistake and a great injustice to the city that the change should have been made at that time. Q. But, getting back to the old original proposition, I assume that the l^ational Civic Federation spending $60,000 looking into this Public Service Commissions Law that they thought it worth while to go over seriously the question of perfection of that law? A. Undoubtedly. Q. There has been, of course, since the report in 1914, October 23d it bears date, there has been no legislation on the subject in this State ? A. ISTo, sir. Final Eepoet of Joint Legislative Committee 1525 Chairman Thompson. — I think that is all ; if there is anything further that occurs to you we would like to have you state it. Senator Foley. — I would like to ask a question, Mr. Chairman. Chairman Thompson. — Senator Foley desires to ask a question. Q. Mr. Low, you took an interest in the approval of those plans, did you, as a citizen ? A. I did. Q. You attended many of the meetings — A. I took a very deep interest in them. Senator, I was a friend of both parties during all the time of the negotiations. Q. You were present at some of them ? A. A great many. Q. With Commissioner Willcox? A. Yes, sir. Q. And Commisssioner McCall? A. With the time of Com- missioner McCall, my work ceased a year before he was appointed. Q. Have you followed the plans since, the working-out of the execution of them ? A. ISTo, I have not had occasion to since then. I would like to before I leave the stand emphasize again the im- portant suggestion I made that the Board of Estimate be given direct representation on the Public Service Commission in this district while the work of construction is going on. I think that meets the only practicable way, and perhaps the practicable way. The whole interest of the city is in the construction as distin- guished from the regulatory features of the Commission. 'Ch'airman Thompson.— I think that is all, and we are very much obliged for your suggestions, and we will take your sugges- tions as well as those of other citizens, and we are very much obliged for your coming here and to have your views. The Witness. — It is a great pleasure to me to have done it, sir. JoHisr E. EusTis, called as a witness, testified as follows: Examination by Colonel Hayward : Q. Mr. Eustis, you were a member of the Public Service Com- mission for a number of years ? A. Yes, sir. Q. When did you go on ? A. When the Commission formed in July, 190Y, and left last May, May 24th last, when my term of office expired, February 1st. 1526 Investigation of Public See vice Commissions Q. You were succeeded on the Commission by Mr. Wood ? A. Yes, sir. Q. You have one of .the chairman's letters outlining the scope of our inquiry ? A. I have it. Q. Well, Mr. Eustis, will you give us your ideas on tlie matters suggested by the chairman, beginning with the suggestion that has been made that the rapid transit powers, and constructive powers, be turned over to the Board of Estimate or some department of the city government that is at present in being or to be created ? A. I don't believe in swapping horses when crossing the stream. The city's subway is now more than half completed, and I think it would be a mistake to make the change, .although it is city work there was a great deal of discussion originally when the law was passed as to whether the Commissioners themselves should not be appointed by the Mayor of the city in this district, because it was a local matter. I don't see why there is any great difference that the Public Service Commissioners, all being residents of the city, shouldn't construct the subway just as well as they should regulate the business entirely within the State of New York ; but the work has been done in connection largely with the Board of Estimate, who represent the city of New York, and you are aware while all the negotiations, which lasted two years, leading up to ithe dual contracts, in which plans were finally agreed upon and signed, the committee of the Board of Estimate was present very frequently in the last few months, and were present at all the principal con- ferences which whipped the final contract in shape. Q. Did any of the corporations, except the city, have any interests to be protected? A. I can't say that as far as it has gone the city has not been as much as though it had a member on the Board ; in fact, they had three members on the Board of Esti- mate, which was a rapid transit committee, and was headed by Mr. McAneny and Mr. Miller from The Bronx, and by a member of this Committee, Senator Cromwell; they worked on the plan, and plans were prepared and contracts prepared, on many matters where the work was to be done, .and I think it would be a mistake at this stage to turn it over to new supervision. Q. Do you recall during your term of there being any conflict between the Commission and the Board of Estimate, or any delay resulting from lack of co-operation between the two bodies, the two Final Kbpoet of Joint Legislative Committee 1527 boards? A. ISTo unnecessary delay. Of course, when we got together with the corporations on certain points, then we would have to wait until the Board of Estimate committee had another meeting and they would take probably several weeks to consider it and perhaps this was unnecessary delay, but eventually there was no suggestion about those contracts but what the committee of the Board of Estimate finally agreed to. Q. Probably there was no greater delay than there would have been had some of those matters been under consideration by a com- mission appointed by the city? A. I don't think there was as much ddlay, for this reason: After we got those contracts whipped into shape if we hadn't had the benefit of the conferences of the Board of Estimate committee, then there would have been a fight probably in the Board of Estimate, as they had to be approved by the Board of Estimate, but in view of the fact that their committee was there, when the matter came before the Board of Estimate, and the Board of Estimate was satisfied to take the report of their committee about it, and that avoided much more delay than might have occurred if they hadn't been there. It was on the suggestion I think of our chairman when the first proposi- tion was made in December, 1910, from the Interborough Rapid Transit Company in regard to the matters proposed that they appointed a committee to confer with us and that continued along until the contracts were signed. Q. Basing your answer on the experience you have had as a member of the Board, Mr. Eustis, what would you say as to the advisability of including Long Island and Westchester county in the present district ? A. I think it would be a relief to the up- State Commission, and I think it could be handled by this Com- mission here. Q. Do you see any difficulty or embarrassment that the district paying the expenses of this Commission would not be coincident with the other ? A. Three or four years ago the question was up ■and there was one man objected to it at the time. I objected to it at the time because I didn't think that legislation necessary in regard to it, in regard to the apportionment of the expense for taking in the additional territory, and for that reason it was not pressed ; but some method, I think, if you were to keep a certain additional appropriation for the State, enough to cover that terri- 1528 Investigation of Public Sekvice Commissions tory that was taken from the up-State 'Commissioii and it wouldn't inflict very much additional expense on the First District Commissison. Q. What do you say, should the Commission exercise jurisdic- tion over telephones ? A. I think that both Commissions should have 'absolute jurisdiction of all matters in their territory. I understand the reason at the time it was not made was because the Telephone Company objected to it and were going to make a serious iight if the First District were to have control of the tele- phones down here; they thought at that time that all complaints had to go to Albany and it would be easier for them. I don't know whether there was anything to that. That was the rumor at that time. Q. And subsequently there was a department of the Second District Commission established here in the city ? A. Yes, sir. Q. For the purpose of — A. For the purpose of taking care of the local complaints. Q. But that is not well kno-svn, is it? A. Well, it hasn't been published very much, but most people know it. By Chaii'man Thompson (to witness) : Q. Do you mean. Commissioner, that the Telephone (company thought that they cou'ld get more favors from the up-State Com- mission than they could get. from the one here? A. l^o, I don't mean it that way, but they thought they would get rid of a lot of heckling and lots of interference perhaps. There are a great many people in New York always kicking and finding fault with telephone charges in the First District, and if they had to go to Albany as they would have had to at that time, they would hesitate about taking the trip. Q. You didn't mean that tTie up-'State Commission acted any slower than the one here? A. Oh, no, no; they are both slow enough. Better be slow and sure than to be fast and go wrong. By Senator Foley (to witness) : Q. Commissioner, I would like to have your experience and recommendations ort the subject of complaints. One of the Com- missioners said you had charge of all Interborough orders and took part in the handling of them ? A. Well, Senator, I am glad Final Eepoet op Joint Legislative Committee 1529 you asked that question. It has been said here that there was I think 300 violations reported against the Interborough Company, and also stated that those were referred to me, that is true. There is no explanation that I want to make of those that were substan- tial. Those reports were made by the Transportation Department's inspectors and they reported to the Commissions violations whether technical or substantial, and they would check up the Interborough for instance in the subway at four or five different points, and they would look them over and probably when they saw people standing they would make a report of a violation because the order called for a seat for every passenger during those periods. Q. That was your own order ? A. That was our own order. Now, I felt that what we were after by that order was a substantial com- pliance and if there was a substantial violation, I would take it up at once either with Mr. Norris or Mr. Hedley and as the supervis- ing inspector had called it to our attention and he would say, " Very well, we will look into it, maybe your inspector is wrong, we will check up." I think they had a right to check us up and see whether our men were correct ; and they would report " our check doesn't agree with yours," then we would have a joint in- spection and the result of that would determine whether there ought to be more service or not. Sometimes they would find our report is correct and put on the additional service. And there is no record in the files, in our files over there, of the handling of all that by the Commission in other cases. I think that I can say that in everyone of those violations against the subway, of the order that they should furnish some number of seats to passengers for every period of twenty minutes which was recommended by our expert at that time, Mr. 'Connette, was complied with in nearly every instance, when you take into consideration that the travel varies from day to day, some days it would be big and others would fall down. ISTow it would happen in that car service that there might be people standing and then a little while after you would find that there was a lot of vacant seats. You will find that people prefer to get into the first car or second car rather than go back to the train, but if you go to the back end you will find that there is a lot of vacant seats, and that three-fourths of all the people get out between Brooklyn Bridge and 72d street and the service between there is adequate. Now as to complaints. 1530 Investigation of Public Service Commissions upon that question I have several times gone myself during the non-rush hours and I have found out about the condition of riding and found that while there might be a few people standing between 14th street and 42d street that when you got above there, especially ■above 96th street, they left and the seats were empty for the next seven or eight miles. You have heard a good deal about com- plaints of kickers but you have not heard from more than 90 per cent, of the people who are satisfied with the service in that part of the subway. I have seen quite a number of people and the trouble with them is that they will get in at the front and crowd the car there and you go to the rear car and you find a number of vacant seats even in the rush hours. They get on perhaps at 14th street and crowded and then leave the train. By Chairman Thompson: Q. You think then that the people in New York city, if the matter were put to a vote of the people there wouldn't be over 10 per cent, of them going to vote ? A. That is, those that are satis- fied don't pay any attention to it. Q. To know whether you are right or wrong. Now there was a gentleman sworn here yesterday by the name of Whitridge, did you hear him sworn ? A. I did. Q. What is your idea of his testimony, is there any value to it that the Committee should rely upon to any extent ? A. I think you are the best judges of that ; I simply say that Mr. Whitridge is a very nice man. I had a good deal to do with him in connec- tion with the service in The Bronx ; he was of course receiver of all The Bronx roads under the jurisdiction of the Commission and we required him to fix up his cars on the road, we were nice about it, but we told him' that the Commission was going to insist upon having cars and their repairing their tracks, and their tracks made good and he came into line. But he says a good many things and you have got to make allowance, he doesn't mean all he says. By Senator Cromwell : Q. The Commission have had correepondence with him? A. Yes, the secretary has had a good deal of correspondence back and . forth. There was a good deal of correspondence at one time I know, and I think I have two volumes of it and I may have three Final Eepoet of Joint Legislative Committee 1531 volmn€S. I understand from his testimony that he has not been bothered much for the last year or two. By Chairman Thompson: Q. Of course, it may be unfair to ask you, but his ideas of the Puhiic Service Commission of the First District and their ideas don't coincide ? A. Well, you have got to take into consideration that he V7as appointed about when the Public Service Commission was appointed, two Aveeks or so after the Metropolitan service, I think the Third Avenue, they had the Third Avenue lease, and that since this investigation was pushed to a certain extent they threw up their lease with the Third Avenue and the company was obliged to get a new manager and they got Mr. Whitridge as receiver, and that was within- a few months after the Commission was appointed and the Interborough turned back the Third Avenue, they having had it under lease for a great many years, and as he says, they stripped it and left him without anything in his shop and we found him in a bad shape in regard to equip- ment, and the proper condition and while the orders were drastic over him if we thought there was good reason why he couldn't carry out those orders and run his road we gave them a reasonable extension. Q. If you didn't he would go to the court and get it anyhow ? A. Then ke usually went to the court. Q. And whenever they went to the court he usually came out first best, that was according to his testimony ? A. Well, we all feel it is best to ask the courts to pass upon disputed questions. By Colonel Hayward: Q. Mr. Eustis, I suppose there were violations in regard to compliance by the Interborough and perhaps some other roads with the orders of the Commission, what was the attitude you maintained while you were on the Commission ? A. I thouglit it was better to get a eompliance at once than to bring a penalty suit for trivial violation. My experience is ae a lawyer that you don't get much relief in a penalty suit unless it is a substantial case and you can show there has been a considerable violation of something which amounts to something. Q. You know, of course, of the correspondence between Mr. Whitney and some of the roads? A. ISTo, I can't say I know any- 1532 Investigation of Public Service Commissions thing about them. I knew, of course, he was writing letters back and forth but I didn't know what was in them until it was brought out here. Q. Did you know what he was saying in his letter ? A. N"o, I never took the trouble to read them. Q. You said you were supervising these inspectors ? A. I say they were turned over to the supervising inspector, and the letters were written in the department which they came out of. Q. Didn't you know where most of these letters were being written ? A. I knew they were about the service I expect, but I didn't pay any attention to what was in the letters or what Mr. "Whitney was saying, the words. At certain points the report showed that they were carrying by certain points 9,000 seats and there were 9,090' passengers, we will say, or ninety passengers more than the number of seats, but that was only one or two on the whole system and I would call that a trivial violation. Q. What would you say if some of them showed over 200 per cent, overload? A. Well, those are amounts that are substantial and we just got additional service much quicker than we would by a penalty suit. Those things are not in the record, there is no record made of what we were doing in those cases, and where it was not a substantial violation with regard to the service if they complied with that order that would be at an end. Q. What became of the answer from the railroad and why did Mr. Whitney and Mr. Daggett describe the attitude of these com- panies towards the Commission and the letters written by the com- panies to the Commission as being contemptuous? A. Well, I can only answer that by saying that in riding in the subway it varies from day to day. For instance, there might be a difference in the checking, if the travel was heavy it might make a difference in the checking and it would make a difference in the checking and then we would call attention to it again. Q. You were speaking about empty seats north of 72d street and 96th ? A. Well, yes. There was no way of taking off any of Khese trains, any of these cars at 96th street unfortunately, and there is no way of taking them off, no facilities for short-running around in the new subway. Q. So your theory was that the company ought to run trains sufficient enly to carry the people that wanted to ride north of 96th Final Repoet of Joint Legislative Committee 1533 street? A. 'No, no; I simply said they run trains to carry the passengers during certain times and they were only during certain hours. Q. The time they saw fit? A. I thought as representing the city we wanted to continue the subway and we thought that before compelling them to furnish a seat for every passenger we better get the business of the subway finished here in the city of ISTew York and give them a chance to increase the earnings of the rail- road and not compel them to furnish a seat to every passenger during twenty-four hours of the day and so they couldn't pay the amortization or interest on their bonds. Q. If you thought these orders were not fair to the railroad, and if you thought that they could not to be complied with, and you thought they ought not to be complied with, why did you make them ? A. Well, we thought they could when the Com- mission adopted them and the object of the order was to have the railroad company put on adequate service, and if they were sub- siantially complied with and they were giving the additional serv- ice I thought that was a good deal better than going into court and getting a judgment for $1 or for six cents. Q. Did you ever get your additional service? A. We got it within three or four days, and if we didn't agree on the count then we had joint counts of the road by their inspectors and by the inspectors of the Commission. Q. You do not agree, then, with Mr. Johnston, or Mr: Daggett, or Mr. Whitney, who say in the record that joint counts were ineffective, because the railroads find out when you are going to make the count and put on additional service? A. I want to say' in those cases I have referred to — or this case — I had checked up the inspectors' report and believed it. When the joint check was made, it was the same service. We have our previous check, and any increase will show on the inspectors' report. Q. Conceding that the Commission was justified in making an order against one of these roads — of course, you would not ever make an order if you did not think it was justified — conceding that a justifiable order was entered and then you had this fifty or • sixty thousand dollars Inspection Department over there to inspect and see if that order was being followed, and if your own inspectors reported continuous and gross violation of that order. 1534 Investigation of Public Seevice Commissions then do you think it was the proper thing- to proceed to question the reports of your own inspectors or wait for the railroad inspectors to make an additional count? A. Our inspectors are human, and I have known cases in which their figures have been found to he incorrect. Q. Did you ever know of 303 of them being wrong in succes- sion, that Mr. Whitney calls the attention — not only the attention of the Commission to, but the attention of the Interborough, as shown in the record ? A. If you say 303, I think you will find 90 per cent, of them are violations that have no substantiability. Q. I do not care to go into the record. I do not think you know what those reports show. A. I know all those that were submitted to me. Q. You had supervision of it, did you not? Your business was to inspect it. You had charge of the whole thing ? A. It was the inspector who made the count. Q. Was it the secretary ? Did he report to the secretary ? A. No, he would bring it to me. ■Colonel Hayward. — I do not want to go into that. It is in this record, Mr. Chairman. Chairman Thompson.. — Any other questions ? Is there any- thing further that occurs to you. Commissioner? The Witness. — I do not know of anything. Chairman Thompson. — I also extend to you the thanks of this Committee, and if there is anything that occurs to you while we are in existence, I shall be glad to hear from you. The Witness. — You are perfectly welcome. William R. Willoox, called as a witness, testified aa follows : Direct-examination by Colonel Hayward: Q. How long were you on the Commission, Mr. Willcox? A, Five and one-half years. Q. And you were chairman during that entire time, were you ? . A. I was. Final Eepoet of Joint Legislative Committee 1535 Q. Judge McCall succeeded you in 1913, in the spring ? A. In February, 1913. Q. 1913? A. Yes. Q. You had one of these letters, did you, Mr. Willcox, from the chairman, covering, or outlining, the scope of the inquiry? A. I did. Q. Will you — Mr. Chairman, you expect to adjourn to-day at noon, do you, or take a recess starting at noon ? Chairman Thompson. — I think we "will adjourn at 1 o'clock. 'Colonel Hayward. — You mean get entirely through at 1 o'clock and adjourn for the day? Chairman Thompson. — We will see at that time. Colonel Hayward. — I wanted to know so I might frame my questions accordingly. By Colonel Hayward: Q. Mr. Willcox, will you give us the benefit of your judgment on this question of the transfer — the proposed transfer — of the construction powers of the Commission under the Rapid Transit Act to the Board of Estimate, or some body of the city govern- ment ? A. I think it would be very unwise to make the transfer at the present even by them. This matter has been gone into very fully in the legislation that has taken place during the last fifteen years, as to subway building in this city, and certainly at this time, when the dual contracts are being carried out, the reasons that have been stated there I think are sufficient. I will not repeat them — the reasons for keeping the authority of the construction in the hands of the Public Service Commission. Then, furthermore, there is this to be said : That the Public Service Commission's work in this district is unique in the matter of regulation. In New York City, the surface roads, the elevated and the subways carry more people in a year than all the steam railroads in the United States ; and the Board that has charge, or jurisdiction, over the service of the roads and keeping watch of what is necessary to be done in order to give additional facilities 1536 Investigation- of Public Service Commissions are the right people with ■whom power, negotiating plans and mak- ing contracts for construction should rest. If you put two Boards in charge of these two relations of the same problem, there would be more or less of confusion as the result, and I believe that one Board would be best. I think that the greater result for the city could be accomplished better by one Board than by division. Q. What do you think of the proposition of a semi-consolida- tion of the two Public Service Boards into one, with a Chairman- at-Large as a connecting link ? A. That might work, but I should not think it would be wise, because if part of the Board looked after New York and part looked after the work up the State, it would be necessary for those members of the Board here to go thoroughly into the work up the State, and vice versa, in order to ■act intelligently on m'atters coming before them, and there is enough work here to keep five men busy every day in the year. Q. Of course, that group of three might have executive juris- diction in that territory, as the separate boards now have ? A. It might be worked out. I would not want to condemn the plan. I have not studied it. Q. Mr. Willcox, what about the jurisdiction over the telephone companies ? What is your theory on that ? A. I have always felt that the jurisdiction over the telephone companies within this dis- trict should be handled — the regulation should be handled — by the Commission of this district ; and I have never seen any reason for changing my opinion. Q. Did you ever take up the need, when on the Board, for hav- ing additional jurisdiction or authority over the railroads running into Long Island and outside of Westchester County ? A. I think it is logical that the suburban of this territory should be under the jurisdiction of the Commission of the Pirst District. There is no real reason why the suburban territory, outside of Jamaica, should not be under the jurisdiction of this Commission, as well as the territory in Jamaica. Q. How would you go about it to work out a uniform plan to cover — a satisfactory plan to cover — the appropriations for that additional territory? A. I believe it would have to be by some special apportionment. I have never given it thought because I have never given any great consideration to that transit of the subject. Final Repoet of Joint Legislative Committee 153Y Q. Do you know whether or not an exercise of the jurisdiction over those territories we have been speaking of has ever been a source of unusual trouble, or worry, or annoyance to the other Commissioners? Have any of them ever expressed their wish that it might be down here, as being a better place? A. You mean — I do not recall any such instance. Q. You do come in contact occasionally with the other Board ? A. Quite frequently when I was first on the Commission, but not so much later. I cannot recall our sitting together but once, and that was on the question of equipment on a road that ran from our district into theirs. Q. Of course, we will have an opportunity to ask them directly about that. I wondered if this thing in your territory had ever occurred at all, because they have really had the jurisdiction over it? A. It has been talked of more or less, but never authorita- tively by anyone, I do not think. I cannot recall a case where there seemed to be any trouble growing out of anything of that kind, or any lack of jurisdiction on the part of one Commission or the other. Q. Did you ever observe any particular duplication of the work of the Commission here and the public service corporations, that could have been eliminated? I mean taking into account ques- tions of rates and inspections, etc. ? A. ISTo, the only question of rates that ever came up, that I can recall, was that of the Hudson & Manhattan tunnels, running from New York into New Jersey. They felt, I know, at one time — the management felt — that they should not file reports with us inasmuch as they were doing an interstate business. We took the ground that they should file such reports and they complied. What would have been the result of it if they had not, I do not know. Q. I do not mean quite so much that as the proposition which has been suggested that there was an unnecessary duplication of the work; that is, that the Commission over here have a large statistical bureau, make original investigations as to capitalization, etc., of the roads, and, of course, the roads have bookkeeping or statistical departments doing that same work. Now, do you think there has ever been ma^de an unnecessary duplication of that work ? A. I do not. 49 1538 Investigation of Public Service Commissions Q. Has tlie Oommission, in other words, Mr. Willcox, been do- ing anything as original in this matter that they might safely have taken the word of the corporation on ? A. I do not think that the Commission has accumulated any information in the way of his- tory of franchises or to the financial affairs of the companies that is not necessary for their work. JSTow, whether they might have found it in the files of the corporations, I do not know ; but, taking the experience that we have found in investigating the affairs of some of the corporations in existence before we took office, I would not want to rely upon their accounts or their bookkeeping. Q. Do you know of any duplication of work by either the First District Commission or the Second District Commission, on the one hand — the New York Commissions — and the Interstate Commerce Commission on the other ? A. I cannot recall any, par- ticularly in my own work. I can see how there might be some- thing of the sort in the up-State Commission, because they are dealing with steam roads running to another territory; but I do not recall any instance other than the one I spoke of, other than the reports of the McAdoo tunnels, that looked like a confiict of authority between the Commission and the Interstate Commerce Commission. Q. ]^ow, Mr. Willcox, tell us what, if any, amendments to this law might have made the work of the Commission more effective, or more efficient, basing it on your judgment? A. I would sug- gest this as a suggestion purely, to your Honorable Board : That, if the 'law is amended — I think the law as a whole is a good law to-day, as it stands to-day, and I want to go on record as stating that — but I think that if the Commission had power to designate members of its staff as examiners in taking testimony, it would be a good thing. Q. Like the Intexstate Commerce Commission ? A. Like the Interstate Commerce Commission. It would be a good thing and save time frequently of the Commission. I know when we were working out these dual contracts — Q. Let me interrupt just a moment. Would you have them make findings of fact to the Commission ? A. I would have them take testimony, the same as a sitting Commission. The sitting Commission is not bound by the question of rules of evidence. In Final Eepoet of Joint Legislative Committee 1539 our informal hearings, or complaints, we take practically all that is said. Q. Those men down in Washington do make findings of fact? A. I know they do, but I am referring now more to the taking of testimony in informal cases. I have seen many times when there are two or three Commissioners engaged in two or three different hearings on matters that are perhaps important to the neighbor- hood complaining of the service, but where it was necessary, or desirable, to have the whole Commission in conference on im- portant subjects. I know that was particularly true in working out the dual system contracts, and very frequently I could not get a quorum of my Board together to confer on the most important subjects, because they were giving their time to taking testimony oftentimes in what may be considered unimportant cases, although, of course, I do not want to admit that any individual complaint is unimportant. Q. Do you think it would have been easier to have gotten a quorum together if you had had three Commissioners instead of five? A. ISTot necessarily. Q. You should have hunted the other fellows up and got a quorum? A. Yes, but I have seen the time when four Commis- sioners had been sitting in four different rooms hearing evidence. I believe that would be a good thing if the Commission had the power to appoint members of their staff as examiners in certain cases. Then there was another point I want to call your attention to, because this was a matter that was presented to three Legisla- tures, and that is the question of the review of orders by certiorari. At the present time, lie hearings are conducted — the complaint hearings — -not observing the exact rules of evidence, and when these hearings are complete and the corporation does not want to obey the order, a writ of certiorari is secured, with all the endless review that takes place in getting the case ready, going to Court and on appeal, and very often by the time the certiorari proceed- ings are finished, the order is of no consequence because it has run into another season. As I have always understood the object of the Legislature, it was to give to the Commission the power it had in settlement of these matters. Take the eighty-cent gas case, for instance. The Legislature took it upon itself to pass a eighty- 1540 Investigation of Public Service Commissions cent gas law. JSTow, suppose, for a moment, that the company could have sued out a writ of certiorari upon the various hearings before the committees of the Legislature and upon various sub- jects before those committees and gone to Court with a writ of certiorari, to have a Judge pass upon the facts whether the Legis- lature was warranted in passing a eighty-cent gas law ? It would have been ridiculous. The company had its right to go into Court and protect itself by injunction and by proper hearing, but it could not review a legislative action by writ of certiorari. I think that is a weakness of the Public Service Commissions Law, particularly in the regulatory side. You know that the United States Courts take a different view of this matter, particularly the case of Pren- tice against Atlantic Coast Line, 211 U. S., 210 ; and yet our Courts have taken the ground that every order, no matter how small, is reviewable by writ of certiorari. I think the Commission should consider whether the writ of certiorari in those cases should not to be abolished and the right of the corporation to resist any im- proper order by injunction. Q. On the ground that the order would be confiscatory in eff-ect ? A. Yes. I think they should have the right to go into Court on the question of every order, but not by certiorari ; because if you go to the expense of selecting five men to sit in a Commission, to pass upon the facts upon which an order should be granted, it is inconsistent that some one man, simply because he is a Judge, should set up his judgment on those facts against the Commission, who represents the Legislature and is acting upon the order of the Legislature upon those items. By Senator Mills : Q. Mr. Willoox, we have heard a good deal during the last few weeks about informal complaints and the way they were handled by the Commission, and we find that the secretary has been ac- ' customed to handle informal complaints and to dispose of them wherever possible. I want to ask your opinion whether, on the whole, the Commissioners themselves could not have handled those complaints more effectively, providing those that were puerile and had no merit had been previously weeded out by the secretary? A. I think the method we had when I was Chairman of the Com- mission was effective. The secretary, as executive officer of the Final Kepoet of Joint Legislative Committee 1541 Oommission, of course, handles these matters ; but you must bear in mind that we bad a trained railroad man of many years' ex- perience, who looked over and passed upon these complaints and ansv7ers to them, particularly as regards railroad matters; and it was in his department that these complaints were looked into and worked out, and the communications, naturally, of course, eman- ated and were carried through the secretary's department. My own judgment was this: That if we receive a complaint regard- ing the service on a road, say in Flatbush, or The Bronx, or ISTew York, or any part of the city, that the investigation and report of a trained railroad official and his assistants to us is of more im- portance, and helps the Commission better, in coming to an under- standing of what they ought to do. It is far better than if a Com- missioner jumped on a train and went up and observed the cars from the curb and tried to make a count themselves. Q. I quite agree with that, only that was not quite what I had in mind. It appeared that the secretary handled these complaints and they never even reached the attention of the Commission. A. I would not admit that that was the general policy when I was the Chairman of the Commission. I am willing to say that a great many of them were handled that way, but we had our Committee of the Whole meetings about three times a week, and sometimes oftener, and complaints of service were then taken up by the Commission. Q. The informal complaints ? A. Not the informal complaints, not the little complaints. There was always a note sent out with an informal complaint, and an answer sent back, and if it was not satisfactory, it was then considered by the Committee. Q. Did the informal complaints go to the Commission? A. They did go to the Commission. It is a question of judgment as to whether each Commissioner should go over each informal com- plaint which came to the Commission. Q. Mr. Whitney has told us that the general practice has been to have the secretary write a letter, and if it has merit, he him- self takes it up with the corporation, and it never even reached the eye of the Commission ? A. That is so on a great many of them. It might have been a neglectful duty on the part of Commissioners not to go over those orders. That is a question of judgment. My own judgment is that many of these informal complaints can be 1542 Investigation of Public Service Commissions bandied just as well through the secretary, who is the executive jfficial of the 'Commission, the Transit Department, as though the Commissioners went into it themselves. Q. Let me ask you another question, basing your answer on your experience as Commissioner. Would you say you could get better results if corporations were brought up short as soon as they violated an order by a Court proceeding rather than negotiat- ing with them and attempting to get results that way ? A. I think it would depend upon how much of a violation it was. The theory of proceeding in Court upon every violation would soon land the orders of the Commission in contempt, so far as my experience has been. It is an unpopular thing to speak of, and I want to speak with due respect, but I do not think the attitude of the Courts, during the first two or three years, to the Commission's order — the judicial orders of the Commission — was friendly; and if you need evidence of that, if you will read the various cases upon which those are rendered, you will see it. By Colonel Hayward: Q. In line with Senator Mills' question, it would depend some- what upon the Legal Department the result you would get in Court ? A. That might be true, but I am speaking of the experi- ence in the past. I am willing to say that with reference to the cases I have had. By Senator Mills : Q. Then you think that, except on informal occasions, you get the better result by trying to induce the corporation to comply with the order rather than attempting to compel them to obey it ? A. It depends on the circumstances and the order and the viola- tion. ISTow, let me make an illustration, if I may, to illustrate just what I have in mind. I think it may be fairly stated that, before the Commission came into existence, there was no more unpopular corporation in town than the Consolidated Gas Com- pany. I know the papers were full of criticism about the service and all that. After the Commission was formed, the president of that company, Mr. Cortelyou, assured me it was their purpose to take care of complaints and to render good and efficient service. He instituted a bureau for that purpose, and our informal com- Final Eeport of Joint Legislative Committee 1543 plaints and others were transferred to them quickly ; and instead of the old method of neglect, the new method of taking care of these complaints was carefully looked after. There were hardly any orders as regards actual service in consequence of this made against the corporation during the five and a half years I was Chairman of the Commission. There were some general orders issued, which were objected to for a time but afterwards accepted and carried out. I want to point out that the efficient work this Commission did resulted in that company rendering good and efficient service in this town, and is due to the fact that the Com- mission was ready to send its complaints to this corporation and was ready to issue orders if those complaints were not rectified; and that the results have been obtained just the same as in the case of this perennial egotist who appeared here yesterday. He talks about contempt for orders. Why, it was the sword of Damocles hanging over him. that made him give good service, and he would have you believe he was a newly-found prodigy in rail- road matters ; but the fact was it was the order for new equipment that brought him to his senses. It was the constant fear of orders of this Commission and that 'Commission that has kept him in line. I think that is the power of the Commission, in having those things done by the corporation, and having it known by the cor- porations and the public that the 'Commission stands ready any instant to insist upon a certain kind of service. That is where the power is. We have I do not know how many policemen in this town — something like 10, 000 and I do not suppose that every policeman in this town is making an arrest every day, or that every species of crime has been done away with, and yet an effective, a well-known and effective police administration reduces crime just as a well-organized commission will hold the servants of these corporations in line. Q. Mt. Willcox, take your own illustration: Suppose there was a traffic policeman up town here on Park, or 'Madison, or Fifth avenue, and you came down every morning with your car at about forty miles an hour, and that particular traffic officer on that comer let you go by every day, now, what would be the in- evitable result? Why, you would keep on doing that, wouldn't you, as long as that officer did not stop you. His presence, if he lets you go by every morning at an excessive rate of speed, would 1544 Investigation of Public Seeviob Commissions not be a deterrent ? A. No, but if he let me go by three or four times and warned me, that would be the end of it, and although we have good automobile laws and a very good line of policemen to enforce them, the fact is that they do not always arrest every man when he exceeds the limit ; and while I have seen lots of cases where I wish it would do it, nevertheless, they do not enforce that law at every point. I do not want to put into the category of be- lieving that law or orders should not be obeyed. I believe they should. Q. Or else not be made ? A. Yes, but I do not believe that you can proceed upon the theory that the violation of every order must necessarily be followed by taking them to Court, any more than the violation of any speed order should result in a man being taken to Court. Q. Suppose the same motorists violated the order 303 times and sixty-five letters were written to him, the letters stating he had violated the order sixty-five times, would you think that that officer was doing his duty ? A. No, not in that case, but I would not say that that applied to a railway system, running trains as they are run, and on the headway they are run under here. I should say that did not apply in that case. Q. What good did the Commission think it was going to do to have this trained railroad man at this station, with his technical skill and technical knowledge, to which you refer, go out and take inspectors along with him and come back and make a report to the Commission based on his technical and unusual skill in those things, if, having his report, nothing was done with it ? A. Well, if that was the general habit, I should say that was a very poor method to follow. I know what you mean, but if that report showed that the order was a technical violation, I should not go to Court on it. Q. But how are you going to find out? A. By this same corps of men making their count and reporting to the Commission. Q. Do they report to the Commission? A. Yes, everything was opened to the Commission. The fact that we had a bureau to pass upon these matters does not mean it was not shown to the Commission. Q. Senator Mills' inquiry was whether or not the personal at- tention on the part of the Commissioners in many of those cases Final Eepoet of Joint Legislative Committee 1545 would not have produced better results. Your answer was no, be- cause you bad technical men who could better arrive at the two situations? A. I referred more particularly, 'Colonel, to the gen- eral line of complaints that come in out of which no orders ever come. For instance, a complaint would come in of a street car line, we will say, up in The Bronx, and a count had been made and we found they were not giving the service they needed, and the superintendent was sent for and the trained railroad man I speak of would take up that question and say : " ISTow here, Mr. Superintendent, that service is not adequate ; " and he would talk with him in railroad language, because he knew what would be adequate service, and if the superintendent then agreed to put on adequate service, to do it then and now, it was done, instead of issuing an order returnable in eight days and then bringing the people down who were the complainants, oftentimes poor people who cannot afford to give the time, instead of bringing them down to give this testimony, and then have it adjourned at the instance of the railroad attorney, and then have another adjournment, and finally issue the orders, we think that the first course was the best, and I still think so. I believe in its being done that way. By Senator Mills : Q. What do you say about the 303 violations? A. I should want to look into them. It is an easy thing to have good service on the subway and have fifty violations a day, technical violations. By Colonel Hayward: Q. I do not say that that is not true, but if that is true, under this law, the Commission had no business to make- that order. This order was for the purpose of giving adequate service and se- curing adequate service, and if, under that order, after it went into effect, there could still be reasonable and adequate service and yet that order be violated fifty times in one day, that order was wrong. A. Then nearly every law on our statute books is wrong. Tour automobile law, your law about seating people in the theatres and at lectures is wrong, and you have got a Board of Health Law that is wrong. By Senator Foley: Q. Your theory is that the enactment of a law is not a guarantee of its enforcement ? A. No. 1546 Investigation of Public Service Commissions By Senator Thompson: Q. Are you familiar -with the subject concerning which these alleged 30'3 violations were under ? A. ISTo, I am not. The coun- sel and I are speaking on theory entirely; at least, I am, because I do not know what those 303 violations are. If there were 303 violations, there should have been something done or the matter should have been taken up with the company and immediately remedied. All I wanted to address myself was to the question of a great many technical violations of any order, just as in the case of any statute in the city. Q. This was a service order in reference to traffic in non-rush hours? A. I do not know what the 303 violations were. Q. I understand that the violations run back not only in the Commission as now constituted, but back into the period during which you had the honor to be the Chairman of it. I speak of that in connection with the gentleman who was sworn yesterday, whom you have just referred to, although you have not mentioned his name, that he was not claiming much for himself, but he claimed considerable in a negative way in reference, to the Commission. He said that your orders were not based on sense, and that you did not intend to force them when you issued them, or words to that effect, as I understood it. A. Well, I do not think that anything Mr. Whitridge says, outside of the craze of his own personality, is entitled to very much credit. There was one or two things he left unsaid that I wished he had given you light upon, because he has never given the public light upon them. He complained yes- terday that the Commission, after I left the Board, did not give him as many securities as he wanted for the 59th Street line; but he did not tell the Committee why they paid $300,000 more to the road than it was bid off for at foreclosure sale, at public sale, and he did not tell who got that money. I wish he would tell the public about that, because that is about one-eighth of the stock of that road. And then he did have a grievance against us, which I v/ill con- fess to having disagreed with him on. He testified under oath before me, sitting as Chairman of the Commission, that, of the 3535,000,000 of bonds on the Third Avenue system, there was no svidence under earth, on .the earth, or above the earth where Final Kepoet of Joint Legislative Committee 1547 $21, 000,000 of that money had gone; and yet he insisted on our capitalizing that in the new plan of reorganization, and when I asked him whether he had taken steps to compel the restitution of that ■$21,000,0'00, he was in about the frame of mind he "was in yesterday, because he admitted he did not know. He said it would cost too much, when I asked him how much it would take to prose- cute it and find out about it. He said : " Two hundred thousand dollars." But, when he was drawing $Y5,00'0 a year, it seemed to me, that, to pay out $200, 000' to find out whether he could compel restitution of $21,0'00,000 was something his stockholders and bondholders should have the right to know about, why he wanted to put $21,000,0'00 in water into the securities of the road. By Chairman Thompson: Q. It is very evident that the Public Service Commission and the Third Avenue Eailroad, through its receiver, did not get along entirely harmoniously. A. It did not. He did not think we had any right to compel service ; but, nevertheless, we ordered him to put his cars in shape, and he did ; we ordered him to put on wheel guards and he did; and in one case, he put a car out without a wheel guard, and it run over some one, and I dare say he did not tell you people how much he paid to settle the damages in that instance. Q. That brings up the interesting proposition of salary. You were drawing $15,000 a year? A. As Chairman of the Com- mission. Q. And four others $15,000 more? A. Yes, sir. Q. That made $75,000 ? A. Yes, sir. Q. And the receiver of the Third Avenue Railroad Company drew as much as all you five ? A. Yes, sir. Q. Well now, is there anything in the question of salary, as to whether $15,000 a year is a proper salary for a Public Service Commissioner, who has to cope with men who draw five times the salary that you did ? A. Do you want me to give an opinion on the salary? Q. On the salary proposition, yes. A. I do not think the salary is any too large to draw the men that you want to draw on the Commission ; but as public officers go, I dare say that it is as high as you can place it. I have always felt regarding the Commission 1548 Investigation of Public Service Commissions that it should be more and more upon the standard of the Courts so far as its position is concerned, and so far as its salary is con- cerned. Q. That is, let the State pay the man some in money and some in honor, and he would feel he was compensated? A. Yes sir, and I think that when you get a Commission of the right men, the same as you get Judges, it is always better that they should be kept in office. I do not say that peTsonally. I do not say that I eared to remain in the office, except that I would have liked to stay a few weeks longer than I did. By Senator Foley: Q. Would you say that about the present 'Chairman ? A. About his theory ? Q. About his ability ? A. I should say that the present Chair- man is a man of very great ability, and I think that the City of New York owes Mm a great debt of gratitude and should thank him for standing up and signing those contracts, a debt of grati- tude that will long be remembered in this town. Q. You and he ought to be even now. He said about the same thing in reference to you. A. I do not know about that. I be- lieve in speaking the facts when I am asked a quesition. Q. Well, the idea I have is this: That if you could make the Public Service Commission — a Public Service Commisssioner — have the same place in the community as a justice of the Supreme Court has, where the position would be sought after as much as a matter of honor, as a matter of salary attached to it, thereby the State could pay some of the salary in honor and some of it in money, and thereby compensate the incumbent of the office, the same as the president of the railway ? A. I think you are on the right line there. I think you have the correct idea. I think they should be on the same standard and be the same class of men. Q. I wish you could tell me how you can do that and have them out digging subways and sewers. How are you possibly going to do it ? A. I think the highest priced talent in the country is ad- ministrative, and if you can point out to me any bigger adminis- trative problem than that of carrying the number of people that our subways carried every day, I would like to see it. Q. That is administrative and not judicial? A. I claim that administrative power is higher than judicial. Final Repoet of Joint Legislative Committee 1549 Q. Engineering? A. Not engineering. You know that ad- ministrative ability in every walk of life pays greater than ju- dicial. You know in your own profession, as a lawyer, that a lawyer with administrative and executive ability has a far higher income than a man with purely judicial ability. Q. I feel like a lawyer to-day. I won a case in the Court of Appeals yesterday. A. I want to congratulate you. I hope you will always be as successful. By Assemblyman Knight: Q. I would like to ask a question, Mv. Willcox. You stated that you would advise the extension of the jurisdiction of the Com- mission of the First District to the telephones? A. I would in this district. Q. Of the First District? A. Yes. Q. Do you also advise the continuation of the number of the Commission as now? A. I think that it should be, especially with this additional work. Q. And you also advise that the subway construction work bo continued under the jurisdiction of the Commission? A. I do. Q. Do you think, then, that in the light of the volume of work that is now imposed upon the Commission of this district that they would have the time to devote to the telephone question ? A. I do, because the telephone is practically one company. It is a natural monopoly. It is practically one company. It is much easier to deal with than to have a dozen different railroads to deal with, running in different parts of the city. Q. Is not that why jurisdiction was given to the Second Dis- trict, because of the quantity of work given to the Commission of the First District ? A. I was not in the counsel of the Legisla- ture, but I think at the time that the burden of extra work put upon the Commission by the subway matters was one of the reasons alleged why jurisdiction was given over the telephones to the up-State Commission ; but you must bear in mind that while now the work of subway construction is very great, I think I can say — although I have not been in the Commission for two years — I think I can say that the work leading up to the solu- tion of the question and the adoption of these contracts was per- haps more burdensome and onerous, so far as taking the time of 1550 Investigation of Public Service Commissions the Commissioners is concerned, than it is now, with these con- tracts working under the enginering department of the 'Commis- sion. I do not mean to say by that that there is not a great deal of work to be done in awarding these contracts and keeping track of them, but my notion is that the time of the individual Com- missioners should be freer now than it was the last two years I was in the Commission. Q. What do you think about the extension of the jurisdiction of the Commission to Long Island and Westchester County? A. I think it might be wise to extend, including the purely Metro- politan District. I have not very strong feelings on that. Q. What do you say as to the recommendations made by Presi- dent Low with reference to extending it to just the suburban line? A. I think that the idea should be. Senator, to include the subur- ban district. Now, if that is Westchester, or part of Westchester, or if it is the east of Long Island or west of Long Island; but the idea should be to try to cover the Metropolitan District. Q. I took it from what he said that perhaps if that were done it might extend even beyond Westchester County. The question is whether you should advise the extension beyond Westchester County or not ? A. My idea — I do not think I can state it any better — was that there should be included in this district what you might call the Metropolitan System. Q. One other question: I think probably you did not answer with reference to some amendments which you would suggest to this section. What do you think as to whether any reference should be made with reference to the penalty clause ? A. I think it would be more practicable, especially in view of the 'attitude of the Courts in some of these cases, frightened away by the large penalties. If it was amended so as to read : " Not less than a certain sum, not less than $1,0'00 or more than $5,000," it means the same thing, but I think it would be better to read as I stated. Q. Do you think it wise to leave it to the discretion of the Com- mission ? A. 'No, the fine has to be left with the 'Court; but if the Court has the discretion of making it not less than $250,000, or not less than $100,000, or not more than $500,000, it would be better. I have heard a good deal of criticism in that respect. Of course, the fine should be not more than $5,000 and means you might make it $1. Final Eepoet of Joint Legislative Committee 1551 Q. That is just the aTgament that has been advanced here by a number of people, that if you bring your action for the penalty of $5,000, that is the very complaint that it has its effect upon the trial jury. Why could it not be fixed by statute that the Com- mission could, in its judgment, determine the amount of the pen- alty which it should bring their action for within certain limits, say $5,000? A. I rather think you would have to leave that to the 'Courts, but the matter of fine, I think, should say : " Not less than so muoh or more than so much." They could give any verdict they wished. Q. As it is now, it is not less than one cent and not more than $5,000? A. I say it might take the edge off. That does not ap- peal to me as much as to some, but so many people have urged that that I treat the idea with respect. Q. To other questions, considerable has been said about the number of these complaints that have been made to the Commis- sion in which it appears that they have not been brought to the attention of the Commissioners themselves, the record of the case. There is one further inquiry. You spoke of the secretary as the executive officer of the Commission. "Would you not also say thatj under a situation such as has been depicted here, these numerous repetitions of letters in a single complaint, that it was the duty of the secretary to have called the matter to the attention of the Commission ? A. Well, I do not think there w.as any time when I was in the Commission that the members were not generally familiar with what was going on in regard to complaints. When I spoke of the executive officer, of course, it is the secretary's duty to send out all complaints. If any Commissioner takes action on anything, it is always sent out through the secretary's office. Q. You said that was necessarily so in a great many instances ? A. I think there are a great many instances in the Commission's work, or in the work of any large organization, where a certain amount of the work has got to be done by subordinates. The ques- tion is to what extent the Commissioners shall devote themselves to informal complaints and matters of judgment. We might differ on that. Q. What I had in mind was where these complaints have been made — reference has been so frequently to these complaints — that it ought to be expected of either the secretary or some other 1552 Investigation of Public Seeviob Commissions of the officers of the various departments that these continued vio- lations should be brought to the attention of tbe Commission itself. A. My own recollection of this work, when I was on the Commis- sion, was that while I was cognizant of every single letter and com- plaint that came into the office, if the road was falling down on service, I was pretty sure to know about it and the other Commis- sioners were, because it was brought up in executive sessions. Q. Do you think you have answered my question ? Do you not think it was the duty of the heads of the departments, or the sec- retary — the head of the Transit Department or of the secretary himself — to draw the attention of one or two of the Commission to the fact that these frequent letters would indicate that the order was not accomplishing any result? A. That was so; but I am unwilling to admit it is so. By Colonel Hayward: Q. Do you think that the people down at Westchester and Long Island desire this benevolent assimilation ? A. No. I do not. Q. Have any of them expressed the desire to come in? A. I live on the north shore, in the summer, in ll^assau County, and I have lived there for three or four years ; and a good many people have said to me: " We wish your Commission had juris- diction over this thing or that thing; " but I do not want to urge that as a reason at all. It is simply an answer to your question, such as I had heard spoken of. I do not think there was any cry- ing demand for it. By Chairman Thompson: Q. What is there a crying demand for here? A. You have opened up a pretty broad question, Senator. In what respect ? Q. In any respect. I want to know what there is any crying demand for ? A. I do not think there is any crying demand for the addition of Long Island and Westchester. Q. Is there anything that occurs to you as to what there is a crying demand for ? A. To finish up the subway as quickly as he can. Q. What can we do about that ? A. I do not know of anything that you can do. Final Report of Joint Legislative Committee 1553 Q. What is there a crying demand for that we ca-n do ? A. I had not thought of coming here to instruct you in your duties, and I would not want to attempt to do it. Q. That is all. By Colonel Hayward : Q. What was the ultimate outcome of this proposition you had up with Mr. Whitridge, where you referred to the $21,000,0'00 ? A. The application for those securities was refused. Q. In the first place, when was that? A. That was back in 1908-1909, I think. It was the plan of reorganization of the Third Avenue Railroad, and we refused to allow the issuance of the securities asked for. That was appealed, and in the Court of Appeals Mr. Whitridge's company won, the Court holding that section 10' of the Stock Corporation Law was not repealed by the Public Service Commissions Law, and that the old statute which permitted bankrupt corporations to reorganize and issue securities up to the limit of what was done before was carried through, and consequently those securities were issued, as well as those of the New York Railroad Company. The point I want to make was her© was $21,000,000 it was stated — I do not know whether it was so or not — but I had the sworn statement of Mr. Whitridge that there was no evidence on earth, above the earth, or under the earth that twenty-one millions was spent upon the property, and yet he was asking for securities to be issued for something that did not exist. That is the only point I wanted to make on that subject, except the one that he had taken no steps to compel the restitution of this $21,000,000. Q. Was there anything the Board might have done? A. I did not understand the Board's authority. Q. Did you think of that at all? A. We did think about it, just the same as we thought to send every page of our testimony to the District Attorney at night, as soon as it was taken ; and yet there was no action by the District Attorney. By Chairman Thompson: Q. Do you think something ought to be done about proceeding for the restitution of the $21,000,000 ? That is a good deal of 1554 Investigation of Public Seevice Commissions money down here, is it not ? A. I am a countryman, but it seems to me it was a great deal of money. Q. Do you think they ought to proceed ? A. I thought at the time it ought to be pursued in view of that statement. Q. Do you think you had a^^thority to pursue that ? A. I knew I did not have. Q. But you did know you had authority, under the Public Service Commissions Act, to request the Legislature to amend that so as to give you authority ? A. They amended it. Q. Did you ask them to amiend it to give you authority to get this $21,000,000 ? A. No, that was none of our business. Q. Why do we talk of it now if it is none of our business ? It was $21,000,000, and it would have been something to the stock- holders of the Third Avenue Railroad if they could get some of this $21,000,000? A. I do not want to say that I believe that the Public Service Commission should take the position of the presi- dent or receiver of a railroad to recover what is due to it. I do not really believe you want to put that in my mind. Q. But you knew they ought to get it ? A. I did ; I say I note. I simply say this, Senator : That he testified to the fact that there was no evidence that the money had ever been spent, and he was at that time before us asking us to issue securities for that money, to issue watered stock, — that is what it amounted to. Q. You should have built a fire under him to get that twenty- one million. A. What fire could we build ? Q. If this twenty-one millions was in sight — A. I do not know as it was in sight. Q. If this Committee thought we could get it, we would try pretty hard. A. You have got the authority to sue this cor- poration. Chairman Thompson. — Assemblyman Knight says the amount is unimportant. ■Senator Foley. — Assemblyman Donohue says : " How could you build a fire under them when there was so much water ? " Colonel Hayward. — That is all I have. I have no other ques- tions. Final Report of Joint Legislative Committee 1555 T. iS. Williams, called as a witness, testified as follows : Direct examination by Colonel Hajward: Q. Mr. Williams, what is your position with the Public Service Corporation, or some of them? You are connected with the B. R. T. ? A. President of the Brooklyn Rapid Transit Com- pany. Q. And the administrative head of that system over there, are you not? A. Yes. Q. How long have you occupied that position, Mr. Williams? A. About four years. Q. And as such, you have come in contact more or less with the Public Service Commission and its subordinates, I presume ? A. Both during that time and prio^r to that time. My connection with the company has extended over a period of about twenty years. Q. E"ow, the question has been brought up here about the differ- ent functions exercised, or supposed to be exercised, by the Public Service Commission. Of course, you are familiar with what led up to the adoption of the dual subway contracts and the partici- pation in the deliberations of the Commissioners and the Board of Estimate and the road, more or less, are you not ? A. Quite so. Q. Have you ever thought of this thing we have been talking about here, Mr. Williams, about " transferring the constructive powers — the powers under the Rapid Transit Act — now exer- cised by the Public Service Commission over to some department of the city government ? Have you given that any thought ? A. I have. I have thought of it very seriously. Q. I would like to have you mention them. A. When I got the Chairman's letter, I started to dictate my views, feeling they could be so expressed more satisfactorily and imparted to the 'Committee more easily than by oral examination; so with your permission I will read you my replies to your inquiry. This letter is addressed to the Honorable George P. Thompson, Chairman Joint Legisla- tive Committee. " I have your letter of the 19th instant, request- ing that the Committee of which you are Chairman may have the benefit of my views publicly expressed in relation to certain mat- ters which you have outlined and which are the subject of a special investigation under joint resolution of the Legislature. With your permission I will take up first the third inquiry of 1556 Investigation of Public Service Commissions your letter, namely, as to the desirability of transferring to some branch of the city government the functions now exercised by the Public Service Commission of the First District relating to the construction and regulation of Rapid Transit facilities within the City of jSTew York. " Whatever may have been the reasons in the Public Service Commissions Law of 1907 for vesting in the Public Service Com- mission the powers of a purely local body, namely, the former Board of Papid Transit Commissioners, such reasons have largely disappeared since the dual system contracts of March 19, 1913, were entered into. Those contracts may be said to have settled for a long period of time the development of rapid transit facili- ties in the City of ISTew York and the relation of public utility corporations thereto. Both the construction of rapid transit lines and the operation of those lines when constructed are purely a matter of local interest and concern, and should be supervised by local authority. The contracts establish a quasi-partnership be- tween the city and the transportation companies, an alliance pregnant with serious consequences both to the finances and to the welfare of the city and its people, and it is neither logical nor wise that the carrying out of those contracts, both as to construction and as to operation, should be entrusted to a State Commission. There is scarcely any single function of city government likely to be of more importance, or of greater interest to the people of ISTew York, than that which pertains to the creation and regulation of rapid transit facilities. " I would suggest, therefore, an amendment to the law whereby the powers of Public Service Commission for the First District conferred by the Rapid Transit Act, and all regulatory powers of that Commission under the Public Service Commissions Law as they affect the public utilities with which the city has entered into contract under the Rapid Transit Act, be transferred to a single- headed municipal department, the chief of which should be ap- pointed by the Board of Estimate and Apportionment. It is need- less to say that such department officer should be a man in full sympathy with the dual system contracts, a man of administrative experience, of executive talents, fair-minded and honest. With such a man at the head and with competent assistants there is not the slightest reason why all the duties of the office should not be Final Ebport of Joint Legislative Committee 1557 exercised by one person, with the result of insuring greater ex- pedition in action, more intelligent decisions, and a closer center- ing of responsibility than would be possible with a multi-headed Commission of varying capacities and with less individual ac- countability. " The transfer could be effected without delaying the work of the rapid transit construction. I assume that so competent a chief as is Mr. Craven, with the necessary corps of assistants, would be transferred bodily to the new department, so that there may be no delay or confusion. Such a transfer would not cause as much delay as would be occasioned by a replacement of the pres^ ent Commission, as is apparently supposed. Indeed, I have no doubt that the engineering work would thereby proceed more rapidly than at present, for the engineer would then report to one man instead of to five. The necessary legal assistance could be obtained from the Corporation Counsel's office. In my judgment, moreover, the services of a great number of so-called experts and statisticians could be well dispensed with for in order to justify their salaries they seem to find it necessary to throw unreasonable obstructions in the pathway of construction progress. " There are many advantages to the city in the transfer which I have supposed. As an investor of $256,000,000 in rapid transit, and as an interested participant in the earnings of an investment of nearly five hundred millions of dollars in rapid transit, the city, and not the State, is vitally interested : "First. — In the honest, wise and economical expenditure of the capital invested, and " Second. — In the profitable operation of the facilities acquired and established, using the word ' profitable ' in the sense both of financial returns to the city and of transporta- tion service to its people. " The responsible representatives of no enterprise equally great would seriously think for a minute, as an original proposition, as entrusting such a responsibility to a Commission in whose selec- tion they had no voice, and over whose actions they have no con- trol except in refusal to approve routes or to authorize appropria- tions. The expenditure of appropriations, whether economical or 1558 Investigation of Public Seevice Commissions extravagant, and the operation of the rapid transit facilities when constructed, whether reasonable or prodigal, or whether rendering adequate service to the people, are now largely beyond the city's jurisdiction and control. " It should be emphasized that the city's interest in this rapid transit program is not by any means limited to its investment of money. Its interest is going to be equally great in the operation of the transit lines, for it will depend upon that operation as to whether the taxpayers are to be called upon to meet a heavy bur- den of deficits in the city's fixed charges, or whether their taxes are to be lightened by fixed charges fully earned, and a distribu- tion of devisable profits. " Therefore, it is just as essential that the city should have full regulative power over operation as that it should have administra- tive power over expenditure. If you will look at the contracts of March 19, 1913, you will find that substantially every regulatory power imposed by the Public Service Commissions Law upon the Public Service Commission is resented to the city in those con- tracts. Service, equipment, accounting, fares, extensions, de- preciation, etc., are all covered completely, and it is expressly con- templated that the powers of supervision may be transferred from the State Public Service Commission to a city administrative body. There should be no duplication of regulative authority. Therefore, it is both proper and wise that all regulatory powers, as they affect the public utilities covered by those contracts be transferred from State to city authority. If it be considered de- sirable that the State should still retain through its Commission the power to approve stock and bond issues of the corporations, contracting with the city under the Eapid Transit Act, and to re- quire publicity of reports under a uniform system of accounting, these matters could be easily provided for without in any way interfering with the program of transfer outlined above. " Of course, the creation of a new city department, such as I have suggested, would not in any way limit the powers of the Board of Estimate and Apportionment which it now has under the Eapid Transit Act. Xor need it increase the present detail duties of that Board. The Board would still have the respon- sibility of approving routes, plans, contracts and appropriations recommended to them by the head of the new department, just as Final Eepoet of Joint Legislativh Committee 1559 it now has similar power of approval over matters of like nature transmitted to it by the Public Service Commission for the First District. But it -would have the very necessary responsibility and control of an undertaking so important to the city's finances and to the welfare of its people. " Such a change as I have outlined would make possible other reforms. It would so reduce the volume of work for the Public Service Commission for the First District that if thought wise that body might be merged with the up-State Commission, or at least could be reduced in members, resulting, under either action, in a great reduction of expense. " I think it would be wise also if the jurisdiction of the bridges, so far as relates to rapid transit operations, be transferred to the proposed new city transit department." In this connection, since dictating this letter, I have observed the testimony given on this particular subject by the Mayor and other members of the Board of Estimate, as well as by gentlemen who have been heretofore connected with the Public Service Com- mission, and who are familiar with ithese contracts; and I must say, that while most of them approve the principle of the transfer which I have suggested, not one of them, with all due respect, has given a single substantial argument why that transfer should not be made at once. I would not for a minute advocate such a transfer if it meant the creation of a mere subordinate power of the Board of Estimate and Apportionment. My suggestion would involve the creation of a new department. The man selected for that department would create the department. It would be such a man, if properly chosen, who would give dignity -and bring ability to the discharge of the duties of that department. Instead of imposing any additional responsibility or work upon the mem- bers of the Board of Estimate and Apportionment, it would actu- ally relieve them of responsibility, because they would have con- fidence in the man of their selection and would naturally accept his recommendations as to routes, contracts, etc., possibly more readily than they now accept and act upon similar recommenda- tions from the Board of Public Service Commissioners. This question of close relationship between the corporations contracting with the city and the city is, to my mind, one of the most serious questions in its possible influences affecting the welfare of this 1560 Investigation of Public Seevioe Commissions city and particularly the welfare of its treasury. To-day tlie city is likely to be obliged to go to its taxpayers for large additional sums in order to maintain the ordinary growing expenses of the city government. If that burden on the taxpayers is to be in- creased by large deficits in the operation of these subways, deficits in the payment of the city's interest charges, why the taxpayers are going to suffer materially from that condition. They have a very vital interest, therefore, in seeing that the contracts ar-e in operation profitable to the city. By Chairman Thompson: Q. Eight there, am I correctly informed that the dual subway contracts give a guarantee of a certain earning capacity in the operation of these new subways to the operating company ? • A. The contracts generally, so far as rental is concerned, are based upon the assumption that, by the contribution of existing facilities and the contribution of new capital, from the pooled earnings of existing lines and new lines shall be deducted, first, what is and what was at the time of affirmation of the contracts, regarded as- the present earning capacity of those existing lines, and second, interest and sinking fund requirements on the new capital invested. The reason those preferences were given was primarily because of the execution of the contract in matters of service, equipment, expense of construction, length of haul for one fare, and on the matter of stringent performance of the contract, were such that capital could not be induced to go into such an enterprise except upon that arrangement for preferential returns. Q. ISTow, these preferences are to the operating companies, not to the city ? A. To the operating companies. Q. And assuming there is not enough in the gross earnings to meet those first two preferences, they have first a guarantee by the city of these contracts ? A. There was no guarantee whatever, and I am speaking more particularly of our contracts, with which I am more familiar than with the Interborough contracts; but I understand the principle is the same in that contract. If the Interborough Company, or our own company, should not earn its own preferences, there is absolutely no guarantee except that it is provided that the deficits shall be accumulated and taken out of future earnings, if earned. Final Kepoet of Joint Legislative Committee 1561 Q. So that it amounts to the same thing? It amounts to the same thing as a guarantee, because the city does not get a cent of interest for its money until these preferences are taken care of ? A. If the company did not earn the preferences, there would be no obligation on the part of the city to make good those prefer- entials. Q. They would have to pay interest on their bonds? A. Un- doubtedly they would have to pay interest on their bonds, and it was foreseen, when the contracts were entered into, that, in the case of each company, for a considerable period of years, the expense of lines to be constructed, the abolition of second fares, the length of haul, the standard of equipment, it would be a con- siderable number of years before the properties would earn full interest on the city's investment as well as on the company's investment. Q. What I was getting at. Colonel Williams, was that the people of the city are just as much interested as the operating companies, very nearly, that a line should pay when you started to operate it ? A. You are exactly right. You have struck the nail exactly on the head. There is not any interest in these contracts which the companies have other than what the city has, and the city, in some respects, has a more vital interest than the companies. Q. Except that the city takes second place and the company first place? A. They take the second place financially, but in welfare to the people in the extension of transportation facilities, why the people are getting a dividend long before the companies are. Q. Well, proceed. A. Now, I could enlarge on that question of costs and the value to the city of transferring this power to the Board of Estimate or to a department created by the Board of Estimate; but I hardly think it is necessary. This contention I have made is the result of two years' operation under the new con- tract. I have seen instances where the expense to the city has been, and might have been, very largely increased by reason of the fact that the approval of contracts and the determination of poli- cies under the contracts have been in the hands of a Commission that did not feel actively, sincerely and constantly its responsi- bility financially to the people of New York. I can point to you, by way of illustration, to the signal contract which has been re- 1562 Investigation of Public Seevice Commissions ferred to in this investigation, where two members of the iCommission were adverse to the adoption of a signal plan, the very best that has ever been devised for any railroad in the country, far ahead of any- thing, and involving a saving to the city of about $171,000 directly in cost of legislation and in an annual saving in expense of maintenance in operation over the bid that was obtained under the original invitation on the original specification. It took the Commission of five pretty nearly three months to settle that ques- tion and two of them were adverse to the saving of that amount of money and to the adoption of that superior system ; and when I asked Mr. Maltbie, one of the dissenting Commissioners, whethcir if, in two or three years after this improved system had been put into operation — or, rather, after the system specified in the origi- nal specification had been put into operation — if he had his way about awarding the contract, would this new system which we might have obtained had been tried elsewhere and found to be a great advantage over the existing system, whether he, as a Public Service Commissioner, would not then be likely to call upon us to discard all of the investments we have made, and at an untold cost of millions of dollars, and install this new system, he said, very frankly, and with that flippancy which sometimes character- izes him : " Yes," certainly he would. That is not a businesslike view at all of a serious question of that kind. If he was interested in the city government, he would never tried to take that posi- tion. That is but one instance of a tendency that must always exist in a commission that has no direct 'responsibility to the people or the city. By Assemblyman Knight: Q. Colonel, there is one question I would like to ask. I think the bid to which you refer was the General Signal Company, Mjc. Williams ? A. Yes, that was the bid that was finally adopted. Q. And the last bid submitted by the 'General Signal Company was about $100,000 under the bid theretofore made ? A. Directly ■and indirectly it meant a saving of between $100,000 and $200,000, about $171,000. Q. About eight or nine hundred thousand dollars off the origi- nal bid by the General Signal Company? A. It was about $500,000 higher than the low bid. Final Repoet of Joint Legislative Committee 1563 Q. I would like to have you explain to me, if you can, how a saving of $500,0'00 can be made by the difference in the two types of contracts proposed ? A. Well, in the first place, the new type proposed saves considerable expense in the installation of the equipment. It simplifies very much the equipment. It substi- tutes a cab system of signalling for a track system and requires considerable less outlay. Q. Can you think of anything more than that? There seems a big variation in the bids of the two companies ? A. The final result was brought about by an earnest and careful investi- gation. Personally I take great pride in the fact that that signal system was settled as satisfactory as it was. We were confronted, when we began the matter of signal equipment, with the fact that practically only two companies in the whole United States were, or seemed to be, equipped to handle that business. It is a growing business, and evolutionized art. These two companies, the Union Switch & Signal 'Company and the General Railway Signal Com- pany,'were the two companies that have done most of the in- stallation through the country. They were the companies that engineers of experience usually looked to for doing work of that kind. Now, it was easily foreseen that those two companies might get together over night and hold this big enterprise up for a tremendous sum for the installation of whatever was necessary. At that time, there came to the front a company which had been doing business for some time, which was called the Federal Signal Company, doing a certain kind of signal business, and there was the old Hall Signal Company, which had also been doing a certain type of business, but not the type of signal business covered by the field of the General Railway Signal Company and the Union Switch & Signal Company. It was to our interest to stimulate competition. The first contract we had to let was in the Centre street loop. Three or four of the companies bid on that contract. The General Company was much the lower and the contract was given them. The next work was what was called the Broadway-Myrtle avenue connection, and there the Hall 'Company was the lowest bidder, and, against the advice of our engineers, because that company had not had experience in that line of work, we awarded the con- tract to the Hall Company. The next contract was another con- tract for the Centre street loop, and there the Federal Company 1564 Investigation of Public Seevioe Commissions was the low bidder, and we gave tbem the contract. Tlien came the general specifications covering the larger enterprise, and bids were invited from all four companies and received from all four companies; and on the basis of those specifications the Federal Company was the lowest bidder, much the lowest bidder. "We should have preferred, because they have been the lower bidder on other occasions, and because from intimations that we had received, they have resisted importunities to join with other com- panies, we should bave preferred to have given the contract to that company; but at the time of the opening of the bids, the General Company announced that tbey had a superior plan under con- sideration, covered by patents for wbich they had been negotiat- ing, and they would like the privilege of submitting tliat plan. We gave them tbat privilege, doubtful of its being anything except a desire to again get into the competition; but our suspicion was unfounded. The General Company did come back with a propo- sition which seemed to have very much merit, and our own engi- neers and the engineers of the Public Service Commission all approved it. If successful, it means a revolution in the signal business, and I haven't any doubt but that it will be successful; but I was not willing to go to the Public Service Commission and recommend the awarding of the contract of the approved system to the General Company unless they could show us that it would mean a very substantial reduction in cost; and I talked with the officers of the General Company for days and finally got them down to the figure of $100,000 less than the Federal Company, with a collateral saving on account of the abolition, or modifica- tion, of speed control on the cars, of $71,000 more; and under those circumstances it was my duty, and our executive committee considered it was its duty, to recommend the awarding of the con- tract to the General Company; and I would have been derelict, and the Public Service Commission in my judgment, would have been derelict, in its duty to the people and its duty to the city, as a financial proposition, if it had not accepted the better device that was offered at the very much less cost. I could go on with these illustrations, but time is going on, and unless you particu- larly wish them, I will not give them. (Witness continues to read from letter, as follows:) Final Kepoet of Joint Legislative Committee 1565 " The above suggestions cover in part the matters referred to in your inquiries numbered second, fourth, fifth, sixth, and seventh. These inquiries are further referred to below in answer to your first inquiry, namely, as to ' whether the Public Service Commis- sioners are personally efficient, and whether there is any ground for just criticism of their official actions either separately or as a body in their district.' My comments will of course be based upon my observation of the Commission for the First District since its original organization in 1907. " It will be conceded that the very broad power of regulation conferred by the Public Service Commissions Law presupposed a very high standard of regulators. Unless that high standard can be attained, regulation of public utilities by an agency of the State is certainly doomed to failure. I think I express a general opinion when I say that this high standard has not yet been at- tained. There is doubt in the minds of many competent observers whether it can ever be attained. Nevertheless I think the people (and most of the corporations) are not yet willing to abandon the principles of regulation until it has been clearly demonstrated by further trial that the services of competent 'and efficient regulators cannot be procured. " Without any disrespect to any of the gentlemen who have occu- pied the position of Public Service Commissioner in the First District, I think the statement is indisputable that not one of them from the creation of the Commission in 1907 to the present time has had at the time of his appointment any administrative or tech- nical experience which has qualified him for the duties of his office. They have been, with few exceptions, men of sincere pur- pose and industry, but they have had no preliminary acquaintance with or training in the matters entrusted to them by the law which have fitted them for the task. They have all had to be educated while in office to the necessarily complicated problem which they have been called upon to decide. In some instances this lack of preliminary experience has been supplemented by temperamental or mental characteristics which unfit them for impartial, fair- minded and intelligent decisions. The results of this situation have been procrastination, in decision, and some cases serious matters disposed of by orders based upon either ignorance, preju- dice or lack of moral courage. 1566 Investigation of Public Sebvice Commissions " Fortunately, the grafter in public office lias largely dis- appeared, but in his place has sometimes come, too frequently of late, the officeholder who is intellectually dishonest and mentally invertebrate. He has no convictions, or if he has any, is afraid to express them unless they are popular. He has one ear pointed constantly towards newspapers or popular applause. Such a m^an is more dangerous and harmful in our system of government than the grafter, for the grafter can be reached through the Penal Code and the machinery of justice, but the man who is dishonest intel- lectually and is willing to pervert official powers to gratify his own vanity and selfishness cannot be reached except by pressure of public sentiment when his hypocrisy is exposed and this process of correction is sometimes slow. It is the entrusting of large powers to men of that caliber which has frightened property inter- ests throughout the country and has brought more injury than benefit to those whom regulatory laws were intended to serve. Honest business has no fear of honest and intelligent regulation; it has a right to ask protection against dishonest and unintelligent regulation. I am glad to say that men of this type have been and are the exception in the Public Service Commission, but their influence on the actions of the Commission has nevertheless, in some instances, been too dominant. " In industry and attention to duty the present Commission has been the equal of its predecessors. Its limitations have been due primarily to lack of administrative experience in large matters, and the inevitable indecisions and procrastinations which result from such inexperience. Without a,ny special previous familiarity with this particular work, however, the chairman, Judge McCall, has exhibited to a marked degTee those essential qualifications to a presiding office, namely, absolute fairmindedness and executive energy. " As to changes in the law, I have no particular suggestions to make except those which I have presented above in discussion of the transfer of authority over rapid transit m^atters to a city depart- ment. There is one phase of the law, however, to which some attention has been given by your Committee, and, which I think should be further carefully considered. I refer to subdivision 2 of section 49, which requires the Commission, whenever it shall be of opinion after a hearing that the service of any railroad cor- Final Eeport of Joint Legislative Committee 1567 poration in inadequate, to determine the just, reasonable and adequate service thereafter to be enforced. This provision of law has been construed by the Commission in practical application to authorize it to prescribe railroad timetables. I do not believe the law ever contemplated such minute regulation by the Commission, for this construction practically makes the Commission the operator of the railroad. In the case of our own companies, orders have been made describing the exact headway on which cars or trains shall be run and prohibiting any changes in the schedules thus described whether increases or decreases. This is an assump- tion of rsponsibility which even the directors of the railroad com- pany would not undertake to assume. They properly leave such matters to the operating offices, and every railroad man knows that especially on street railroads schedules have to be changed almost constantly in order to meet the changing requirements of traffic. The railroad superintendent has to be on his j*)b all the time adjusting his schedules to changes of weather, to accidents and breakdowns, to sudden variations in travel, and to reconstruc- tion or alteration of tracks and 'structure. It is absurd to assume that five public officers giving necessarily incomplete consideration to these matters and being all without practical railroad experience can fix railroad schedules in a manner satisfactory to the public. The result of the attempt, with the threat of penalties, if orders are violated, is to make the railroad operator feel that he is no longer primarily responsible to his company and to the public for giving adequate service, but to a Public Service Commission. That situation is wrong in theory and vicious in practice. The law properly gives 'authority to the Commission to see that service is reasonable, just and adequate, and there are many ways in which that authority can be made effective and useful without the official promulgation of railroad timetables. If necessary the law should be amended to make clear the limit of the Commission's authority." The above suggestions — those which I have made with regard to authority — cover those inquiries in four, five, six and seven. Chairman Thompson.— Is that all? A. I have some matters to refer to informally here, but I do not care to take the time of the Committee at this hour, when I presume you are anxious to 1568 Investigation of Public Service Commissions get to lunoh. I 'will do whatever you say. You have asked me to come here and express my opinion. Q. I want you to come here and express your opinion. A. I have felt, whether those opinions were of any value or not, I would be derelict in my duty if I did not at least put you in possession of suggestions which seemed to me to be pertinent to your inquiry, and which, if I did not make, you might later criticize me for not making. Chairman Thompson. — Well, Colonel Williams, it is our idea that it is our duty to investigate the working of this law, and if we come to that conclusion, to recommend to the Legislature possible changes in the law. Now, we do not feel that we can make such recommendations intelligently unless we hear from representajtives of all interests affected by the law, and we have called you witnesses, representing the large transportation in- terests here in the city of ISTew York, and we have called other wit- nesses, because we wanted your ideas ; and we have been very glad to have your ideas, and if there is anything that occurs to you, we would be glad to hear from you; and if they occur to you after to-day, we would be very glad if you would write the chairman any time as long as we are in existence. A. Thank you. I have approached this subject in the same spirit, and any comments I have made, or am to make, I make without any desire to criticize any existing officeholder, but if possible, in view of the prospective changes in the Commission, make the suggestion which seemed to me to be necessary to the proper organization of such a Com- mission. ■Colonel Hay ward. — Mr. Chairman, cannot Mr. Williams com- municate to us these additional ideas that he speaks about ? Chairman Thompson. — Oh, yes. Colonel Hayward. — Mr. Cortelyou has not taken the stand, or a Mr. Shouts, and we are coming back anyhow, and perhaps Mt. Williams would be willing to oome back then. Senator Cromwell. — Mr. Cortelyou indicates to me tha/t he has meetings later in the afternoon, and I think it would be courteous to hear him. Final Report of Joint Legislative Committee 1569 The Witness. — I shall defer any further testimony until this afternoon, if you wish. Chairman Thompson. Senator Lawson, of Brooklyn, wants to know something about that Eastern District. The Witness. — I am glad he does. I would like to know some- thing about it myself. Chairman Thompson. — Then you can interrogate each other. He wanted ^to know if you would come back this afternoon. The Witness. — I shall be very glad to. iColonel Hayward. — Then, may we temporarily suspend with Mr. Williams so that Mr. Cortelyou can get away ? Chairman Thompson. — Yes. Geoege B. Coetelyou, called as a witness, teiitified as follows : Chairman Thompson. — We have not been going through the formality of making witnesses of you gentlemen. We have asked your opinions. We are not going to swear you. Direct examination by Colonel Hayward : Q. Mr. Cortelyou, will you tell the reporter what ofSclal posi- tion you hold here, and the name of the company that you represent ? A. President of the Consolidated- Gas Company of New York. Q. For how long ? A. About six years. Q. You had the same letter that the other witnesses who were called had ? A. Yes, I received the same letter. Q. Have you prepared something? A. I have no prepared statement. I came in here to answer any questions or give any information that would be of service to the Commission, that might be asked in questions. Q. Have you taken up the subjects touched upon in the chair- man's letter, and can you give me some suggestion? A. Would it not be well to take them up categorically, and then talk about any points that may occur to you ? 50 1570 Investigation of Public Service Commissions Q. Yes. A. As to the transit matters, unless some questions are ask^d on those, I ■would prefer to pass over that, and the first question would be as to whether the Public Service Commissions Law, as enacted in 1907 and since amended to date, providing for two Commissions, in two districts in the State, has proved to be a satisfactory organization of the Commission and whether the Public Service Law has proved substantial and sufficient legisla- tion on the subject. Answering that in general terms, I say " Yes." The third is as to whether the Public Service Commis- sion, First District, is exercising inconsistent functions, namely the quasi-judicial exercise of regulatory powers over public utili- ties and also the exercise of administrative powers in the matter of the construction of new rapid transit facilities with the city of New York. Theoretically yes; practically no. The next is: And, if so, ought legislation be had either in the interest of the proper exercise of proper utilities regulation by a Public Utilities Board who may, in order to effectively regulate, the better perform the duties by not being required to perform some other inconsist- ent official act, taking a great deal of their time, or in the interest of a proper administration in the construction of a local improvement and an acknowledgment of the theory of home rule, ought adminis- trative functions, novsr exercised by the Public Service Commis- sion, First District, be transferred to the city of New York, or to the Board of Estimate or some proper department thereof. To that I would answer substantially as I answered the previous ques- tion, theoretically, for the most part, yes; but practically no. I can understand how strong might have been the argument origi- nally to vest such authority in the city government, but at present I think it would result in some waste, and not a little waste mo- tion, in many administrative details, to make such a transfer. In other words, I believe it would be better to leave the transit prob- lem now in the hands of the Public Service Commission, where it is. Fourth : " Has the organization and maintenance of a Pub- lic Service Commission of the State of ISTew York proved itself a proper and satisfactory and necessary governmental function of the State, which the State ought to exercise — " yes, in general terms. " And if so, ought the organization thereof be further maintained in two departments in two separated districts. And if continued in two separated districts, ought there to be any ter- Final Eepoet of Joint Legislative Committee 15Y1 ritorial clianges in the boundaries of the district ? " I believe it would be better to maintain the present organization of two Com- missions. While I do not feel very strongly as to taking in of territory, I think it would be in the interests of good service to add Long Island to the First District Commission's supervision. As to Westchester county I am not so clear. I know you have heard in your meetings here what was referred to as the Metro- politan District. I think there might be some strong arguments adduced for taking in that Metropolitan District territory and put it under the First District Commission; but to give merely an expression of judgment I should think that it would be just as well to leave Westchester territory where it is at present, under the jurisdiction of the up-State Commission, having their jurisdiction come down to the city line ; because if there were no line of demar- cation between the jurisdictions of the two Commissions will give rise to some at least conflict in the jurisdiction and authority. By Colonel Hayward: Q. You would have to fix an arbitrary line up there at some point as long as you had two Commissions? A. You have got to get an arbitrary line for that, and I should think the city line furnished the natural boundary ; " We would like to be advised as to whether in the present administration of the Public Service Commissions Law there is duplication of functions either (a) between the Public Service Commissions and the city administra- tion." I have not given a great deal of thought to that question, very probably because we have not experienced serious difficulty in connection with it. My personal impression is it would be better if certain of the franchise duties of the Bureau of Fran- chises of the Board of Estimate and Apportionment were turned over to the Public Service Commission, leaving to that Bureau of Franchises certain questions as to openings of streets and physical questions of that sort, but giving to the Public Service Commission in connection with the granting of franchises the very important matter of financial payments in connection with the granting of franchises. " Between the Public Service Commissions and the public service corporations." That would be a rather difficult question to answer. As to the duplication of functions there, because by a duplication of functions for instance in the case of 1572 Investigation of Public Service Commissions the Commission under its regulatory power impinges upon the management of the company and I might state there is in all Pub- lic Service Commissions a tendency in that direction, possibly in- separable from broad authority bestowed upon them^ there is great danger of that and we must in the future guard carefully against, the danger of regulation taking on a greater or less extent manage- ment. By Chairman Thompson: Q. You think there must be a line of demarcation there some- where ? A. They certainly must have. " Between the separate districts of the Public Service Commission " — as to the question of duplication. We have not in our company experienced difficul- ties in that direction ; although there have been indications at times that a little greater degree of co-operation between the two Com- missions would be an advantage to the public. The same question might be at the same time before two commissions ; it may not be requested simultaneously; they may not deliberate upon the case at the same time, and they would have to render a decision, and there is the embarrassment until the other commission has acted, where the jurisdiction of the two commissions covers one State; but I have no very strong feelings upon that particular point. Lastly, " Between the Public Service Commission of the State of 'New York and the Inter-State Commerce Commission of the United States." That our company does not touch in any respect; although from some previous knowledge of the work of the Inter- State Commerce Commission I can understand that some of the matters of regulation might easily conflict. " Also seek advice in reference to suggested amendments to the Public iService Act in the interests of protecting the law in consistent or isolated instances which may occur to the minds of experienced and inter- ested persons. Seventh: In conclusion the Committee deems it their paramount duty to recommend to the Legislature any sen- sible, necessary and practical amendments to the Public 'Service Law and the Public Service Commissions Law, either of substan- tial or collateral character, which experience under the Act may have proven to be of value to the State and in the interests of per- manent perfection of the law and also proper and satisfactory administration thereof." Now, Mr. Chairman, that brings up the Pinal Kepoet of Joint Legislative Committee 1573 large question of amendmemts to the existing law. I have had something to do with the effort to frame a utility law and for some- thing over two years through the National Civic Federation we worked on that rather large problem, the idea at first being to pre- pare what was then called a model law. When attention was called to the fact that such designation of the law added very materially to our responsibilities we dropped 'the word " moclel " and contented ourselves with proposed draft of the utility law. There were many conferences held, many sub-committees met, and among these sub-committees, on the sub-oommittees were repre- sentatives of all interests concerned, some from public service com- missions, others from utility companies, some occasionally referred to as representing the public, as though neither of the others repre- sented the public, in any event, they were supposed to be repre- sentative. After many meetings and a greait deal of discussion, much of it of a heated character, and properly so, because the ques- tion is a big one, and it brought out the real opinions of those participating, and that was published as the best thought of those meetings. Of course, it did not represent the views probably of any single individual who took part in those discussions; it repre- sented the best thought that could be had after a canvass of all the questions involved and problems presented. Now, I take it, that the law now existing in this State, is to some degree of that same character; it represents a great deal of thought, and a great deal of care in its preparation. Personally I feel that certain sec- tions of it probably should be amended in some slight degree, both to the advantage of the corporation and to the advantage of the public, because in the last analysis the interests of the two are so closely related that if any change were made it must be made hav- ing in view both interests. I think, for instance, that there are certain sections of the present law that might easily be amended by striking out repetition. By Chairman Thompson: Q. Yes, there is a good deal of that there. A. I am sorry to say that applies to most of our laws. In other words, the result is that in drawing a section it takes a page where half a dozen lines would cover precisely the authority intended to be granted and so give opportunity for extension of authority which is to put a burden 1674 Investigation of Public Service Commissions on the expenditures of money of the Commission and needless burdens upon the companies regulated. Now, I can understand in the case of the First District and Second District that at the beginning it was necessaiy to gather together facts, and gain infor- mation, as a foundation for future work, for a future set of cases ; but after some seven years or more have elapsed since the enact- ment of the law one of the criticisms that I would make I think is to a certain extent inherent in the system, and it is not aimed at the individual Commissioners or at the Commission as a whole, but that it has already obtained so much of this foundation infor- mation that it could well relieve the companies regulated of the burden that is now put upon them of calling yearly and frequently during the year for a mass of information, of the things obtained the whole year, and you gain statistics, gather statistics of no earthly use to anybody. There come times when — Chairman Thompson: Q. Do the companies when complaint of them is made, the statute requires a certain amount of expenses shall be paid? A. Yes, and it requires a certain amount — Q. It requires a certain amount of expenses in the Commission, for the Commission to pay when received, which is used for the same purpose ? A. I think that inheres in some of our provisions, some of the provisions of the law which the Commission has to pay for and after much of this information which is practically useless is received, of course. We are obliged to file a yearly report, and that report is unnecessarily diffuse because after such report is filed the Commission can come in at any time and go over our books and papers, and in response to other requirements reports of that character might be curtailed, and curtailed materially, and it comes a request for information received constantly during the year and there again I think there might be a material curtailment. Now, I have read in the press of quite frequent references to complaints. I do not want to be put in the position of volunteering any information as to the conduct of the State or governmental bureau, but we have complaints in our case, and it would be foolish to say we do not, covering a great city and doing an enormous business there are bound to be com- plaints; some of them just complaints, many of them unjust; some Final Kepoet of Joint Legislative Committee 15Y5 of them failing to realize that we have no responsibility whatever about the matter complained of; for instance, in the gas business we get frequent complaints involving the breaking of fixtures in a house, the companies have no responsibility whatever with that ; possibly a failure of construction, and in many cases leaks, and notwithstanding the fact we have no responsibility we are sum- moned to give first aid, you might call it. We receive complaints and every one is carefully and minutely attended to, and incident- ally in case it appears urgent a man is despatched at once to attend to it and report the case back as to what has been done ; frequently after that report showing a satisfactory adjustment is received a letter is written to the complainant and he has assured us there is absolutely no further grounds of complaint. IsTow some of these complaints also go to the Public Service Commission. Q. You are speaking of the complaints bureau that you keep yourself? A. Yes. I say some of these complaints go to the Public Service Commission at times, and the complaints that go up there do not come to us. I think the practice has been in the Commission to notify us at once in case of complaint and ask us what we wish to do about it ; in many instances we reply by telling what investigation we have made ourselves and the result, and in other cases possibly that has come to our attention we immediately investigate and make such a report. Now, when their complaints reach the Commission, or our report, you would naturally suppose they would go into the bureau or some office having to do with them, just as an executive officer of a corporation will not attempt to handle every case of complaint personally, because many of them are unexpected matters which come at short intervals and in the meantime are investigated for a so-called frame-up, and so in the Commission's bureau the officer charged with that duty doesn't need to go with every little complaint to the executive officer. After they come if they are at long intervals .to the Commission or at frequent intervals and unannounced they are simply informed that they have been received. Q. If the company had a bureau of that kind with the fellow that had charge of it and authority to make his orders — you refer to those complaints that have been complied with ? A. Yes. If they didn't do that it would be idle to turn them over to the depart- 1576 Investigation of PnBLic Sekvice Commissions ment or a subordinate if they didn't give the subordinate power to follow them up until they are satisfactorily explained or adjusted. But the Public Service Commission is rather an arm of the gov- ernment established for the benefit of the citizens — Q. Yes. The Public Service Commission is an arm of the government established for the benefit of citizens who has not got the money nor the patience to wait for the enforcement of what was the law to get an expeditious enforcement, that has always been the law and the Public Service Commission should be the strong arm of the ordinary citizen who cannot afford to go to court and establish his rights ? A. Yes. Q. That is what it ought to be maintained for. And if the ordinary citizen don't feel he is getting justice when he goes to the Public Service Commission, the Public Service Commission will fail, won't it ? A. That is right. Chairman Thompson.— That is all the questions I have. A. Now, while I do not imagine there will be opportunity for any material amendment to the present law, there are one or two sug- gestions that occur to me that might be considered, not as exhaust- ing what suggestions I would like to make if I only had sufficient time to make the suggestions; but for instance as to the amount of regulation over municipally-owned plants. That does not affect us materially in this jurisdiction, but it does affect the up-State jurisdiction; there are quite a number of municipally-owned plants, and I cannot for the life of me see any argument against complete publicity of the workings of such plants, and the com- plete regulation of them by the Public Service Commission. The public is entitled to know all about that, and further than that the privately-owned companies, as part of the public are entitled to know all about them, so that when comparisons are made we should know every possible detail as to what we shall have to meet. We discussed that- at considerable length in framing the Civic Pederation law, and it was finally agreed that it should be incor- porated and that was I believe about the time of the investigation made by the Illinois Legislature which came to the same unani- mous conclusion, and I am inclined to think that the best thought of those who have studied the question deeply is that there should be that kind of regulation of municipally-owned plants. This Pinal Hepoet of Joint Legislative Committee 157T mass of informatiou of those companies required to be turned in yearly to the Commission, and frequently that means that this year about the same time we turn in what was turned in the year before about this time. I can understand how in a report it is a convenience to have the information, but if it is encouraged it makes an unnecessary burden of work for the companies reported ; then again, it often calls for unnecessary detail, and I think that this grows out of the provision of the law, which may be changed in some slight particulars to make such treatment unnecessary and the calls unnecessary. When we come to the very large ques- tion of the supervision over security issues we have, I think, one of the glaring and unfortunate features of lack of sufficient flexi- bility in the treatment of applications for the issue of securities. There are cases in which the decisions seem to be based upon the idea either that the return must be of practically the legal rate of interest, or violative of certain well-established business princi^ples to an extent that the applicant either loses an. expailding market for the sale of his securities or suffers material loss in other respects. If there can be introduced in the law in such a way as to secure the amplest publicity of proposed security issues, and in every other respect safeguard the public and greater latitude along the lines accorded business generally I think it would result in advantage to all interests. Q. You think that that tendeoicy has to some extent prevented railroad building the last four or five years in this State? A. I wouldn't speak with any emphasis upon that, I am not well enough informed upon the details, and would have to go into that. Q. I simply have heard of that suggestion. No one would risk their money, risk the loss of their money for 6 per cent., that is what you mean ? A. I mean precisely that ; and some of the later decisions of public service commissions have spoken of 7 per cent. and 8 per cent. Q. That is the same thing ? A. That is the same idea. It em- phasizes the appeal made for greater flexibility in the treatment of those matters and safeguarding the interests of the public by a little wider latitude in the interest of the public. I think that covers what I want to say unless you gentlemen have some ques- tions you wish to ask. Unless you have I have a letter, written some time ago, in which I sum up my ideas on the subject of regu- 15Y8 Investigation of Public Service Commissions lation, in these words: " I am not opposing proper regulation of public utilities, but I believe it would be better to have further experience under the kind of regulation you now have, drastic as some of it is, before we consider its extension. I do not believe that such legislation should be permitted to become at any point an encroachment upon the management of the companies. As I do not believe in municipal ownership, I do not believe in those subtle encroachments which mean a modified form of it. Already, with the powers conferred upon them, commissions have great difiiculty in discharging with reasonable promptness the business that comes before them. The whole system of regulation is in great danger of becoming unwieldly, both State and national. Of course, if the power of commissions is to be all-embrathis service to the people up there ; that, although the Public Service Commission think that the people should have it — and, of course, the people are sure they should have it — that it is the hostile, or stubborn, attitude of the Interborough that is preventing that from being done. I want to know if that is the fact — of course, it is a fact if, to put in that station, would accommodate those passengers, even though it would not produce any more revenue for the Inter- borough that should not be done? I want to know if that ever came to your attention personally ? A. It has not come to my attention in that way. Q. And even if it were the fact that there was a temporary hiatus here, on account of this contract, that precluded the Public Service Commission from taking action, do you not think that the Interborough should do something to help those people in that section ? A. Yes, we want to do it and we are doing it. Q. I mean it in this way, by giving them this extra sitatlon? A. We have been giving extra stations at other places, and I know of no reason for not doing it there if the facts warrant the ex- penditure. Q. What do you mean by " The facts warrant the expendi- ture ? " A. If the travel on each side of the new station they want reflect such a growth as would justify this additional ex- penditure. Q. You understand, Mr. Shonts, that you are getting all the passengers with the two stations which you would get with three? It would not help the company financially. It would not help the Interborough. A. If your attention has not been called to it, I will call your attention to this now: That, under contracts one and two, any expenditures of that kind, if made, are made at the city's expense, and we guarantee that fund the same as on the gen- eral fund, and that is amortized during the life of our lease, and the city gets it free, but in the first instance, it is the city's money- 'Now, we have always operated and co-operated with the city au- thorities on the theory that we did not want to do anything from Final Report of Joint Legislative Committee 1645 their standpoint or ours that was not fair to the city's finances as well as to the public. Chairman Thompson. — Inasmuch as it is a joint obligation, it seems to me that there should be joint action ; but I do not know that we have ever been the dii-ect cause of preventing any improve- ment where there was any reasonable excuse for it. Mr. Shouts, I was going to ask you one question. Now, you say that you were in partnership with the city'^ A. Yes. Q. And you said yesterday that you did not think that regula- tion ought to extend in any way to the operation of your road; that there should be a line of demarcation ? A. Yes, sir. Q. Do you not think that in some things, on account of the peculiar situation that exists between you and the city in the part- nership which you have, that the city should have something to say possibly about that operation ? A. I think the city — if I did not make myself clear yesterday on this point, I will do it to-day — I think the duty of this Commission is to see that we give reason- able service in view of all the conditions that exist in any part of the city. Q. You stop there ? A. Yes, sir. Q. And getting at this: You have got a preferential on the profits of this partnership ? A. We will have when that contract becomes effective. Q. And your operating expense comes out of this ? A. Yes, sir. Q. And then a reasonable amount of dividend comes out? A. Yes, sir. Q. And then the city gets it share, and then you are both in- equally on the residuary legatee equity? A. The city gets as much as we get. Q. Now, take your salary and salary of your superintendents and the operating expenses, and your overhead charge, should not the city have something to say about that ? A. It has. The con- tract covers all those things. It will have when the contract be- comes effective. That has not yet become effective. Q. When yoTi start operation under the dual contracts, that will come. A. All those things have been taken care of, and the salaries would be by consent of the city's authorities. Was that all? 1646 Investigatiojn' of Public Service Commissions Colonel Hayward. — Yes. The Witness. — I want to thank you very much for letting me leave this order with you. Chairman Thompson. — We are glad to have it. We would like to have anyone come back and explain anything they have to offer. If you have anything more to offer, we should be glad to hear from you at any time. The Witness. — Thank you. Chairman Thompson. — We will suspend now until 1 :30 p. m. Hearing adjourned until 1 :30 p. m. AFTEK KECESS JosiAH White, called as a witness, testified as follows : Chairman Thompson.^ — Proceed in your own way and tell this Committee what you desire to with the understanding that your time is limited to five minutes. A. I will answer some of the questions addressed in the letter to witnesses. The first one is " To ascertain whether the Public Service Commissioners are per- sonally efficient and whether there is any ground for just criticism of their official action, either separately or as a body in their dis- trict." I will say as to that, that I think it is imposing too much upon the education and the formal functions of the members of the present Public Service Commission, to expect them without any knowledge of transportation affairs, without any knowledge of the subjects that come before them, to expect efficient service of them. I agree with Colonel Williams in what he said yesterday about the want of knowledge of the subjects that come before them, and with one exception I don't think there is a member or has been a member of the Board of Public Service Commissioners who is familiar with the subject-matter of cases before them. We have had in my experience of fifty years in the transportation and in transporta- tion reform for the last thirty-five years, going before the New York State Legislature and before the National Legislature on Interstate Commerce Law, and we have had the greatest difficulty in the world of procuring proper talent to serve upon the Oommis- Final EeI'oet of Joint Legislative Committee 1647 sions. Our first effort was to get a Railroad Commission which would accomplish — after seven years going to the Legislature we got a bill, a measure passed on the pattern of the Massachu- setts Railroad Commission Law; we put into that law a salary of $15,000' a year, for this purpose: In order to secure expert talent, I suppose it would be in those days, an average salary for those days of $10,000 was considered a sufficient salary, but we wanted to get expert talent, and we had in the law a provision for certain portions for engineers, etc., to compose that Commission. We make a great mistake. We were honest enough in our desires, but we made a great mistake in making that salary so high, for the reason that the ofiice holders, the seekers after office of the different parties which should be in power always craved those positions with such a large salary and we didn't get any experts on it. l^ow, coming down to this Commission, it was framed upon our Railroad Commission, and I had a conference with our good Governor Hughes and tried to give him ideas as to who might be utilized to put on that Commission. By 'Chairman Thompson : Q. Are you responsible for the appointment of those fellows by the Governor ; did you suggest their names to the Governor ? A. I never suggested nor asked for an office for myself or anybody else in my life, and I don't propose to, either. The second question is " Whether the Public Service Commis- sions Law as enacted in 1907, and since amended to date, pro- viding for two Commissions in two districts in the State, has proved to be a satisfactory organization of the Commission, and whether the Public Service Law has proved substantial and sufficient legislation on the subject." I answer emphatically No. This Public Service Commission has been a perfect farce. I have attended it many times together with applications from different boards of trade that have gone before it and have found them not only unwilling to allow them, but sometimes calling in a policeman to put us out. I can give you an instance of that if you want me to. Do you want it ? Chairman Thompson,-— Want what ? A, An instance of people heine nut out. neonle who had hem notified to b© 'tb©r©, Tb© OQ^A' 1648 Investigation of Public Service Commissions sion of this thing was simply this : The Chairman, the then Chair- man of the Commission, Mr. Wilcox, told us to vacate and we came there on notification and we protested against it and de- manded to be heard. Chairman Thompson. — Well, haven't we had enough of that ? A. And Mr. Whitney sent over to this building for a policeman and the policeman came over and he couldn't find any riot or any- thing of that kind and he went away. Chairman Thompson. — These 'New York policemen can't see anything anyway. A. Well, I'd know. He was a reasonable man. Now, the Public Service Law has been a complete failure. It has not satisfied the people, and if you allow the people to vote on it not a single person except Commissioner Maltbie will ever vote for it, but they believe in his integrity of purpose, and his desire to serve the public, and they don't believe a thing as to the other. Chairman Thompson. — Well, your time is limited, you know. The Witness. — Well, do you wish me to answer these questions ? Chairman Thompson.^ Well, if you can do it in the next two minutes. The Witness. — JSTow as to the third question, 'as to whether this shall be relegated, this subject shall be relegated to the State of New York, I say emphatically yes, so far as local transportation is concerned, and I say that the people should be the ones to decide who their Commissioners shall he; that they should have the op- portunity of selecting them and nominating them and electing them. It is not what we want. It is the people. They own those franchises and they are paying for the building of them. I have been for thirty or forty years of my life struggling with the idea against public ownership of railways; but when I found that the people did own and did build and pay for the building of these subways, and I saw the benefits of the earnings that inured to that operation, I say they should inure to the people ; that the city should operate these lines ; they do own them ; the franchise that is granted is simply allowing certain parties to claim tolls, why shouldn't they scramble for the whole of the operation of these lines, to get hold of it. It is for the immense profits of the line. I will build a subway from The Bronx down to Conev Island, and Final Report of Joint Legislative Committee 1649 I will give the people a five-cent fare for all the whole twenty-four hours, and I will pay 5 per cent, into the sinking fund in case of these railroads of construction, and I will put millions of dollars in my pocket. It is the profit, it is the profits of operation that these great corporations are after. Chairman Thompson. — Your time is up. It is perfectly ap- parent Ave understand it would pay to run a subway to Coney Island. Everybody goes there once a week. A. Well, I ought to say, I want to explain a little bit the theory of that matter. Chairman Thompson. — Well, theory, we don't want to listen to theories. It is only the facts that we desire to have called to our attention. Your theories we would be glad to have you write out and send them to me, send them to me and we will put them in the record and consider them just as well as we would if you go on the stand and told them to us. The Witness. — Will you permit me to answer, because I have had a lot of experience and the gentlemen who were here yesterday were allowed — Chairman Thompson. — Well, I might as well let you as to try to argue it with you. Go ahead. Take three minutes more. I would rather let you proceed than to argue it with you. I will give you three minutes more. A. Well, I want to explain what professional men do not understand at all, but what business men do understand ; that the very fact of the high price of living is involved in the transportation on railways together with the ques- tion of open markets here in New York. It is a question that every city merchant educated in old school matters understand perfectly well, and they can tell you what naturally causes the high price of provisions, but they know the cure, which is simply a commercial question. In regard to the division of these different subjects, I say that there should be a Commission right here in the city of Wew York that will have all it can do, and it is as a railroad man, as a man who has operated and built railroads, and I say that they ought not to have the supervision of these local railways; and I say that there should be a return to something similar to the old Railroad Commission, which should be a State- wide commisiion that will cover the transportation of the State, 1650 I^'vestictAtiox of Public Service Commissions and of the telephoBe and all that sort of thing, I believe those should he under the control of the city of Xew York, the same as the operatives of the great railroads do, taking care of their mat- ters. The question of five-cent fare I will say that Commissioner Cram has always shown me that he believed in five-cent fares, both for telephones and in the regulation of them and the rail- roads, the service ; but it is a queer thing that — excuse me, I will say this: that the Legislatui-e, this Legislature ought to pass laws for — fixing the rate of telephone service, fixing the rate of fares, and fixing such rates, and that the penalties shall be en- forced, but I would prefer a law officer like the District Attorney, you understand, that he should have it, and not depend upon these gentlemen to do it. Chairman Thompson. — Well, we thank you, Mr. White, for coming and giving us your ideas. The Witness. — Thank you, sir, I am very much obliged to you. Geobge VA^■ SicKLEx Williams, recalled, testified as fol- lows: The Witness. — I came over here just to make an explanation that I thought I ought to make so it will appear in the record. I don't know how much weight has been given to the testimony that was brought out here this morning. Chairman Thompson. — There didn't anybody call you a brass band. The Witness. — Xo, tliey didn't call me a brass band. I have been pretty busy and I might apologize for not being over here, but between the Court of Appeals and the Civil Service Commis- sion, and the ]\Iayor and the Coroner, we have been pretty busy. I wasn't here this morning, but I understand IMr. Sheehan — I don't want to criticize people — but I understand that Mr. Sheehan — I am very sorry I wasn't here, I was over in Brooklyn, I had to go to Brooklyn, but what I wanted to explain in that regard is this: I understand I was attacked this moruiuc; by one of these gentlemen on the theory that I had formerly been couii'iel for the Brooklyn Rapid Transit Company, and I want to (stify here as to the facts, in this proceeding. I tried cases, n^ >cnce cases in Court. FixAL Repoet of Joint Legislative Committee 1651 certain cases that were assigned to me up to that time; at that time I was connected with the firm of Sheehan & Collin, ex-Lieu- tenant-Governor Sheehan, and Professor Collin of Ithaca. I was in their office and tried cases not only for that company, but other companies that they happened to represent. About a year or two after the negligence business was transferred from them to a de- partment of the Rapid Transit Company that has tried the negli- gence cases in Court. I tried the last case, and appeared for that company for the last time in June, 1903, when I left the com- pany. I had more business outside, and they said they wanted to have their lawyers devote all their time to their work, and since that I have not been interested in that company in any way, and I just state the fact that for the first six months my private prac- tice commenced in the Supreme Court and County Court of Brooklyn. I had fifty cases, forty cases against that company, either for negligence or anything that my clients might happen to have. Chairman Thompson. — If you lived up in Western Kew York and practiced there, we would call you an ambulance chaser. A. We had no ambulance chasers at all, and those people evidently had some confidence in me at that time. I then formed a partner- ship with Judge Abram A. Daley, and anyone who is familiar with court practice in Brooklyn or in that department knows that the firm of Daley & Graves or Daley & Williams it became after January 1, 1904, I never heard anything of the railroad company, and anybody familiar with the records of the courts will know that I recovered more verdicts against the Rapid Tran- sit Company in New York and Brooklyn than I ever tried cases for them, and I think that Colonel Williams' estimate of the mem- bers of the Commission yesterday should be sufficient to show that it is not a matter of friendship for his company, and there is no Commissioner since I have been upon the Commission that has granted in any way a favor of adjournment to the company and most adjournments have been asked for by our own people. Now I notice that question of the consolidation of these roads was brought up. An order had to be entered consolidating the roads before the order could issue, the transfer order and it was under- stood, the whob Commission understood it at that time. Now, 1652 Investigation of Public Service Commissions I ask leave to put in the evidence, and my opinion in the case, the evidence as well as my opinion, the evidence that vras introduced in the case before me. Chairman Thompson. — How long is it ? A. It isn't long, be- cause in my opinion it will show conclusively everything that was done. I understand it is here now and I would like to have it spread on the minutes as something that the Committee here will take into account. Chairman Thompson: Q. When were you appointed Public Service Commissioner? A. In 1912. Q. Have you had any connection with the B. R. T. ? A. Ab- solutely none, except I tried cases for them but I never appeared for them in any way, shape or manner. Q. Of course, it would be a good deal cheaper for them to have you on the Public Service Commission. A. They didn't have anything to do with my going on the Public Service Commission at all, and there was nobody had anything to do with it at all, ex- cept Governor Dix. At the time I was counsel to the Conservation Commission at Albany, which was one of Governor Dix's pet pro- jects, conserving the natural resources of the State as he called it ; I met him very frequently. Chairman Thompson. — I never could understand Goveriior Dix. The Witness. — That is because you didn't know him as well as I do. I knew him very well and he was an excellent Governor, and I was for his renomination, and if they done as I wanted to, we would have had the State to-day and been in control at Albany, and you wouldn't have been down here, there is no doubt about that. That is all I care to say. John HoLly Claek, Jk., sworn as a witness, testified as follows : Direct examination by Mr. Wheden : Q. Where do you reside? A. I reside at Flushing. Q. I understand you have had some experience with the Public ;/-»TVlTm CClJ^Tl ITl ■f TlrCi lQa+ •XTOQf ?j AT l^nT^.<^ Final Repoet ob Joint Legislative Committee 1653 Q. Please relate your experience with the Public Service 'Com- mission. A. I was appointed counsel to the Flushing Association on January 1, 1914, and in July I went before the Commission in Case 1848, which was before it, which was introduced here in evidence while Commissioner Cram was on the stand. Commis- sioner Cram was holding hearings at that time and evidence was produced by Mr. Johnson which was very damaging to the rail- road company, and the three hearings were held, as the record here shows, and the matter was adjourned without date. In Septem- ber I went to the Commission's oiEoes and saw Mr. Crum.mey, he was assistant attorney in charge of the case, and asked hiiU what had been done, and he said nothing had been done, because the railroad company said they didn't have any money, and he thought they were telling the truth. I told Mr. Crummey I thought it was a nigger in the wood pile, and I went and saw Dr. Weber, and he said the Interborough had been charging off so much for power for the last five or six years. That gave me a clue, and I proceeded to examine the reports and found out there was a deficit of a million and a half, which was manufactured for the sake of the company to have it give decent service; the figures I found out by the record. Soon after this — that was published in the Flushing paper, and soon after that the Commission started proceedings again on October 27th. I wasn't notified of that, but I did appear ; one of the Flushing papers called me up and I went down and appeared before the Commission and brought out the facts before them. The attorney for the railroad company was very angry, and said I had no standing before the Commission, and I said Dr. Weber had testified as to those matters, matters of finance, and I was asked to appear by the members of the associa- tion, and he was there, and took up the question of the ISTew York & Queens County Railways Company, the financing of it, and I asked him to give me the facts and he promised he would do it, but I have been up there since that time about seven or eight times and saw that report of the Statistical Department. Q. When was that? A. October 2i7th, and I asked to have that and I have not seen it yet; they have not made that report yet, and they told me two or three times they were working at it but couldn't get it out. Q. That is the Dr. Weber whom Mr. Whitney referred the other day? A. That is the same party. I appeared on October 1654 IsrvEsTiGATioif OF Public Service Commissions 27th and the railway asked for an adjournment, and I objected to it, but it was granted, and on November 6th I came again and protested against their putting in these statements of their finan- cial condition. Commissioner Maltbie, Commissioner Cram and Commissioner Bassett have always held that the finances of the company had nothing to do with the service and they always held that in their opinions, but let the evidence in, and I objected to their being in evidence and asked them to rule on it, and they held that it was immaterial, but let it in, and I asked to cross-examine him on it, and was refused the right to do so, they said they didn't think it was necessary as it was immaterial. On November 20th, they did enter an order directing the railroad company to give seats to passengers on and after December I7th for each half-hour period including Sundays and holidays. The railroad company applied for an extension of time as to whether it would obey the order or not, and I appeared in opposition to that application, and on December 4th I found that the order extending the time was already prepared, and I might just as well have stayed away, but I was informed that it would be considered at that time. It ex- tended the time four days in which to notify the company — within which to notify the Commission whether the order would be obeyed. On December 8th the Company wrote another letter stating that to give seats to passengers would take some fifty-eight cars which would cost $290,000', which was afterwards proved to be false ; it was because of the tremendous amount of power equip- ment that they would have to buy. I suspected they were going to grant the application and even the letter of Mr. Johnson recom- mended that it be granted. On December 18th I received notice that they were going to consider it and on the 22d — that was Tuesday — the 22d was Tuesday — the 18th was Friday, and one of the Flushing papers called me up and said they had been advised by the car company that the Commission was going to modify the order. I immediately got busy and prepared papers in an application for a prohibition to prohibit the Commission from modifying this order in favor of the railroad company. I went to the Commission on Saturday morning, I wanted to get some papers to include in my proof on the prohibition application, and I went to the counsel's office first and found that he had been instructed to prepare this modification order, and that the Com- Final Eeport of Joint Legislative Committee 1655 missiou was prepared to sign the order aud I prepared my writ and my process server, I gave it to my process server to serve and lie went up and down Fifth avenue trying to find the directors of the company, Mr. Belmont, Vanderbilt, Vreeland, and all those fellows, and he could not get any, and finally on Monday morning he went down to the Interborough office — the motion was return- able Tuesday morning, and over Sunday I completed a tabulation I had been making showing that the .Commission in three years, from 1910 to 1912, had granted 315 out of 335 applications of the railroad companies, and that the extensions of time that they had granted during those three years amounted to about twenty-six years and eleven months ; and Judge Goff saw my contention was j ust, that there was no other way to prevent this matter except to have them prohibit the companies, if the time was extended, and of course the law was in effect that the order had to be modified. The principal thing I wanted to do was to keep the company from having the time extended, extending the time in which the com- pany could obey the order, because that would in effect nullify the law. Q. Did the counsel for the Commission oppose your motion ? A. The counsel for the Commission argued for the railroad com- pany, yes. Judge Goff took my view of the case, and made coun- sel enter into stipulation that the order would not be modified unless there was to be a hearing at which I should have an oppor- tunity to be heard. The order was prepared and was finally signed — and I had little difficulty about that. The Commission didn't modify the order, and it is still in effect. After this pro- hibition had succeeded, I thought I would endeavor to make the Commission enforce its order, and on December I7th, that was before the prohibition matter was presented, I went to observe the service with my brother and another member of the associa- tion, and found that the order was being disregarded, was being disobeyed, and that they were not paying any attention whatever to it; they were giving the service and immediately after take it off, making the people stand just willfully, the cars would go by empty and fifty or sixty people standing waiting to get there ; our lines have the distinction of having the longest standing ride in the city, we have about seven miles to stand and get on the Queens- boro bridge the cars are probably the slowest this side of China, so 1656 Investigation of Public Seevice Commissions on January 1st I prepared a mandamus, prepared mandamus papers after having other observations taken throughout the week of December 23-30, I prepared a mandamus against the Commis- sion, the Interborough and the New York & Queens. This was returnable on January 13th. I didn't expect to get a mandamus directly against the railroad company, because there had been some decisions that held that couldn't be done, and also other decisions said they were necessary parties, and I had thought the Commission had the duty as well as the power to enforce the law, and the courts to enforce it. The matter came up on the 13th and Judge Layman argued for the Commission that it had discretion in the matter. He said he had expressed in his opinion a little while ago, " The Commission is, however, I think, clearly given by implication the right to use its discretion as to when it shall seek to enforce the penalties and is expressly given the power to bring action only when in its opinion the law or its orders are being violated. No matter what evidence may be brought before the courts by a private individual that the orders of the Public Service Commission are being violated, the court can still not order the Commission to act, for the law authorizes such action only when the Public Service Commission, and not when the court, is of opinion that such violations are taking place. ISFor does a previous expression of opinion by the Public Service Commission show the present existence of such an opinion especially where it affirmatively appears that the Commission is now contemplating modifying its own orders. The whole scheme of the statute creating the Commission shows, in my opinion, a clear intent to place the regulation of the service provided by railroad companies in the hands of the Public Service Commission, and the courts should not attempt to override the views of the Commission or to force it to take action which in its discretion, whether wise or unwise, it deems unnecessary. It follows that the motion should be denied with $10' costs." I think that that $10 was a hundred times as much as they ever collected from the railroad. The order in this case, of course, stated that the Commission was of the opinion that the law was being violated, and the law provides that when the Commission is of that opinion it shall bring mandamus proceedings to enforce its orders. In the meantime, on January 6th, the subway accident FlBTAL KePOBT of JoINT LEGISLATIVE CoMMITTEE 1657 had occurred, and I had been convinced for several months from my rather persistent studies of the records of the Public Service Commission, that I ought to prepare, and would file charges with the Governor asking for the removal of at least three of those Commissioners. Accordingly on January 8th I drew charges and took them to Albany on January 11th, and presented them to the Governor. A great many of the things which were in those charges have been brought out here. We argued the case, the case which I have just been speaking about, which is still going on and the order has never been modified, it is still being disobeyed and utterly disregarded, and the Commission has taken no steps what- ever to put it into effect. I think Colonel Williams stated it right yesterday when he said that they had not the moral courage, as Commissioner Maltbie has said in his opinions, to desire to enforce the orders, but he has known for months, or for a long period, and has never made a motion that it would be enforced; they knew it was being violated, but they wouldn't enforce it. Of course, an order doesn't amount to anything unless they take action on it, and this order for this service to the people of Flushing was just throwing sop to us. I made an investigation, which I included in my charges, that I would like to refer to and have incorporated in the record in that way. One case is the matter of the service on the Jamaica line, in Case No. 1774, which was heard by Com- missioner Cram. That was the first case in which I had appeared before the Commission was January, 1914. In that case it ap- peared that in the morning between 8 and 9 quite a number of girls came from Flushing to Jamaica over the miserable line, where the headways are always irregular and you can't tell when a par is going to come along and the result is that either the girls have to stand or they have somebody stand on them. This condi- tion has existed there for several years and the railroad makes no effort to remedy it. Commissioner Cram stated that he knew these conditions existed and must be remedied, but he discontinued the proceedings and nothing has happened to it since, and it is still going on. Then Case 1527; all throughout the year 1912 and up into the year 1913 the tracks run down here in a perfectly disagreeable condition. The Interborough sold it and on the Xew York & Queens they would put the cars that weighed about thirty-two tons, 1658 Investigation of Public Sekvice Commissions I think that was a pretty heavy car, and they were running them over the tracks of the New York & Queens, and they tore the tracks all to pieces. The tracks were separated with a gap of about four or five inches between the end of one rail and another, and that caused the cars to jump across that, and that was the condition that existed throughout the line. That was particularly bad in Flush- ing, and Commissioner Cram said he had been out there, and he thought that on the evidence that was adduced as to the condition, the company would be indicted as a public nuisance, and so after he had said that he didn't do anything about it until April, when he discontinued the proceeding, because on the temporary reports of the engineer the Commission said it wouldn't do any good. Then another proceeding I would like to refer to is Case 1726, which was a matter of the Flushing Avenue extension, where the proceedings were held through October, November, and Decem- ber, 1913, before Commissioner Cram. It was for an extension of one of the lines through Flushing avenue and we were against it, but it is clear that it must be done under the forms of franchise, and the Commission could have done it, and in fact in several cases they have ordered it done without the taking of any testi- mony or making any order, simply gone and started mandamus proceedings. This testimony was all taken before Commissioner Cram in those last three months of 1913, and on December 6, 1913, there appeared in the record two letters, one from Mr. Hed- ley, Frank Hedley of the Interborough, to Commissioner Eustis, stating that the road would not obey it, and there ought to be some regrading done and he referred to a conversation that he had had with Commissioner Eustis, and Commissioner Eustis talked with Chairman McCall, and there wasn't any grade, and I should be very glad to know how they found it without maps. On January 6th Commissioners Cram and Maltbie spoke very vigorously about having the law in force, and Commissioners Enstis, McCall and Williams voted against it. I think it was a distinct dereliction of duty on their part and Commissioner Maltbie made no bones of saying so. The president of the Flushing Association has been interested with the matter and was waiting for Commissioner Eustis to leave the Board before asking for a rehearing of the matter. A rehearing was held all through this fall, and on December 7th, Commissioner Williams wrote an opinion. I assume Final Report of Joint Legislative Committee 1659 that that was what the Commission thought about the extension, saying about the extension while everybody knew that it would be a hardship on the railroad company, it was rather an apologetic opinion. They did bring a mandamus proceeding but now the railroad has applied to-abandon the route and Mr. Roberts is fight- ing to prevent the 'Commission from allowing it to abandon the route. I have been through the reports of the 'Commission of 1913 and made a tabulation of their actions of that year, which is rather enlightening. Of the fifteen proceedings on complaints, that is formal proceedings, five were disposed of in favor of the plaintiff, eight were discontinued or dismissed without action, one remained pending at the end of the year and one was a modifica- tion of an existing order then in effect for an extension of one month. Twenty-five applications for bond issues, eighteen were granted, seven are pending; eighty-nine proceedings on motion of the Commission was service and transportation companies, twenty- seven are discontinued without action, twenty-six pending at the end of the year, and eleven were modifications for the benefit of the railroad company of previously existing orders. One was a denial of the application of the railroad for a suspension of a pre- viously existing order, and twenty-two, only twenty-two out of eighty-nine, resulted in final orders. Q. Is there anything to indicate whether or not those orders were in force ? A. I know some of them were not in force. The Xew York & Queens I found some 587 violations of the order of the Commission in 1911; in the New York & Queens they didn't pay any attention to the order. That order. Case 1349, which is entered in 1911, provided that they should run a service to College Point in the evenings? A. There had never been service to College Point in the evenings; they would run up to 12 o'clock at night, and people were stand- ing waiting to get a Flushing car, and it was a deliberate violation of the order, and the Long Island railroad was in a similar situ- ation. That order was to run, on complaint of the Flushing Asso- ciation, was to run a midnight train to all stations on the north side of the division; they run them to Port Washington. They never ran them to White Stone Bridge, and last year they never attempted to comply with the order. Then the cases in Brooklyn, Commissioner Williams, they were the only ones of the service 1660 Investigation of Public Sekvice Commissions lines in Brooklynj practically all the service lines, that is, smal Sixteenth Avenue line, were without effective regulation of anj kind, and on the Sixteenth Avenue line the order is being violated and the company has never made a pretense that it was going U comply with it, and they said that if they, put cars on the Six teenth Avenue line, they would take more off the Fulton Stree line, and CJommissioner Williams said yesterday if they mean t( do that, of course, that means they have not enough cars and it ii a violation of section 37 of the law. Mr. Williams stated yester day in Case 1706, that is the Sea Beach line, they brought actior for two violations of an order and neither of them were violations, As a matter of fact, the record in that action shows that the ordei has been continually violated and there is the letter from JohnsoE to Daggett and Whitney that it was being violated right along. I don't know whether the legal department of the company was thiflking of bringing a mandamus on the basis of the two violations when they put 200 people to work on it, but that is what they have done. Mr. Williams spoke about the order in Case 1693, which was an order that the B. E,. T. should protect people on the rear platform of trains. They have so few cars that a great many people have to go on the rear platforms, and it was considerable trouble, especially in a small company. The order went into effect two years ago, I think, and they have never pretended to obey it. These cases in 1913, 226 pending cases, thirteen discon- tinued, and in 1914, four were still pending, and on January 1, 1915, only nine orders were entered. Of the eleven previous orders that were taken six orders entered prior to 1913, which were taken up in that year, and the time to comply with it had been extended to five years, two months and four days. There were ten separate rehearings granted and fourteen modifications — I am not sure all without rehearings — ten extensions made according to the previous extensions, eleven years, three months and six days. Of the twenty-two final orders entered, thirteen were allowed to stand as entered, and nine were modified after they were entered, that is, of these nine there were three rehear- ings and six modifiKiations, four of them were without rehearings in one case, 'the modification was denied of a rehearing, and nine extensions of time were granted aggregating one year, eleven months and fourteen days. The length of hearings before an FixAi, Kepokt of Joixt Legislative Committee 1661 oi"der averaged two mouths aud ten days. Length of time between the last hearing and final order averaged one month and eight days. Average time from the first hearing to final order was three months and eighteen days. That is in rather marked contrast to the bond issue eases where the average length of hearing was only forty-three days, and of the decision was only nineteen days, and that includes the Coney Island-Gravesend matter which was held up for six months. There was considerable opposition to that, and Commissioner Williams, I think, stated that Commissioner McCall transferred the matter, and it would be decided with the other matter. As a matter of fact, the transfer of stock was decided in December, and the transfer matter was not decided until the following April. Q. Do you remember the letter that was written to Commis- sioner Williams on that matter ? A. Well, there was a letter written. The hearing was closed in that proceeding, and in the Gravesend proceeding there was a little opposition to the granting of the application by the people of Brooklyn, so the Commission held it up to let the agitation subside. I presume, and in Decem- ber, I think the 19th, Colonel Williams and Mr. Chairman ilcCall — I should say Colonel Williams wrote Chairman MeCall and said in effect that they had received many informal assurances, the matter would be decided in their favor, but they had not yet received a formal modification, and regretted if it was not decided before ten days, they couldn't buy the stock at the same price. About ten days after that the Commission decided it. Q. Did you ever see an instance in the record that you have been going over here, where an action was produced by the letter of a citizen '. A. Xo. Q. From your experience with the Public Service Commission do you say it was possible for a citizen or a group of citizens of this town, even when represented by an aggressive lawyer, to obtain relief from the inadequate transit facilities from the Public Service Commission where the railroad company opposed it ? A. You cannot; no, you cannot obtain relief. You can get them to go through the motions, but they won't do it. Q. Can yoTi get a result ? A. Xo, yon cannot. Q. Did you ever hear of anyone who did get results ? A. Well, perhaps they might, but in two years it occurs to me that I have 1662 Investigation of Public Sekvige Commissions not seen a result. The order was they were to have twenty cars, Commissioner Maltbie said they were to buy twenty cars, and I found out that they had twenty cars in the barn and were not using them all this time; and he stated and intimated to Mr. Wood that he might better put those cars on, but you don't get any ade- quate result They always talk about adequate service and of granting seats for passengers, but you never get them, they never grant thein. There is no possible reason why they can't give seats for passengers on that line at night, Sundays and holidays included. The Interborough's own auditor testified, in 1908, the proper operating ratio of that road should be 60 per cent. Then it went up to 101 per cent. There is no track limitation. There is no reason why they could not, and the Commission decided they must; and Commissioner .Cram gave a good instance of the way they jumped on one side and then on the other, in his testimony. He does not believe they have any relation to the adequacy of the service. If he does not believe it, he should enter an order and enforce it and let them take it to the courts, and if the courts say as a conclusion that we must take our medicine. If they say it is not an excuse, they should issue an order and let the courts decide whether it is or not. You do not know where you are at. Their orders, particularly in the matter of this Queens line — ■ that is, the one they issued — was entered in bad faith. The first clause reads " seats for passengers," and I understood it was on the basis of twenty passengers standing in cars, and the secretary is writing letters to Mr. Wood saying this order demand- ing that you give seats to passengers in cars would operate, and all the time Mr. Connette and Mr. Johnson were talking to Mr. Wood and working on the basis of 135 per cent, load, and they were much surprised that Maltbie said if they said " seating capacity " they ought to mean it, and he did not know of any other term of adequate service except seats for passengers; and there is nobody else over there can give an interpretation of it. A Commissioner will never say what is the proper interpretation. I think, as far as the law goes, I would only have one suggestion to make, and that is in section 2i of Definitions, where the terms " common car- riers " and " railroads," etc., are defined, and include companies which control railroads. In 1907, for some reason, that word " control " was stricken out, so that it now reads " used, operated FiN-AL Eepoet of Joint Legislative Committee 1663 or owned." It seems ridiculous that the Brooklyn Rapid Transit Company and the Interborough-Metropolitan Company should not have to report to this Commission, as they never had, for their operation, as they are really the ones who are responsible, and it seems to me that it would be a very just provision to incorporate in the law to add the directors to the criminal section, which is 56-A, particularly as controlled corporations are not in it. The only one criminally liable would be this man. They were really giving inadequate service but the ones who are responsible for it are the other directors of the Interborough Rapid Transit Com- pany. It seems to me that the law should be made clear and put the responsibility where it belongs. If anybody is going to jail, put the right fellow in jail. I do not think I have anything more. Chairman Thompson. — Anything more ? Mr. Whedon. — That is all. Chairman. Chairman Thompson. — Are there any other gentlemen present who desire to be heard ? Mr. O'SuUivan. — I wrote you a letter last week. Chairman Thompson. — I have it. Do you wish to say some- thing further? Mr. O'Sullivan.— Yes. Michael O'Sullivan, called as a witness, testified as fol- lows: (Mr. O'Sullivan, during the course of his testi- mony, was sworn as to all his testimony here given.) The Witness. — If it is not objectionable, I would like to give my experience with the Public Service Commission. Chairman Thompson. — Anything that you think would be of value. A. I believe that the present Commission has long ago lost its usefulness to the city. They had a chance of being a good Commission in the beginning, and they fell down entirely ; and I also believe that all the construction work on this subject should be removed from the jurisdiction of the Public Service Commis- sion and put in the hands of either the Board of Estimate or the Finance Department. They are better qualified to supervise the 1664 Investigation of Public Seevice Commissions construction work, and they have had more experience in that kind of work, and if there is a commission needed to regulate the two transportation companies, it should be a small body of men to report violations and issue order covering the violations and see that the courts back them up. I do not see that the Public Serv- ice Commission serves any other purpose at all. For instance, on the construction of this Fourth Avenue line, there is a great deal of defective work going on there. It is very common. It is, in fact, characteristic of all the work for the last few years. Such a condition should not exist in the city department at all; so I believe it is vital that, in the absence of any specific body such as city engineer or state engineers — Colonel Hay ward. — How do you mean the work is defective, in what particular ? A. For instance, the iron columns of this construction work on the subway, which supports the route of the street, the overhead, etc., of course, it carries a great load, and they are set upon wooden blocks and these wooden blocks left in and covered up with the concrete, they are about two or three inches, and that, of course, is to save the labor of doing the work properly. By Colonel Hayward : Q. Do you mean to say there is cement covering around those blocks ? A. Yes, sir. Q. And how should it be done? A. It should be leveled up for each column. E^ow, I do not know whether that is according to specifications or not, because I was never able to get a copy of the specifications unless I paid $6. If it is in the specifications that the work could be done that way, the specifications are a fraud and were gotten up by incompetent men or a man having some other designs. Q. What will be the effect when those wooden blocks rot away ? A. First, the columns are liable to shake themselves loose. It may not do it in one, two or three years, but they will do it in the course of a few years. By Chairman Thompson: Q. Do you mean to say they put wooden blocks at the top and bottom of the subway construction? A, They are putting theiji along the sides. Final Eepoet of Joint Legislative Committee 166S Q. And leave them there ? A. Yes, sir. Q. Permanently? A. Yes, sir. Q. Where do you know of any instance of that kind? A. I have not my memorandum with me now. I can find out in one or two hours of a thousand cases. Q. In the subway construction ? A. Yes, sir. Q. Whereabouts? A. Fourth avenue. Q. Brooklyn? A. Yes, sir; and that is only the portion that can be seen with the naked eye from the street without examining underneath where the roadways are planked up and not open to the view of the public. That is w'hat you can see by casually look- ing down. Q. What has the contractor to say about that manner of con- struction? A. I do not know. He says something, of course; but I do not think he sees the whole thing. In the first place, they are running down an edge in there and cannot be set perpen- dicular. He leaves a channel on the concrete base. Into this con- crete channel the shoe or lower part of the column which was about eighteen inches square was set. You must set the thing perpen- dicular, and the shoe does not rest on the base, and a great part of it was not at the proper level ; so in order to obviate the necessity of doing that at each column, four or five or six yards apart, he runs the whole thing in one grade and levels the columns by blocks. That is bad enough, but in the projecting parts of this base, which are in both sides of this groove, there is blocks between the column and the line, and they are grooved ; but that is only one feature of the thing I want to talk about. Q. Is this a condition, Mr. O'Sullivan, that anyone can see that ? Could I see and comprehend it ? A. You can see it. Q. N^ow, you say you can see it at Fourth avenue, Brooklyn? A. ISTo, not now. It is covered up. Q. Where can I see it now ? A. You would have to go down and find tie column. Q. I would have to dig down ? A. There may be some of the work going on there now. Q. If it was open and apparent now, I would go and see it. A. There is no question about it. You can go and see it. I drew the attention of one of the subway inspectors to it and complained 63 1666 Investigation of Public Seevice Commissions about putting the wood under the columns, but they still kept on putting the blocks on the side. Q. And the Public Service Commission, if they went over the work, could see that? A. Why, everybody on the job saw it and knew it, even the laborers would know it. Whether he was a foreign laborer or an American laborer, he knew about it. But that is only one thing. If the Public Service Commission was a city organization, why, you could be bold enough with them, and they would not dare treat you with contempt and ridicule when you went in there asking for information. You could stop that. By Colonel Hayward: Q. Have you ever been treated with contempt and ridicule w'hen you went in there ? A. Yes, sir. Q. Tell us about that, Mr. O'SuUivan ? A. In one case — let me interpose at this point by saying it was testified — Q. I do not want to interrupt the reasonable orderly course of what you want to say, but if you can tell us, I should be glad to have it. A. You want me to continue? Q. Yes. A. When I tried to get a copy of the specifications, when I saw this thing going on in the Fourth Avenue subway, I went over and saw two or three people — I cannot recall their names now — and was shown a copy of the specifications and was told it would cost me $6. I have written the Commission letters — ■ two or three letters — and the replies are of the usual nature, roundabout, roundabout j and a man like me, who takes a little interest in those affairs, he does not like ridicule and does not Avant to write too many letters ; and I wanted to get a copy of the specifications, and I could not unless I paid $6. Chairman Thompson. — Would you just as soon be sworn? A. Sure. (Chairman Thompson administers oath to witness.) By Chairman Thompson : Q. The matters you have stated on the record up to now, are they true, so far as you have stated? A. They are true, except that I do not know that I have stated the number of columns. Q. The statements you have made are tTie truth, and you make those statements under oath, the same as the statements you will Final Repoet of Joint Legislative Committee 1667 make from now on ? A. Yes, sir. Now, tliat particular case, as soon as I got those specifications, so I could tell about it, how that work was directed to be done, I felt as if I was an intruder, that I was looked upon as an intruder. That is one case. I did not have the $6 and I would not pay the $6 anyway. I tried to find out whether they were ever published in the City Record, but that would entail a lot of work to go over three or four different City Records and I gave that up. I wrote the Engineering De- partment of the city regarding the work, but they did not publish it. I was sent from man to man at the Public Service Commis- sion. One day I wound up at the fifth man and got sort of an ambiguous reply to my inquiry. That is when they were building the Sea Beach line down 65th street. The people down there tried for years to improve their streets, but could not get any authority from the city to move the tracks, which are in a cut there over from the street onto its own land, tfhough it is not claimed anywhere, even by the railroad company, that the tracks have any legal right on this street land. We conclude that it will be a good time to get the Public Service 'Commission to remove those tracks. I came down to find out what they were doing, and Mr. Cram, who is in charge of the maps over there — I had seen him once or twice before. He sent me to another and another, and to the fourth and fifth man, and the fifth man did not give me the information I was after ; but he did give me some other infor- mation which I was surprised about, and that is, that the Public Service Commission was then making the plans for the through line that was afterward tacked onto the Sea Beach line, and the Brooklyn Rapid Transit Company, for its own specific purposes, are running through trains there. Those are two things. Another occasion I wrote to the Commission about is that over there in Brooklyn I was thrown off a car a little over a year ago on account of a transfer. The conductor punched the transfer at a particular time, and if there is enough passengers on the car, so you cannot get on and have to wait for another car, and the trans- fer is late, some conductors will say nothing about it for ten or fifteen minutes; but another conductor, if you are one or two minutes over the time, he will put you off. Well, I took a car to come to ISTew York, and I have a transfer, and I was there over the time, and I expostulated and explained the matter, and I 1668 IirvESTiGATiOJs: of Public Service CoMMissioifS jumped on the car and he put me off the car before I could say another word. That was the thing that happened to me. I jimiped on the next car, expecting to pay a fare, and I handed that conductor the transfer and the conductor took it and I came over. I thought that was a proper subject to write to the Public Service Commission about. Let me state right here that I 'heard ^Mr. Williams testify yesterday. I never saw Mr. Williams before I saw him testifying, and heard him, with his paternal air, refer to the people writing the Brooklyn newspapers. Well, the Brooklyn- citizens are very certain circumspect as to what they write about the B. K. T. Unless they write under another name, their letters will not be printed. By Chairman Thompson : Q. What do you mean by that, that you have to be circumspect ? Do you mean in order to get them to print the letters . A. Yes, they will not print them at all if you say one or two words too much. You must get in there under an assumed name. I have written to them and signed my name, and they would not put it in. Q. It seems to me we will have to come dovm and investigate the newspapers, the newspaper reporters ? A. The reportei-s are all right. Many times they have said that they would put that in, and they never did. Many a time I have heard a reporter say that to myself as well as to other people, but they never did it. I wrote to the Public Service Commission about these matters, and I would have hunted up the letters if I had known I was going to be on the stand this afternoon. If I had known I would be here to-day, I would have had the correspondence. Q. You can send that to me, that letter you refer to, at Albany, care of the Senate, and I will put it in the record. A. I started to tell about the Third Avenue line ; we asked that the Third Avenue line be compelled to run the line into Third avenue over the Brooklyn bridge, as formerly. The people, with all these oppor- tunities for rapid transit, felt that they should have that- The Third Avenue was always a through line until recent years. Later, I got an answer to my letter, and another letter, and of course, nothing was done about it. They could not run the Third Avenue line over the bridge at all. I thought afterward that if I had asked the Commission to remedy the situation another way, FiKAL Eepoet op Joint Legislative Committee 1669 they might have done that. If you asked the Commission to remedy a certain thing one way, they will find another way in which it may be done. They will not do it your way. They will put it back on you, because you know the right way. The Public Service Commission did not tell me to ask for remedial action in another way, which would provide the relief. They should be allowed a limit of an hour or two in the afternoon on transfers, say that the a. m. transfers are good for the morning and the p. m; for the afternoon. I remember another case, a few years ago, where they charged an extra fare for running do'^vn a few blocks, and I asked them if the railroad had authority to charge five cents fare for two blocks, and Mr. Bassett informed me that my letter was not in the proper language. He said : " If you will frame your letter in another way, we will take action." I framed it again and to this time I have never heard from them. Q. Who was that ? A. Bassett, at that time. As a general observation, if you will permit me to say so, the Public Service Commission had bad luck in the beginning. They got up against Whitridge of the Third Avenue railroad, New York, aijd he beat them in court in one or two cases, as I recall it ; and the New York Sun and the Brooklyn Eagle and others never stopped poking fun at the 'Commission about Whitridge, and Whitridge never stopped poking fun at the Commission. That was unfortunate for the Commission itself in the beginning. They never stopped it at all. It kept up for years ; and I think that the people of this city should know that the history of the Third Avenue Railroad Com- pany of jSTew York is not a very flattering one. It could not be considered as a model. Q. If they could forget it, you would like to have them do so ? A. Yes. And some time before that, they went up against Judge Scott — is that right ? Colonel Hayward. — Yes. A. I do not know if you gentlemen remember when we made an amendment in New York increasing the salaries of the judges, outside of the Judicial Department, and the judges in the city took advantage of that and tried to get $21,500' a year under the amendment, and an advocate of the judges came over before the committee and asked that the salary be made $21,500 a year, and the Board of Estimate gave it to 1670 iNVESTIGfATION OP PuBLIC SeKVICE COMMISSIONS them ; but there was such a howl that Mr. Justice Scott came over and said it was all a mistake and they did not want the $21,500 a year after all. By Chairman Thompson : Q. They did not want it if they could not get it? A. There was a good deal of talk at the time. Q. I do not think a judge is much different from anybody else. He tries to get all the salary he can get and put the clerks on record too. A. Well, if you try to make yourself different from anybody else, I suppose you can. You and I may not think so, but they are the authorities for making power, for molding public opinion and morals. Colonel Hayward. — You have got the figures and data about that easement on Third street ? A. Yes, sir. Colonel Hayward. — Before you get through, we would like to get that into the record. A. Coming down to the Public Service Commission — By 'Chairman Thompson: Q. You referred to Judge Scott's increase in salary. Did that have some connection with Judge Scott's making this order, that was in your mind? A. In the minds of the public, it was an unfortunate thing, whether it is a suspicious circumstance or not. I will leave it to you to judge that, that this order from the Public Service Commission to compel the railroads to give public service should come before Judge Scott. The Commission should have taken it to the Court of Appeals. The railroad companies deride them and treat them with contempt, and when the Public Service Commission sees the corporations doing that, if the courts will not back them up, they should resign. By Colonel Hayward : Q. I see that that case was prepared by the Law Department of the Public Service Commission. They have something to do with that. Did you read that opinion? A. No. They were a new body, land the judge of the court was outside. iScott said that the reason he could not do that was that there was no proof before him that this order the Commission had sought to get the penalty Final Eepoet of Joiiyt Legislative Committee 16T1 under had ever been passed by the Commission, and no minutes were sbown him that the meeting had been held. Mr. Whitney says that there was an order offered in 'evidence, but we oould not tell without the original record before us. I have no desire — Q. That is what Judge Scott said, that there was no legal proof before him that there had ever been an order passed by this Com- mission over there, or that the Commission had held a meeting at which the order had been passed, and the rest of the judges of the Court of Appeals confirmed the order, so that it might have been the authority in the Legal Department of the Public Service Com- mission ? A. That was a handicap, and Whitridge was a handicap, and the continual poking of fun by the papers, the New York Sun and the Brooklyn Eagle, against the Public Service Commission should have been of enough importance to cause them to resign in a body, because this brought humiliation and contempt upon them; and if the courts were not supporting them, they should have resigned in a body. Q. Ox else gone back to the Legislature and got a better law ? A. They should have done something. They lost entirely the con- fidence of the public, and I believe, firmly and absolutely, that all construction work now under the supervision of the Commis- sion should be put either in the Board of Estimate or the Finance Department in the absence of a regular city engineer, which I believe we should have under the charter, an electrical engineer. ISFow, there was the Park affair some years ago — ■ By Colonel Hayward: Q. That was Sunset Park? A. Yes, sir. The elective offi- cials of the city hold more responsibility. Now, if the Board of Estimate — and I may say that I have been up there — Q. They were more responsive to the judges when they came to get that $2-1,500'? A. They are not so responsive now. We are all a little weak. We brought every other official into line, and we started on the judges the last few years. I am only getting at the fact that the construction work should be under the Public Service Commission and the regulatory work, which I believe is a minor matter, to have the courts back them up, and you would have ■a small body of men, which would not be so highly paid, with all due respect to the present Commission. Now, if there is anything 1672 Investigation of Public Service Commissions else — oh, yes, I "will refer to the Fourth Avenue subway again, being constructed below Fourth avenue, 40th street and Fourth avenue. When they ran the present subway through to 42 d street, they built in spur tracks. The plan of the Public Service Com- mission at that time provided that the new line would run under 40th street, and they are putting those cross-overs, and it is entirely completed. A few years later, they came along to this 38th street cut, and they unloaded that onto the city, and unloaded this spur track and the cross-overs at 40th street. I do not know how much money the city had to pay for the 38th street cut, which was always a failure; but they immediately started work on the Fourth avenue subway, which had been just finished, and the asphalt had not been laid four months, when they began to rip it up again, and they have been using tons of powder in the last year pulling that out. By Senator Mills: Q. They pulled out a station there, did they not? A. Yes, sir; paid out all the money that went in the connection at 40th street. It was a waste of public money, that is all. You do not find all the reasons for things at the time, but there is before the Public Service Commission an application from the two railroads that own this 38th street cut — there is now an application to make Third avenue, from 40th to 60th street, a freight road, on the plea that this 38th street cut is now occupied by contractors making the alterations, and if they run any freight trains there, it would be an inconvenience. The Commissioner should understand it. He has been there a year or a year and a half. They are going to establish on Fourth avenue the same conditions that the people of New York city have been fighting against for years. By Colonel Hayward: Q. Do you think you were treated better yesterday than you were in the past ? A. Absolutely. I will almost make an allow- ance that a man like me is looked upon as a disturber. I make allowance for that all the time. By 'Chairman Thompson : Q. Why? A. I would not like to state it, but I have noticed it for many years. In the Board of Estimate I noticed it. Final Eepoet of Joint Legislative Committee 16Y3 Q. You always come along like you are now? A. I have been subject to that for years, but if you will find anybody who can say anything against me, you can strike out that testimony. Q. I find here that, when they do not like you, they call you a " nut." A. Yes, but I always found that, if a man's neighbors say a man is all right, he is safe. Q. Your neighbors are all right? A. Sure, and if they did not approve of me or a man like me, that takes a hand in public affairs, if they did not approve it, I would find my place quickly. Q. What Public Service Commissions are for is to listen to men like you. They may not do what you ask them to do, but they should find out your demand and act on it ? A. That is not the attitude they took. Q. That is the attitude they should take in the judgment of the chairman of this Committee? A. I was very grievously disap- pointed about the dual subway proposition. I thought that the city, when it was building its own subways, should operate its own subways; and that was a job, because those officials were elected to office on the theory that they would do that, and as soon as they got into office, they cast aside all of those promises. Every mem- ber of that Board of Estimate went into office with a lie on his lips, and as soon as they got into office, the public did not know how to run subways ; but the public ran the water works. By Assemblyman Donohue: Q. That is all settled? A. ISTo. I was disappointed and grieved, like a good many other citizens. ITow, about -overcrowd- ing on the lines of the B. E. T., that I have been troubled about for years, but I never complained about that, because I would be considered a nuisance. I never got beyond the step on the way home last night and many other nights. Take last summer, com- ing down from Flatbush Park. I have to come downtown in the middle of the day. Coming into town you would never get a seat. You take 36th street and Fifth avenue, 10' o'clock to 11 o'clock to 1 o'clock in the morning. I go over to Jersey a good deal and usually come over at 12 to 1 o'clock, and you would stand there and wait for a car fifteen minutes or half an hour, and if 'the crowd becomes too clamorous, they will run out a car ; and if the crowds are quiet and make no complaint, you will get no addi- 1674 Investisatiok oS" Public Seevice Commissions tional cars. I did not write about that, because it brings me too much ridicule. They had a contract at Flatbush avenue and Fourth avenue to construct the Fourth Avenue subway at 150th and put in some additional tracks and subways. Why should not that have been shown in the order ? A city engineer and a Board of Estimate that would do a thing of that kind would not last at all. At Fulton street and Flatbush avenue they were building what is known as the Tri-Borough route. All that money is wasted. That shows inefficiency and inconsistency, and if the Public Service Commission was responsible to the city, they would not have that condition. The city would not stand for it. That is why I believe that the Public Service Commission has ended its usefulness entirely. It is an entire failure. They went down on the Sea Beach line, and that was taken in, and the dual sub- way proposition was a two-track line, and from Fourth avenue to Coney Island might be over the dual subway system. A few months later they came in and asked the Public Service Commis- sion for two additional tracks. Those two additional tracks ran down to the water, and adjoin a special freight yard that had been established for the B. R. T. for taking water freight and discharg- ing it along to whoever has it in charge, because you cannot charge a price from that block to this block. Now, the land for that subway, I have had no means of finding out whether the cost of those two additional tracks was a charge on the dual subway sys- tem or as to whether the city should go in this freight business, into the transfer of freight. By Colonel Hayward: Q. I have tried to look that up, Mr. O'SuUivan. I think I may have a memorandum on it. A. The point I wanted to make is that if this Public Service Commission had compelled that rail- road to apply for a franchise to the Board of Estimate or the Pub- lic Service Commission, for that freight line, that would be an entirely private affair, and they would have to pay the city the cost of a regular franchise and the co^t of this public permission. I believe that the land they bought for this freight line cost them approximately $1,0'00,000, and they would have to pay the city something for what travels to Coney Island. Then I remember when a certain man went down and got a contract for building that FiWAL Eepoet of Joint Legislative Committee 16Y5 for $1,700,000. Of course, hearsay evidence is no good, but there "were rumors and talk going around about the way that thing was brought about. That freight line runs down to the freight yard, but they never took pains to move those tracks in 65th street, and everyone knows the history over there. There are property owners there who have been trying to improve their places for twenty years. That is a peculiar case of city government. Pub- lic street-s in Brooklyn now are under four official bureaus. If you go to see one of those, he will send you to the second, and the second to the third, and the third to the fourth. They have the Brooklyn Grade Crossing Commission and Board of Estimate. Q. I do not want to interrupt you, but we are trying to get through. Have you got some more information about the Public Service 'Commission ? A. Well, I think this is illustrative of it. The streets of Brooklyn are under four bureaus. Now, in regard to what I have stated here about this defective work on the Fourth Avenue subway, in case you should hear about it — you probably will, or somebody will, now, the people who are building that sub- way, I have known them, and I got a letter from them before I knew there was anything wrong with the subway. I got a letter asking me to submit bids for constructing a part of the sewer. I told them that I was not in a position to take the contract, but that I would take a job superintending. He said he had his own men, and that was all there was about that*. The Public Service Commission has been a disappointment, a grievous disappointment to the city and the public here. It is all right for Mr. Williams to tell you about the public view ; but the public will not submit again — they will not lay down again — to those methods they have been suffering from for years. You have only to ride any evening in one of those trolley cars to hear the conversation. On the Third Avenue line in Brooklyn, six or seven dollars a day would remedy the overcrowding. Q. How? A. Take the big department stores in Brooklyn. The employees all come out of there between half-past 5 and 6 o'clock. What is to prevent the railroad company from having four or five cars there to take the people out of the streets at that time. There is a public square there, on each side. Take half a dozen cars on each side of that public square that is there, and leave the cars there until the crowds come out. I always expect 16Y6 Investigation of Public Seevice Commissions to stand. I do not mind it at all. I never sit in a car when any woman is standing up. ■Chairman Thompson. — You have lots of opportunity to stand, then, of course? A. Yes. I am willing to stand; but there is no just reason for this overcrowding. You take the Church Ave- nue line. I have not traveled on that line in some time, but you take the girl students in the High school on Tlatbush avenue at half-past 3 in the afternoon, and they are packed in that car; and I have come along and seen that car when you could not get in it. Chairman Thompson. — Where is that? A. On the Church Avenue car. I was down there some years ago on the contract for the city water works, and I used to go back and forth a good deal, and I noticed the conditions at those times, the girl students coming out of the High school and taking that car. There is a very important and old school there — Flatbush Hall, I think it is — and a very fine lot of people go- down there, and to see the condition of those cars at 3 and 3 :30 in the afternoon, with those students coming out, it is terrible. You cannot help but notice it They stand on the steps until you get nearly home, before you can ever get inside of a car at all. It thins out at 36th street, but then the crowds from the factories fill it up again. The conductor never goes in there hardly. He waits for them to come out. He shuts the first door so nobody can get out that way, and everybody has to go back and pay his fare to him on the way out. Colonel Hay ward. — He has them well trained? A. Yes. Well, you have to be. They might better have a police officer. If a police officer is disrespectful to you, you can always complain about him with a degree of confidence ; but in the other case, you have to submit. It all comes to this, that the Public Service Com- mission has disappointed everyone. If there is anything further you wish to ask me, I am willing to tell you. As I said before, I never go out of my own district to any other part of the city look- ing for trouble, and I concede that a man like me is not welcome in city ofiices. The Public Service Commission is the limit. Colonel Hayward. — We are glad if you are getting more cour- tesy and respect than you were before we came down. A. Yes, FiiiTAL Repoet of Joint Legislative Committee 1677 but I am afraid of after you go away. I do not know as I finished with you on the Fourth Avenue case. There is an application now before the 'Commission to use the avenue as a freight line. Now, one instance I was trying — and I would have brought the papers with me here this morning if I had thought I would be called upon — I would have brought the franchise that the com- pany got over on Third avenue. It covers their running a certain number of 'passenger and freight cars. From that day to this day, they have never run a passenger car on the line. That was nine or ten years ago. They have never run a passenger car at all and never ran a car. south of 52d street. They put down the tracks, poles and wires overhead, and never ran a single car ; and now that an opportunity comes by which it is to be turned into a freight line, they are going to handle it that way. That is at 38th street. I do not know whether the Public Service Commission will approve it or not, but I am afraid they will. It was testified some years ago here in the city before the Inter-State Commerce Commission that every carload of ice that came into our district had to pay a surtax in the way of extra freight of $7.50 on each carload of ice more than it would have paid to the regular rail- road. There is a big terminal at 65th street, where the Pennsyl- vania and Long Island com'panies are, and if those loads of ice came in two blocks farther down, to serve the same territory, it would cost its consumer $7.50 more on his freight rate. ~Saw, this application before the Commission provides that one corpora- tion is getting from the other $1.90' each way on each car, whether loaded or empty, on this public thoroughfare. The city does not get anything at all. It is an outside matter, just as if it was pri- vate property. It does not even say that the carrying of freight on 38th street, now that it is a private and dual subway system, has been eliminated. As near as I can make out, they still use that for freight. But they are in the same -position that is now on the west side. You cannot put me down too strong against sustaining the present Public Service Commission. Assemblyman Donohue. — Mr. 0' Sullivan, on behalf of the State Legislature, through its Committee, I wish to thank you for attending, and I wish to assure you that, if there is anything you may have to offer, that you do not think of now, we shall be glad 1678 Investigation of Public Sebvice Commissions Colonel Hayward. — You miglit leave that letter v^ith us, Mr. O'Sullivan. The stenograplier v^ill mark it. (Letter from Michael O'Sullivan to Honorable George L. Thompson, dated February 18, 1915, received in evidence and marked Exhibit No. 33 of this date. This letter is copied in the record. See index.) (Letter from Michael O'Sullivan to tbe Editor of the Engineering News, dated December 14, 1914, received in evidence and marked Exhibit No. 34 of this date. This let- ter is copied in the record. iSee index.) Assemblyman Donohue. — Is there anybody present who desires to make a statement? If not, I will call the Chairman of tbe Committee to the rostrum, so he can pronounce the benediction on this Legislative Committee. Chairman Thompson. — Is it possible we have got to a time when there is no one who has anything to offer to this Committee ? Is there anybody present who desires to say anything further? Is there anybody present who knows anybody that is not present, who desires to be heard? Does anyone want to say anything in favor of the Commissioners ? I am too modest to make the re- quest tbat, if there is anybody who wants to say anything in favor of tbe Committee itself, he may do so. (Prolonged applause.) Well, gentlemen, it is with great regret that we find ourselves where we are able to adjourn the future deliberations of this Com- mittee from your very very pleasant city to that old ancient city of Albany, where we will have to adjourn until next Tuesday. We have kept long hours this week and we have worked hard in tho interest of the public all the time. We are going to take an ad- journment over two days, and we will adjourn the future meet- ings of this Committee to the Public Service Committee quarters, which is in the Finance Eoom of the Senate Chamber at Albany. We will meet next Tuesday at 10 :30 a. m. With those few well chosen words, we will now retire. (Pro- longed applause.) Hearing adjourned to Tuesday, March 2, 1915, 10:30 a m. FiN-Ai, Eepoet of Joint Legislative Committee 1679 MARCH 2, 3, 4, 1915 On March 2iid, 1915, at 10.30 a. m. pursuant to- adjournment taken from ISTew York city, committee met in the state senate finance committee room, Albany, N. Y. On motion adjourned until 2.30 p. m. At 2.30 p. m. committee met pursuant to adjournment. On motion adjourned until Wednesday, March 3rd, 1915, at the supervisors' room in the City Hall, Albany, IST. Y., at 10.30 a. m. On Wednesday, March 3rd, 1915, 10.30 a. m. committee met pursuant to adjournment. On motion adjourned until Thursday, March 4th, 1915, at 10.30 a. m., at the same place. Committee met at the supervisors' rooms in the City Hall in the city of Albany, JS^. Y., on Thursday, March 4th, 1915, at 10.30 a. m., pursuant to the adjournment taken from Wednesday, March 3rd, 1915. Present. — A quorum of the Committee being present. Appearance. — Mr. Burt Wheden for the Committee. Frank H. Mott, sworn as a witness and examined by Mr. Whe- den, testified as follows : Q. Mr. Mott, you are secretary of the Second District Commis- sion? A. Yes, sir. Q. When were you appointed to that ofiice ? A. It was in June, 1913. Q. Will you commence and give us a history of the Commission as it has existed since its creation with regard to the names of the Commissioners, the length of time that they held office, and also the names of the present Commissioners, and when they were ap- pointed ? A. Mr. Franlv H. Stevens was appointed July 1st, 1907, and remained a Commissioner until May 2, 1913. Charles Hal- lam Keep was appointed on the same day and served until March 23rd, 1908; Thomas Mott Osborne, was appointed the same day and served until February 1, 1910; Martin S. Decker was ap- pointed July 1st, 1907, and is still serving; James E. Sague was appointed July 1st, 1907^ and sei^ved until, I think, the 1st of 1680 Investigation of Public Seevice Commissions April, 1914; John B. Olmstead was appointed Marcii, 1908, and served until February, 1913 ; John N. Carlisle was appointed Feb- ruary 10th, 1910, and served until March, 1911 ; Winfield A. Hup- puch was appointed February 20, 1911, and served until Novem- ber 15th, 1912 ; Curtis IST. Douglas was appointed November 15th, 1912, and served until April 1st, 1914; Devoe P. Hodson was ap- pointed February 7th, 1913 ; Seymour Van Santvoord, February 27th, 1914; Frank Irvine, April 1, 1914; William" Temple Em- met, April 2, 1914, and they are still serving. Q. Mr. Emmet was appointed April 2, 1914? A. Yes, sir. Q. So Commissioner Decker is the only member of the Commis- sion who has been in office since the creation of it ? A. Yes, sir. Q. Will you give me the residences of the present Commission- ers ? A. Judge Hodson lives at Buffalo, Chairman Van Santvoord at Troy, Irvine at Ithaca, Commissioner Emmet at South Salem, Westchester county; iCommissioner Decker at New Paltz, near Kingston. Q. Where do you reside 1 A. Jamestown. Q. Where is the main office of the Second District Commission ? A. Albany, all over Albany. Q. Will you please explain just exactly where the different offi- ces, and the branch offices of the Commission are located? A. Well, the main office, the secretary's and the executive office of the Commission is in the Capitol, on the first floor. The counsel has a roving office. He is now housed with the state treasurer, in part of his office. Then we have an office at No. 19 Washington ave- nue which is occupied by the Commissioners, and 25 Washington avenue is occupied by the statistical department, at No. 14 Wash- ington avenue, which is occupied by the engineering, the capitali- zation divisions and the printing department. Then the Commis- sion has a branch office in New York city. Q. Now the fact that the main offices are located in different parts of the city, doesn't that make it inconvenient ? A. It is very inconvenient in managing the affairs of the Commission. I should say it would interfere with the efficiency of the work very, very greatly. Q. There is a real necessity for a new office where the various departments can be located ?' A. A very great necessity, yes, sir. FiWAL Eeport of Joint Legislative Committee 1681 Q. ISTow have you any other branch offices? A. There is an office, a branch office in Buffalo which was instituted shortly after the organization of the Commission which is continued ; a branch office in New York city which has to do particularly with tele- phone matters; and the matters that are handled in Buffalo are matters of miscellaneous nature, a great many complaints of a miscellaneous nature come in there and they are forwarded to the Albany office. Q. Those complaints come from the city of Buffalo? A. Yes, and vicinity ; then the traffic inspector, Mr. Meyer, is located there and by telephone communication and other commimication goes out from place to place to investigate any traffic conditions of which there are hurry-up complaints, and one of the supervisors, deputy supervisor of equipment is located there, because it is more con- venient for him to go out from there to the western end of the state; whereas the present chief of the division, the acting chief works from the eastern end of the state. There is in the Buffalo office on Fridays and Saturdays, there are hearings in the Buffalo office, every Friday and every Saturday. Q. Has that practice obtained since the organization of the Commission, do you know? A. I think it has very largely. I know Mr. Stevens held hearings there. Mr. Stevens instituted the hearings there, and I haven't in mind definitely, but it has been practically the custom, at least on Fridays and lately it has been also on Saturdays. Q. Who holds the hearings at the Buffalo office?' A. Judge Hodson usually. Q. Do all of the Commissioners hold hearings there, I mean in a body ? A. They go there occasionally on some of the matters as to which the entire Commission, or a majority of the Commission deems it desirable, but the hearings generally speaking, I should say, are conducted by Judge Hodson. Q. And Judge Hodson goes down there every Friday ? A. He leaves here usually Thursday night and is there Friday and Sat- urday. Q. And comes back Monday ? A. Yes, sir. I think last Monday he had two or three hearings there on Monday, but usually he is here on Monday. 1682 Investigatiow op Public Service Commissions Q. Are any of the files of the Commissioii kept at the "Buffalo office ? A. Not generally. Of course, we frequently have requests that papers be sent up there. Q. I mean are any of the files located there permanently? A. No. Q. All complaints regarding service rendered by Public Sei'vice corporations in and about Buffalo are handled at that office? A. I would not say that, Mr. Whedon. Q. All hearings on complaint ? A. Not all of them, but a great many of them. Of course, there are cases frequently that are held here, but what you might call the miscellaneous cases — the cases that you cannot characterize by any special head — are held there. Q. Do you mean minor matters? A. No. That is one of the difficult questions to determine, what is a minor matter. Noth- ing seems' a minor matter to the man who is making the com- plaint. That has been our experience. Q. That has been our experience. What matters are handled at the New York office? A. Well, generally speaking, the tele- phone matters exclusively. Of course, there are hearings held in the New York office in connection with complaints outside of Greater New York and Long Island, and sometimes in West- chester and that vicinity, that it is more convenient for the at- torneys and litigants and everyone to hold the hearing in New York than here. Q. But hearings in regard to telephone cases are held there? A. That is, those relating to New York city usually. Q. And who usually holds these hearings, which one of the Commissioners? A. At the present time, I should say that the Commission as a whole is taking up the telephone caseS', and that the other miscellaneous cases in that vicinity are held generally by Commissioner Decker or 'Commissioner Emmet. Q. As between the two, who holds the most hearings there ? A. I think just now Commissioner Emmet. I think six months ago Commissioner Decker. Q. Do they have regular hearings on Fridays and Saturdays, as they do in Buffalo ? A. I do not think they are held so regu- larly, but it is a rare case when there is not a hearing on Friday. Final Eepoet of Joint Legislative Committee 1683 Q. And usually Commissioner Emmet goes down there to take care of tliose matters? A. Yes, sir. Q. And stays there until Monday? A. No, Mr. Emmet is. usually here in the office on Saturday. Those hearings are usually on Friday unless they are prolonged, generally speaking. Q. Any complaints of service on the Long Island Railroad, for inii'tance, are handled at the New York office ? A. I do not think they are handled there in the sense of anything more than we might ask them to inspect something a little outside of their func- tion ; but if there was a pai'ticular matter that they might attend to for the Commission and save someone else going, it would be done. Q. Suppose hearings are held with regard to a complaint on service in Long Island, would those be held in Albany? A. I cannot state positively as to that. I think they might be, but they are held both at Albany and New York. Q. In the course of our investigation in New York city, it ap- peared in the testimony that one possible reason for putting the jurisdiction over the Long Island Railroad under the First Dis- trict Commission was that complaints coming from people on Long Island, who were a great deal nearer New York than Al- bany, could be handled with greater convenience to the complain- ants by the First District Commission; and it was suggested in answer to that that the Second District Commission maintained an office in New York city and, therefore, there really was not much force in that argument, because the matter&' could be handled there. Now, my question is are they, as a matter of fact, handled there ? A. Of course, in stating they are handled there it would not be accurate for me to say that. They very often are sent there and transmitted to this office, and then a hearing is held there. I think one last week and one this week is to be held. Q. What I am driving at is: Suppoise a resident of Long Is- land complained of service on the Long Island Railroad, and the matter was then taken up in a hearing. Is it usually necessary for him to come to Albany ? A. Ordinarily not. Q. Now, Mr. Mott, will you give the Commission a resume of the organization of the various departments of the Public Service Commission, Second District? A. (Referring to chart.) This 1684 Investigation of Public Service Commissions was a bluepriiit originally, but this (indicating chart) is not a blueprint. It is a sort of a table containing the arrangement of the divisions of the Conunis&iou. Q. You have here a table showing the arrangement of the vari- ous divisions of the Commissions? A. Yes. Mr Whedon. — I think we had better put that in, Mr. Chair- man. Acting Chairman Maier. — Keceived. (Chart referred to received in evidence and marked Exhibit No. 36 of this date.) Mr. Whedon: Q. 'Now, Mr. Mott, referring to this table. Exhibit No. 36, you have taken up the organization and the other Commisisioners. Now, take up the office of secretary and explain just who you have there under you ? A. Well, the secretary — of course, this plan indicates he had some relation to all the departments of the Commission. Q. Will you explain in just what way ? A. There are actually in the secretary's office the assistant secretary, the executive clerk, the auditor, the stenographers, which are necessary for the gen- eral work of the office. Q. Who is the assistant secretary ? A. Erancis X. Disney. Q. Who is the chief clerk? A. The executive clerk iia Mr. Edward C. Mclntee. Q. Right there, your salary is what, Mr. Mott? A. Six thou- sand dollars. Q. And the salary of the assistant secretary? A. Five thou- sand dollars. Q. And of the executive clerk ? A. Five thousand dollars. Q. Now proceed. What other assistants have you in your office ? A. Well, we have the stenographers — I think sixteen in number, something like that — and several clerks and an auditor. Of course, Mr. Barnes, as a matter of fact, has his desk in the main office. Then the filing division — there are four filing clerks there. They are all in the main office. Q. Do you maintain a library ? A. We have a good many books, but we have not a library in the better sense of the term. FiiTAL Report of Joint Legislative Committee 1685 Q. Not in the expensive sense of the term? A. ]S!"ot in the largely expensive sense, no. Q. Now, the counsel's office, will you explain about that? A. Judge Hale we had a hearing room in Judge Hale's office, on the second floor. This was the old second Court of Appeals hearing room, and we had to yield that this spring — the hearing room — to another department. Q. What I mean is has Judge Hale any assistants? A. Not except his stenographer. Q. And he handles all the legal work for the Commission him- self ? A. Yes sir, his office is now with the state treasurer. Q. And his salary is ten thousand dollars ? A. Yes. Q. Now, take up the division of Light, Heat and Power. Who ie the head of that? A. Mr. McGuire is the head of that de- partment. Q. And his salary is what ? A. Four thousand dollars. Q. Who is the assistant chief ? A. Mr. Cheney is the assistant electrical chief, and Mr. Leonard is the gas chief. Q. And what salary do they receive ? A. Mr. Leonard, I think, receives three thousand dollars — I think they have three thousand dollars each. Q. And there are certain others ? A. There are meter inspec- tors. Q. Four assistant gas inspectors ? A. Yes, sir. Q. Eight gas meter testers ? A. There are twenty-two in that department of light, heat and power. Q. Have you a statement of the annual salaries of all those em- ployed in that department ? A. Yes, sir. Q. How much is it ? A. In that department ? Q. Yes. A. I haven't it as subdivided from the other depart- ments, no. I can have that prepared for you. Q. Now, the Division of Statistics, who is in charge of that ? A. Mr. Hasbrook. Q. What is his salary ? A. Five thousand dollars. Q. And he has under him what assistants ? A. Well, there are fifteen altogether. There are the assistant statistician, juniors and clerks. Q. What does the assistant statistician receive ? A. My recol- 1686 Investigation of Public Seevice Commissions, lection is now — I cannot tell you exactly, but my recollection is it is twenty-four hundred dollars. (Witness refers to papers.) Twenty-four hundred dollars, yes, sir. Q. What other assistants has the chief statistician ? A. Hehas_ the two juniors, inspector, two stenographers, bookkeeper, statis- tical clerk and five clerks, I think, just as it stands to-day, unless there is one possible vacancy, but I think not at present. Q. Who is the chief of the Division of Tariffs ? A. Walter E. Griggs. Q. His salary is what ? A. Four thousand dollars. • Q. And what men has he under him ? A. He has eight, a total of eight ; a chief clerk, a tariff clerk, stenographers and bookkeep- ers. Q. Who is at the head of Division of Capitalization ?' A. M. H. Taffe. Q. When was he appointed ? A. The appointment was effective March first. Q. Who was his predecessor? A. Howard C. Hopson. Q. What salary does he receive ? A. Four thousand dollars. Q. And he has under him what assistants ? A. Well, there are two, who are supposed to be the chief assistants, who get twenty- five hundred dollars a year. There is one vacancy on account of Mr. Taffe being promoted for that position himself, and the other assistant gets twenty-five hundred dollars, and then he has the clerks and general assistants. I think there are seventeen in that division altogether, examiners, and assistant examiners and accountants. Q. How many are there in your office, under your supervision in the general office ? A. I think there is in that office a total number of — of course, some of them are general employees — but I rather think there are something like sixty. I should say there were sixty who come more or less personally under the supervision of the secretary and the general work of the office. Q. What men are employed at the Buffalo office ? A. There is really but one man who could be said to be employed at the oifice and that is Mr. Joslyn, the assistant secretary, but the assistant supervisor of Equipment and the Traffic inspector make their headquarters there and do their work from there. Final Eeport of Joint Legislative Committee 168Y Q. What salary does Mr. Joslj^n receive ? A. Fifteen hundred dollars. Q. And the traffic inspector, v?hat is his salary? A. Twenty- four hundred dollars. Q. What does he do there, that is, what duties does he perform? A. Whj, he goes about from place to place taking care of the con- g-estion of shipments of goods, the congestion of cars. He has par- ticularly to do with that question, and is sent, for instance, in the fruit season, into Niagara and Orleans counties in that section of the state, and into Monroe county, where the shippers have diffi- culty in getting cars. He frequently confers with the railroad companies and the shippers and assists in producing better results in shipping. That is merely an example. Then he does that in other lines, goes to other places. During the entire year some' times he comes down and goes down the Hudson river and differ- ent places in the state. Q. He is not an inspector of street railroads ? A. Oh, no. Q. Is there such a man employed at the Buffalo office ? A. Wot as an inspector of street railroads, did you mean that ? Q. Yes. A. ISTo. I think not ; in fact, there are only two inspec- tors of street railroads in the Commission for the entire state. Q. Will you tell us who is at the head of the Division of En- gineering Inspection ? A. That perhaps would require just a little explanation. We put all the engineering divisions under one head, the grade crossing engineer, Mr. Arnold H. Sutermeister. Q. What salary does he receive ? A. Four thousand dollars — forty-five hundred dollars. I think his salary has been recently increased. (Witness refers to papers.) Yes, it is forty-five hun- dred dollars. Q. Who is under Mr. Sutermeister ? A. Mr. Sutemieister has four people immediately under him. Q. Who is the Inspector of Electrical Service ? A. ]Mr. Charles R. Barnes. Q. T\Tiat does he receive ? What is his salary ? A. I thing he receives five thousand dollars, is it not, Mr. Barnes? Mr. Barnes. — I wish it was — forty-five hundred dollars. The Witness. — Forty-five hundred dollars. I know we were trying to make it five thousand. 1688 IXVESTIGATIOX OF PuBUCC SeEVICE CoillllSSIOXS By Mr. Whedon: Q.How many assistants has Ifr. Barnes^ A. Mr. Barnes has one assistant only. Q. Do you mean to say that the Inspector of Electrical Service for the Second District has but one assistant ? A. That is tru^ sir. Q. Xow, he has under his jurisdiction the railroads — all of the street railroads in the state outside of the city of Xew York, is that right ? A. Yes, sir. Q. Who is the Supervisor of Equipments A. That office is vacant at the present time, but Mr. James J. Gill is the acting su- pervisor. He was the assistant supervisor and is now acting supervisor. Q. How many assistants are there in that department? A. I think he has seven altogether. That includes the boiler inspec- tors. With that there would be seven. Q. What salary does he receive i A. He is getting his old salary. Q. What do they pay the head of that department ? A. It would be four thousand dollars a year. The official salary is four thou- sand dollars. Q. Who is the chief of the Division of Transportation? A. Mr. Vanneman. Q. What salary does he receive ? A. Forty-five hundred dollars. Q. What assistants has he ( A. There are four in his depart- ment alt(^ether. Q. Then the accident inspector is who ? A. Of course, the acci- dent inspectors are included in Mr. Vanneman's department. That would be six that are under his direction. Q. Xow, the Division of Telegraphs and Telephones, who is the chief of that ? A. Mr. Rogers. Q. And his salary is what i A. Four thousand dollars. Q. And he has under him what assistants ( A. Well, including the Xew York office, there would be ten. Q. Who is in charge of the Xew York Office ( A. Mr. Walter I. Sweet Q. He is the Assistant Chief ? A. Yes. sir. Q. And his salary is how much ? A. Three thousand dollars now, hi^ salary is. Final Repoet of Joint Legislative Committee 1689 Q. What assistants has he ? A. He has an inspector, a stenog- rapher there in the JSIew ^''ork office, making three in the New ^'ork office and seven in the Albany office. Q. Now, what jurisdiction has the Chief of the Division of Light, Heat & Power, what duties does he perform and his office ? A. AA'^ell, his duties are of a very general nature. Q. AYhat matters does he have jurisdiction over? A. He really has supervision of both the gas and electric matters that come before the commission, that is, matters of inspection, meter inspection and inspection of service complaints and of rate cases, and if they relate to gas matters, Mr. Leonard, as a gas engineer, looks after them, and if they relate to purely engineering mat- ters, Mr. Cheny, the assistant chief looks after the engineering part of them, and the chief of the division, has the general super- vision. That includes also informal matters as well as formal. iChainnan Thompson. — I just came in as you said that. I wish you would explain the difference between formal and informal matters. A. That is a good deal like the difference between federal and state jurisdiction. There is a twilight zone that is hard to define, but it is largely a matter of judgment. Senator. Q. AMio exercises the judgment '( A. On the cases where it is not important, the secretary does ; but if it is important, then the commissioner or the C'ommission. Q. AMio determines Avhether it is important or not ? A. Those things pass through the secretary at some stage of the proceeding, and he must exercise some judgment as to whether it may be taken of informally. Q. Taken care of by the secretary or one of the subordinates without the attention of the commissioners? A. They all come to the attention of the commissioners, every informal matter, at some stage. Every informal matter at some stage comes to the attention of the commissioner. Q. Just explain that. A. At the end of each month, we send the Commission a list of all the informal matters which have been before the Commission. If any of those were matters not handled by a Commissioner or by the Commission, and the Com- missioner cares to look into them, he will send for them, which they frequently do — send for the cases, the folder — if they are 1690 Investigation- of Public Seevice Commissions matters which, on their face, show satisfactory progress, or there is no peculiar element in them, they are passed along without any special investigation. Q. You say once a month you bring to the attention of all the commissioners a list of the complaints not closed? A. Yes, or of the informal matters. Q. You make a list of them and send it to the commissioner? A. Yes, sir. Q. How long has that practice been in effect? A. I do not know. Up to just a little time ago, I thinli all the informal cases were closed by the Commission by resolution ; so that it has been practically in one form or another at all times. The method was a little different a while ago, but the result is that the entire Com- mission, at least at a stated period, has had notice of the progress and the development of each case. Q. And each case has, in some way, been brought to their attention ? A. Yes, sir. I think that has always been so. Q. Well now, has there been any difference in the plan of your organization within six months ? A. Why, I do not recall that there has been any difference substantially. Senator. There may have been in the detail. Of course, very frequently, with our Commiseion, the informal Commissioners conduct informal — what we call informal, or correspondence — complaints. If you care to have me go further into that, as to just the method, I should be glad to do so. Q. I wish '-j ou would. A. As these matters come in, if they are not on their face mere communications and are not formal com- plaints or petitions, they go to the secretary or the assistant secre- tary, and if they are — of course, if they really require important attention, they are taken care of automatically. If it is a question which the Commission has passed upon, a letter is written ex- plaining that that matter has been determined either favorably or otherwise by the Commission. If it is a matter involving another legal principle which has been passed upon, and it appears on the face of it that it can be taken care of by correspondence, a letter is written in the secretary's office to the corporation complained of, and a copy of the complaint, or a part of it — the substance of it — is sent to. them with the request that they satisfy that complaint or explain it, explain why they will not be able to do so. FiWAL Eepoet of Joikt Legislative Committee 1691 I think, generally speaking, 95 per cent, of those matters are taken care of to the satisfaction of the companies and the com- plainants. If the matter relates entirely to an electric railroad case, that is, an electric railroad matter of service particnlarly, it is sent over to Mr. Barnes, who has charge of that work ; if it relates to an electric light company, it is sent to that department ; if it relates to telephones, it is sent to the telephone department, and each division handles a case relating to its particular activi- ties. If it is a case that cannot be eatisfied, or if it assumes larger proportions that it was first believed would result in, it is taken up with the chairman or with some commissioner who might be especially interested in a question involving the same elements, or it is sent over to the Commission and made a formal ease; and if we get to the point whei'e it is very certain that nothing can be done by correspondence, it is automatically made a formal case for the Commission. Q. How long does it take for the correspondence to become automatic ? A. Generally a very short time. Q. What is the Commission's idea of a short time, two yeans? A. I shouldn't think it took quite that time. Q. That is different then in practice between the up-State and the down-State? A. Well, of course it would be rather difficult to classify them, the complaints, some of them are amusing complaints, complaints of things that are not in our jurisdiction, and that the Commission has no functions to per- form, and it would be idle to take them up, and it is something that the Commission has jurisdiction over; we have hundreds of amusing complaints, I have five or six pages here of what we call amusing complaints. Q. That is to amuse anybody but the secretary ? A. Oh, yes, if they are matters over which the Commiasion has any jurisdic- tion, they are brought to the attention of the Commission on that score. When a complaint comes in we start the correspondence about it. It is a service complaint, say, within a short time if there is no satisfaction of the complaint by the public service corporations, the complaint came in but not satisfied, and is disposed of within a short time, then it becomes automatically a complaint before the Board. 1692 IsrvESTiGATiojr of Public Service Commission's Q. Going on say for six months, five or six months? A. Well, I presume there are cases, very exceptional cases, no doubt where they have gone that long, but not as a usual thing. Q. I would like for you to make a statement of all complaints which were filed with you before July 1, 1914, which haven't been satisfied up to now? A. -Yes. Q. That wouldn't be a very long list, I take it ? A. It would be very short. Q. And one that we may have this afternoon? A. Yes, I think so. Q. As I understand now from your definition, an infonnal complaint is one that comes to the secretary and if in his judg- ment it is not material, of sufficient importance to be brought to the attention of the commissioners immediately, it is taken up by correspondence by the secretary and satisfied in some manner to the satisfaction of the complainant and the public service cor- porations. A. Yes, that is substantially correct, I thinlc. Q. Now, a formal complaint is one that is given a hearing if its importance is such it is called at some time to the attention of the Commission, or by means of the lapse of time unimpoxtant matters come automatically before the Commission in the man- ner described? A. Automatically called up for action of the Commission, yes. We simply make it a formal matter. Q. Simply because a satisfaction is not arrived at ? A. Yes. Q. A conclusion didn't come along by means of the correspond- ence? A. Yes. Q. Then it comes before the Commission ? A. Yes. Q. And becomes what you classify as a formal complaint ? A. Yes, of those last year we had 2,000', last year, those informal com- plaints. Mr. Wheden (resuming) : Q. Is it not a fact, Mr. Mott, that the question of whether or not the Commission are able to obtain a satisfaction determines whether or not the matter shall be brought up for a formal hear- ing. A. Yes, or a formal hearing, yes. Q. And not the importance of the matter involved so much as the question of whether or not the Company complained of is dis- posed to meet fully the suggestion of the Commission? A. I Final Repoet of Joint Legislative Committee 1693 think that is a more accurate statement of it. I might say, Sena- tor, in connection with that, that there is also inspectors of the Commission go out on thesed ivisions investigating these com- plaints, and if they find with an informal complaint, — if there is enough substance to it to require a report, they report and that report is sent over to the Commission and passed on before it is served on the company. Q. Now, with regard to the supervision and the handling of informal complaints by the Commission the supervision by the Commission, you say that you send a list or a statement of the formal complaint ? A. We send a monthly statement, yes sir. Q. Do you send a daily stateonent ? A. We send a daily state- ment of all formal complaints and petitions received just as rapidly as they are received. Q. Then is that statement addressed to any particular Com- missioner ? A. No. Q. The things that contain a long detailed explanation of the nature of a complaint? A. That is of formal complaints, yes. Q. But not with the correspondence? A. Not the informal, except the correspondence complaint, that is, simply sent to them, the complaints as they are received, giving the number, the people and all those things. Q. Is there any particular commissioner assigned to the super- vision of those informal complaints ? A. I think not. Where the inspectors make a report on an informal complaint, the recent method has been to refer the report to Judge Irvine, but gener- ally speaking, those mattei-s are given out, divided among the commissioners, the same as fo'rmal matters. Q. But there is no particular commissioner whose duty it is, or whose practice it is of going into the facts on infoirmal com- plaints ? A. No, they all do that, and I take them up with the commissioner who is most available to take up those informal com- plaints ; that is the method of procedure. Q. When was the last time, Mr. Mott, that a commissioner cam.e into your office and went over the general questions of the informal complaint pending in your office, I mean as' a general proposition ? A. I do not recall it has been done any time par- ticularly as a matter of investigation, because it is done in a cer- tain way all the time. 1694 Investigation- of Public Seevice Commissions Q. I mean has it been during your incumbency of the office, which you would call up for the general inspection by the Commis- sion, of the method of handling those coanplaints ? A. Well, the chairman, Commissioner Van Santvoord has frequently talked to me about tliem when I first came here, and very many times sinca I wouldn't say that he had gone through these matters in detail, but we have gone over the matters generally that I have taken up with him almost daily, informal matters. Q. What you call complaints against a street railway corpora- tion, for instance, if one comes into the office it is turned over to Mr. Barnes ? A. Unless it is a complaint that is addressed to a particular commissioner, then it is turned over to him and he has to decide it. I have taken it up frequently with a commissioner on the Commission. Q. Would you say that unless it was a complaint that a par- ticular commissioner has it is a matter which is considered by the Commission, do you not? A. Well, for instance, Mr. Wheden, we had one came from Kingston, Mr. Duffy's railroad, and Mr. Decker living in that vicinity I immediately went over it with him, into the case as to whether we should make it a foirmal case or proceed with the correspondence, or what should be don© with it and he knew the circumstances and advised what to do. That is just given as a mere illustration. Q. ISTow, in coimplaints coming from the city of Buffalo, in regard to service on the street railway lines, for instance, where it is turned over to Mr. Barnes as soon as you get them ? A. I think Judge Hodson has taken care of most of the complaints in Buffalo. Of course we sometimes have correspondence with Buffalo in connection with informal complaints. Q. How long has that condition existed? A. I don't know that I can. say how long it has., it has been a development rather than a distinct practice and commenced since Commissioner Hod- son went on the Commission, perhaps might have started along about that time. Q. Is it not true that complaints regarding seirvice in Buffalo ai*e not turned over to Mr. Ba.meis here but are sent to Commis- sioner Hodson for his own handling ? A. I think that is the case. I think pea-haps a great many of those are addressed to Oommis- sdoner Hodson personally, and that those where they go to Buffalo, FiifAL Eepoet of Joint Legislative Committee 1695 are addre^ed to him individually, the same as othei* localities are addressed to other commissioners. In many instances it passes directly to us and isi frequently taken cai-e of by correspondence, in the absence of Mr. Barnes. In the absence of Mr. Barnes my understanding is that Judge Hodson takes them up with Mr. Barnes informally, a great many of those matters, but that usually he supervises them and has to do with them generally. Q. Judge Hodson has? A. Yes. Q. All complaints that are addressed to Judge Hodson are taken over to him? A. That is true usually most informal com- plaints, the same as addressed to any other commissioner. Q. He handles the complaint at the Buffalo ofHce? A. Yes. Commissioner D'ecker handles a great many informal complaints of all kinds. Q. How about complaints from Jamestown? A. Judge Hod- son handles those genefally. Q. Does Judge Hodson handle all of them ? A. Some of them ; some of them the secretary answers. Some of them I think Mr. Barnes has the most important, has charge up there, those that have been filed lately. By Chairman Thompson: Q. What is the name of Mr. Barnes' department? A. In- spector of electric railroads. Mr. Wheden (resuming) : Q. What do you find is the attitude of the public service cor- porations towards your suggestion, for instance, as to improve- ment of service where it is complained of? A. I think if a complaint is a reasonable one on its face, a just complaint on its face, not full of complications, that they usually try to adjust those. I think generally speaking that is the attitude of most of the corporations in this district. Q. Do you find that is the attitude where the question is one of more frequent service? A. We don't usually have an informal complaint go to that extent; that is a matter that usually takes on formality. Q. Those are matters which usually develop into formal pro- ceedings ? A, Yes. 1696 Investigation of Public Seevice Commissions Q. In other words, when you make a request of that kind they are not so — A. We don't often regard as informal cases re*- quiring more cars; that is for the purpose of inspection by in- spectors unless it is something with which some commissioner is familiar and knows all about and takes it over and deals with it directly. Q. Where a complaint is made which involves considerable expense to the corporation complained of for remedying that matter, is it usually brought into a formal hearing? A. Why, yes, I don't say that that is always the practice, generally speak- ing that would be true. Q. What has been the attitude of the Commission upon the question of adequate service on street railway lines, is it their policy to enter an order and enforce compliance with that order, or is it their policy to endeavor to iiiduce the railroad company to improve their service without the entry of an order? A. I think the whole policy of the Commission with respect to these matters is to produce practical results if possible; where it is not possible, then to use their arbitrary powers. Q. Do you find any matters where it is possible to produce results without the entry of an order ? A. I think in many cases, yes; very many. Q. You don't know of any cases in which the corporations have agreed to remedy their service after a formal hearing, say, by the Commission, and then going back on their agreement ? A. I don't recall any such case. Generally speaking, that is not the case in this district. Q. Now, on these hearings, are they held by a single commis- sioner, hearings on service matters ? A. Yes, the statute permits that ; either one or more of the commissioners may. Q. Usually one commissioner sits and reports his findings to the Commission, to the whole Commission ? A. Yes, sir. Q. Now have you a list of the outstanding service orders against street railways ? A. Well, I have a list of the complaints against street railways since the beginning of the Commission up to about two or three weeks ago. Do you want that much, Mr. Wheden? Q. Well, I have all that, I think. I want a list of the out- standing orders of the Commission providing for service of street FiWAL Eepoet of Joint Legislative Committee 1697 railroads. A. Well, that is all published in the annual reports, all orders that is, those preliminary; and then we have a printed copy of all orders of last year, and then the bound volume con- tains all the orders of the preceding years. Q. Can you tell me olfhand how many orders there are in existence now? A. That is railroads? Q. Yes, street railroads. A. I can't offhand, no sir. Q. Were there many or few ? A. Oh, yes, there were a great many; there were a large number, I don't know the number, I can tell you definitely I think this afternoon. Q. Will you look that up ? A. Yes, sir. Do you mean orders that had been observed ? Q. No, I mean orders, they may or may not have been observed, their being enforced or that may be enforced by the Commission. A. Yes, I think we can give that. Q. Have the Commission ever instigated a penalty action against and of the public service corporations to compel compli- ance with their orders ? A. I don't believe there was one — I think I spoke of one to Judge Hale, I don't recall any more than one, and I don't know if that was the case Judge Hale had. I don't think it was continued. Q. Was it in a penalty case ? A. I think not a penalty case, I don't think there has ever been a recovery in a penalty case. Q. Has it been prosecuted to a conclusion? A. JSTo, sir. Q. Is it on related to service? A. I think not. Well, there have been several started in connection with filing reports and the companies then filed a report and the matter was discontinued, not as a penalty action, but failure to comply with the order of the Commission; I asked Judge Hale about that and he didn't recall that there had been any but the one and that was apparently satisfactorily adjusted. Chairman Thompson: Q. What action is that? A. That is an action a long time ago; I can give you the detail of it if you wish it, later. Mr. Wheden (resuming) : Q. How many mandamus proceedings have been instigated to compel compliance with the orders of the Commission? A. I 54 1698 Investigation of Public Service Commissions don't believe there have been any, Mr. Whedeu, unless this was a mandamus proceeding I have in mind; my recollection is that there has been but one case where legal resort had to be had to the courts to compel compliance with the order of the Commission. Q. Has the Commission ever instigated criminal proceedings under the misdemeanor section of the statute ? A. ISTo', not to my knowledge. Q. I notice in your rules of practice you have a rule 2 for acting on complaints; you have a procedure thereuuder which apparently anyone can bring in a complaint and have a formal hearing? A. Yes, sir. Q. By filing a formal verified • — ? A. It need not be verified. Q. A formal complaint ? A. Yes, sir. Q. Rule 2 provides, says : "A particular form of complaint is not required. The name of the corporation complained against must be stated in full; and the full name and post-office address of the complainant must be given." Then Kule 7 provides for an answer to that complaint: "An answer must specifically ad- mit or deny the material allegations of the complaint. If any or all of the allegations of the complaint are denied the answer must set forth the facts as claimed by the party answering." Now, after that answer is filed, that is how long after the complaint is served, do you know ? A. Well, generally twenty days ; if it is an emergency case apparently that rule may be shortened. Q. After that answer is filed the case automatically comes on for a formal hearing before the Commission? A. Yes, sir. If you will permit me just one explanatory word: When a petition comes in, it is brought to the secretary and aclaiowledged and is then referred to the executive clerk who prepares a memorandum analyzing the petition and notice of its receipt is sent to each commissioner a few days after that. Unless there is some special reason, which the Commission decide, it automatically has twenty days to answer, or less, if the Commission so determines, deter- mines it to be proper. When the answer comes in, then each of the commissioners is notified of the receipt of the answer in each of them, all cases of the preceding week, a list of all cases is sent to each of the commissioners and is taken up in executive session, this list of the cases or complaints or petition, and are divided among the Commission, assigned among themselves. FiNAi, Eepoet of Joint Legislative Committee 1699 Q. When a complaint comes in you can refuse, if you so con- sider it refuse to compel an answer, is that so ? A. I don't think we would have any proper authority to do that, if it was special, if it was a formal matter. Q. Has it ever been within your knowledge cases of a formal complaint that is not submitted, on a question of service or some other question, in which matter it has not been answered, which the railroads have not been required to answer. A. Well, I don't know ; but it is barely possible that there may be one or two cases like that. I know it has not in the very later cases, unless there was some peculiar reason for that. Q. What I am trying to get at is, is it possible under your practice for a citizen to obtain a hearing before the Commission by filing a formal complaint? A. Oh, yes. And in that con- nection, Mr. Whedon, I think Mr. Barnes will bear me out in this that there has not been a single informal complaint closed unless it was satisfied or unless it was beyond the jurisdiction of the Commission or impossible of satisfaction, if the complainant re- questing a hearing, that it was not granted. I think that is a true statement. Q. In case the answer of a corporation indicates that the com- plaint is not well founded, do you bring that up for a hearing. A. Well, that is a question for the Commission. A case is assigned to them and they can bring it up then for a hearing, as we are requested by the Commission or a commissioner. Q. So that all complaints do not necessarily come up for a hearing ? A. Well, not all ; I should, say most of them do, except those that are satisfied by the answer. Q. Of course it is possible that the answer may not truly state the facts? A. Yes, then it becomes a question of evidence, of course, very clearly. Q. Isn't that almost always the case in case of complaint and answer, the answer will in some way contradict the complaint? A. Yes, unless in a case where they would say they woiuld com- ply with it at a future day. Then the complainant is asked if that is all right, and very often they say it is all right; that is done through correspondence by the commissioner. Q. Can you tell me how many foi-mal complaints have been 1700 Investigation op Public Seevice Commissions received by tke Commission since its creation ? A. Well, I should judge something like twelve or thirteen thousand. Q. That is regarding all kinds of complaints? A. Just in- formal complaints. I don't know but I have here a detailed num- ber of the formal complaints, a detailed number for seven years is 15,889. Q. Will you state that number by years? A. 1908 formal complaint 252; correspondence comiplaint 1,147; w© call 'those informal complaints correspondence complaints, interchangeable; 1909, formal complaint 53l2, correspondence 1,088 ; 1910, formal 345, correspondence 1,452; 1911, formal 330', correspondence, 1,713; 1912, formal 312, correspondence 2,227; 1913, formal 315, correspondence 2,158 ; 1914, formal 312, correspondence 1,726. Now, here the detailed number of applications if you want them, from corporations, that would be of a formal nature. Q. Applications for what? A. Well, for either the issuing of securities or permission to do certain things which the statute reqiiires thean to get the consent of the Commission, like certifi- cates of convenience and necessity, the issuing of securities, and things of that sort. In 1908 there were 207; 1909, 225; 1910, 262; 1911, 278; 1912, 314; 1913, 369; 1914, 325. Q. Now that to'tal of 15,889, which you gave us some time back, was the total of all formal complaints and correspondence complaints and applicatio^ns that had been granted by the Com- mission? A. Yes, up to January first. Q. I see here a number of orders of the Commission to show cause? A. Yes, there were twelve of those. Q. Will you explain what those are ? A. Well, those are — I wouldn't want to go into detail, until after I looked over the report, but very frequently complaint is made and the corporation is asked to show cause why they should not do certain things. Q. Especially if it is of an immediate nature ? A. Why, yes, if the order was outstanding, and it was not satisfied, apparently not satisfied; I don't recall any order to show cause befo(re the Commission in a pending proceeding, but if in the nature of a complaint it is done very often as a readier way of disposing of the case, if it is, or has some immediate vital element. Q. They bring it on for a hearing in that way ? A. Yes. That FiWAL Eepoet of Joint Legislative Committee 1701 is often done in fire cases in the Adirondacks and things of that kind. Q. I notice in your annual report for the year ending December 31, 1914, jou state on March 16, 1914, there were pending' be- fore the Commission 390 formal cases, to which up to and in- cluding December 21st had been added 567 ? A. Yes. Q'. " Of this total of 957 cases 775 have been disposed of, leaving on hand 182. There were 558 informal complaints pend- ing on March 16, 1914, to which were added, up to including De- cember 31st, 1,189. Of these, 1,420 cases were disposed of, leaving on hand 327. From January 1, 1914, to January 1, 1915, the Com m ission held 630 hearings, of which number 274 were held in Albany, 41 in ISTew York City, 145 in Buffalo, and 170 in various other places in the State. Of the 298 entire days actively devoted to such hearing, the time of the Commission was divided as follows: Albany, 136 days; Buffalo, 57 days; New York City, 33 days; general, 72 days." That is a correct state- ment, is it not? A. I think it is so given in the record under my supervision, I think that is correct. Q. Can you tell how many of the 182 formal cases which were on hand on December 31, 1914, is still pending before the Com- mission, and still undisposed of. Have you a statement of when those cases were cammenced, and what each involved? A. Yes, I think so; that is I have of March 1st, that is, it contains in general the status of the oases, with dates of their receipt and their progress of the formal cases. Q. As of March 1, 1915 ? A. Yes. I think I gave Mr. Clark at one time one of those, this shows the number of the case, the date of the receipt and the subject matter of the case. I notice the first one is Wheden v. The New York & Vermont Home Tele- phone Company. Q. Have you got a list of the cases which you state were pend- ing before the Commisision on March 1, 1915, and the dates, showing the dates when the cases were pending which were com- menced in 1910, and which were commenced in 1911 and so on? A. Yes, sir. Q. That is the one I just gave you that is stated in the order? A. Yes. Well, I don't know that it is in the order of years, but that can be computed readily from those figures. 1702 Investigation op Public Seevioe Commissions Q. Will you have sooneone do that ? A. Yes, taking the years back and analyze them as tO' years ? Q. Yes. I notice in the Annual Report for 1914, under the heading of " Expenses of the Conunission " the Commission have " for all purposes whatsoever since its organization, July 1, 1907, to the close of the State fiscal year, September 30, 1914, are as follows: For the first fifteen monthsi, July 1, 1907, to September 30, 1908, $307,734.05 ; for the fiscal year from October 1, 1908 to September 30, 1909, $276,575.41 ; for the fiscal year from Oc- tober 1, 1909 to September 80, 1910, $295,443.08; for the fiscal year from October 1, 1910 to September 30, 1911, $342,739.47; for the fiscal year from October 1, 1911 to September 30, 1912, $372,323.04; for the fiscal year from October 1, 1912 to Sep- tember 30, 1913, $373,068.21; for the fiscal year from October 1, 1913 to September 30, 1914, $405,955.22." I notice that the ex- panses for the fiscal year from October 1, 1913, to September, 1914, were $32,000 greater than the expenses of the previous year. Can you explain the ca,use of that ? A. Well, I can only explain on the theory that it was from general lines. Q. There is no particular — A. I don't think there is any- thing special that explains it. I could of course give you the exact items of that ; I think I have them so^mewhere. Q. I was just wondering if that increase was explainable for any particular reason ? A. I don't think it relates to a particular matter, no sir. Q. I notice that the estimate of the Commission for the fiscal year commencing October 1, 1915, is $423,685.90, which is about $18,000 more than last year. A. Well, that, Mr. Wheden, I think involved a question of sufficient — by the way there is one reason I want to answer on that other question also — - there was an item of $8,000' in it to the electrical department, electric street railway department providing for one other employee, with of course a little increase of salary in two or three cases, in the appropriation for expenditure for this year, 1915. ITow, upon that last question it refers to the appropriation for 1915-16, doesn't it? That we have asked for four hundred and some- thing — Q. For the year commencing October 1, 1915 ? A. Yes, that is for a contingent fund, what we call a fund for additional em- FiwAL Eepoet of Joint Legislative Committee 1703 ployees occasioned by special matters that come up from time to time, which arises from the desire of the Commission to have a sufficient amount to meet emergencies of that kind, like to make a proper inspection and investigation of rate cases and complaints. Q. What is the reason for supposing that there is going to be a particular em.ergency? A. From the fact that there has been. The Commission has had $100,000 appropriation for the telephone investigation, it wa^ made necessary because in that fund there was not a sufficient amount of money to carry on the investiga- tion. Q. Has the Commission on hand any particular investigation to call for this extra amount? A. No particular ones, no sir. It relates more to the general needs of the Commission -with respect to additional employees; then the printing of the Commission is a much larger expense, printing prices ai-e very much larger, everything that the Commission has costs more than it has in previous yciars. Q. But T notice in this report that the Commission ran from July 1, 1907 to September 30, 1913, on something under $375,000. A. Yes, sir. Q. And then commencing October 1, 1913, that amount got up to about $33,000 and this year you propose it to go up anotheT $18,000 before you finish up with 1915-16. I wondered if there were any particular reason for that recently, other than the European war or the general financial situation which induced the additional expenditure? A. The only explanation I think, Mr. AVheden, is, the increased needs of the Commission with respect to traveling expenses and its increased salaries which the Commission has belie^^ed were necessary, and the contingent fund for emergency. That, generally speaking, is the explanation. Q. What I am trying to get at is, has there been any additional emergencies? A. No specific emergencies, no sir; that I recall, but there have been other innumerable cases which no doubt the Commission would investigate or send out investigatoirs upon if it had had greater financial resources, and the work of the Com- mission would have been expedited much better if that were the case; scone of the.m at least are due to the fact that the Commis- sion has no way of immediately employing a sufficient number to take care of these current cases. 1704 IlSrVESTIGATION OF PuBLIC SeKVICE COMMISSIONS Q. Is it proposed to increase the number of employees of the Ctrnxmission ? A. Only from time to time, between October 1, 1915 and October 1, 1916. Q. Is that the reason for this ? A. That is one of the reasons tha.t we increased it, which would enable the Commission to go about it as they needed it. Of course, if the Commission find it is not needed, does not need this appropriation, it will be allowed to lapse finally. Chairman Thompson: Q. If there is some of the fund available to employ so'mebody, even if it is not enough, there is some over in the Comptroller's ofiice? A. Well, the Commission generally needs this much. Mr. Wheden (resuming) : Q. Well, that is a point I was just going to bring out; the tele- phone fund was $100,000, that wa^ appropriated in 1914 to- cover the telephone investigation? A. Yes, sir. Q. Down in New York ? A. Yes, sir. Q. How much of that remains unexpended? A. As I recall it, the last stateotnent was made March 1st, and I cannot give the exact figures, but my recollection is about $30',000 has been, ex- pended. Chairman Thompson : Q. That is the sum, which has been paid out? A. Yes, sir. Q. There has been considerable incurred beyond that? A. Not unless in the New York office, for counsel fees. I believe Mr. Littleton's last counsel fee was paid up to November or December, or up to January 1st, I think up to March 1st everything except the counsel fees for January and February; that is my recol- lection. Mr. Whedon: Q. Those are one thousand dollars a month counsel fees? A. That is wha:t he was paid for November and December. Chainnan Thompson. — One thousand dollars a month ? A. That is from November 18th to December ISth. Chairmaji Thompson. — We want to know this afternoon about how many hours and minutes and days he worked. I think w© FiKAL Eeport of Joint Legislative Committee 1705 had better suspend imtil two o'clock, but before we do, I would like to know tbe whole cost of this up-State Commissiou, the whole annual cost, in the expense of administration. A. From the be- ginniiig. Q. Each year, the cost per year? A. Yes, sir. Chairman Thompson. — We will suspend now until two o'clock. Adjournment until 2 p. m. AFTER RECESS Fbank H. Mott, recalled, testified as follows: The Witness. — If Your Honor please, I would like to ask if it is proper, or possible, for the stenographer to read the minutes about the reference to the violation of orders to the Co'imnission ? Chairman Thompson. — In reference to the possibility of mis- demeanor ? The Witness. — Yes, and penalty actions. Chairman Thompson. — Yes, you can get it from him. (Mr. Wheden consults stenographer regarding minutes referred to.) Mr. Wheden. — The stenographer says he will have the minutes out in a few moments, and you can see them if you want to at that time, and make any corrections you desire. Mr. Chairman, are you ready to proceed? Chairman Thompson. — Have you any explanation to make in connection to that ? Mr. Wheden. — I say the stenographer is going to send in those notes. Chairman Thompson. — All right. By Mr. Wheden: Q. Mr. Mott, at the close of the morning's session, we were discussing the question for the reason of the increase in the ex- 1706 Investigation of Public Service Commissions penses of the fiscal year conunencing October 1, 1913, and the fiscal year conLmencing October 1, 1915, and you mentioned the question of travelling expenees. As I understand it, you in- tended to indicate that that might have something to do with the increase. Will you kindly elucidate what you mean? A. I think, Mr. Wheden, that I would better state my conclusions after looking that particular question up this noon. The appro- priation in 1913-1914 — was $405,245.90, but the expendi- ture for that year was only $398,033.02. That means approxi- mately twenty-five thousand dollars increase in the regular ex- penditures, and that ie accounted for in this way: Salaries, $18,- 700; extra service under that additional employee item, $2,800' ; printing $6,000; $1,500 of that printing item represented mat- ters which were to be paid for the preceding' year, and the other represented an increase in the actual printing expense of the Commission, due to an increase in the rate charged, and the in- crease in the business transacted. Q. Is that forty-eight hundred dollars increased? A. The net increase is twenty-five thousand dollars. Q. In that item of printing? A. Oh, about forty-five hun- dred dollars, the net increase. Q. What about the travelling expenses? A. I presume that was a rather inexact statement as bearing on that, but it is an exact statement as bearing on the reason for future increases, that is, for this year the increase in the appropriations is based on the fact that the travelling expenses are needed for the investi- gation, the capitalization department, the steam railroad depart- ment, the electrical department, etc. Q. Have not those travelling expenses been incurred through- out all the years? A. I think there is necessarily an increase from year to year. Now, this last year — the last few months — perhaps the monthly expenses were lesis than they had been for the preceding months; but it was due to the fact that we had actually to call in some of the examiners and inspectors for lack of funds and had to curtail their examinations. Q. In this proposed budget for the fiscal year commencing Octoberr 1, 1915, is it the idea of the Commission to use the appropriation there, or any part of it, to increase the inspectors Final Eepoet of Joint Legislative Committee 1Y07 on Mr. Barnes' staff? A. I think an item is included in tliat matter. "Inspectors of Electrical Eailroads, $8,000." That would involve the appointment of another inspector. Q. One more inspector? A. Yes, sir. Q. Do you not think that you need more than that? A. I thint so, beyond any question. Q. Has a matter of an increase of electrical railroad inspectors been brought before the Commission during your incumbency of office? A. Yes, sir, frequently. Q. What has been the attitude of the commissioners ? A. The attitude of the commissioners, I think, generally speaking, has always been favorable to that, but the difficulty up to now has been in not having the available funds. There is now available an item for the appointment of an electrical assistant inspector. Q. Could they not have gotten available funds by making ap- plications? A. The Commission, in 1913, I think, made the recommendation, and it was not granted. For this year, 1914- 1915, they made a request to the legislature and it was put in the appropriation. An item was put in the appropriation to in- clude that. I might say, perhapis, off the record, that only the fact that we have a man of very large experience and intimate knowledge with every electrical railroad in the State would have rendered possible the service we have given in that regard with the force we had. Q. In other words, Mr. Barnes is a very efficient and capable man in that department ? A. Yes, sir. Q. I note that, in the fiscal year commencing October, 1912, $205,768 was spent for — the department of chiefs of divisions', inspectors and others, the expenditure in the fiscal year 1913 was $223,025, an increase of about eighteen thousand dollars. Where was that additional money expended ? A. I would not want to answer that offhand, Mr. Wheden. Q. Will you look that up ? A. Yes, I ishall be glad to do that. Q. Now, can you explain to the Committee how the work of the Commission is divided among the present commissioners? What commissioners have what particular class of work? A. Well, in that regard, Mr. Wheden, the work of the Commission is not divided as to subjects. The cases are taken before the 1708 IWVESTIGATIOW OF PuBLIC SeEVICE COMMISSIONS Commission and they divide tliem am.ong themselves. I do not think there is any particular method of division. One commis- sioner takes one ease and the other the other. I think from this list I can shovs^ you very quickly the method of dealing with it. This (indicating) is the status of cases as of March 1st. There are several cases vjrhich the Chairman has. There is the list of cases which Commissionea: Decker has (indicating) and their status up to March 1st, and you will find there are all kinds of cases, rate oases, service cases, miscellaneous cases, except that the capitalization cases are called "Commission Matters." Q. That is they go to the whole Commission ? A. They go to the whole Commission and are passed on by the whole Commis- sion. The others are divided not as to subjects but — well, I do not know but the necessities of the case determine it. Q. We found in the first district that a certain commissioner would handle most of the rate cases, and capitalization cases; another commissioner would have charge of rapid transit work, etc. A. That has not been followed here. The cases are not divided so definitely. Mr. Decker takes a great many of the so- called rate cases, but not exclusively. Q. Can you tell me the rate cases now pending? A. I am just having a list made of every rate case that is open before the Commiagion. I think we will have them in a few moments. Chairman Thompson. — I do not think they have as big an or- ganization here as they have down the State. They cannot get things so quickly on that. They are more economical up here. By Mr. Wheden: Q. Mr. Mott, does your Commission hold executive sessions? A. The Commission, under the rules, has an executive session every Tuesday morning and every Wednesday morning. •Q. And that is a closed session; that is, the public are not ad- mitted? A. It is, practically. I do not know as if anybody having any business wanted to get in there, there would be any objection to it. Q. They do not hold them in a public room? A. They hold them in the only room they have, room 19. Q. It is not formally opened to the public ? A. No. FiWAL Eepokt of Joii^t Legislative Committee 1109 Q. Do they have what the Firist District Co'mmission desig- nates as " Stated Meetings," that is, piublic meetings at which they convene and vote in public upon matters which are brought before the Commission ? A. No, sir, they have just those stated executive meetings which cover all those purposes. Q. So that in this executive session, which is a closed session — or at least, not formally opened to the public — they discuge the matters and also formally vote on them and decide them? A. It might be well to call your attention to rule I, subdivision 1, which reads as follows " The iCommission shall meet fo-r executive conference at its assembly room at Albany at 10 o'clock Tuesday and Wednesday, and the Commission shall meet at executive session at Albany at 10 :30." They call them executive conferences, but they are a continuous matter. They are actually executive sessions as distinguished from public sessions. Q. Down in ISTew York we foiund that they have what they called meetings of the committee of the whole, which were equiva- lent to executive sessions, and then stated meetings, which are public sessions. The meetings of the committee as a whole were characterized by some of the commissioners as Star Chamber Proceedings, and by others as a joke. Evidently yours were not a joke? A. ISTo. Q. Now, in the matter of bringing up questions involving the rates charged by the gas and electric companies, for heaxings be- fore the Commission, is it the practice to have one hundred citi- zens — to require one hundred citizens — to sign a petition? A. Well, from memory, Mr. Wheden, I should say that the statute provides it must be one hundred consumers, or the mayor, or oonamon council, or the village trustees, in cities of the first class ; cities of the second class, it is only fifty of the same officers. Now, that is as I recall it. Q. Has the Commission ever taken up the question of rates on its own motion and held formal hearings ? A. I am sure it has of service. I am not so sure of the rate. I doubt if it is as to rates. Of course, there is a subdivision of section 61 or 65 — I am not quite sure which — which indicates that the Commission can make an investigation on its own motion. Q. Has the Commission, if you know, employed special counsel 1710 Investigation of Public Service Commissions in any of its litigation ? A. I do not recall any special counsel in any matter except the telephone matter. I rather think that perhaps early in the Commission's business someone was employed to assist Judge Hale temporarily. It was only a temporary employment. But practically there has been no employment of counsel except in the telephone matter, so far as I can recall, or so far as I have been able to ascertain. Q. Has Judge Hale had anything to do with this telephone matter from the legal end ? A. I think only occasional consulta- tion. Q. Who has been employed by counsel? A. Mr. Daniel V. Murphy was employed as special counsel first, and upon his death, Mr. Martin W. Littleton. By Chairman Thompson: Q. What does Judge Hale do? A. I should like to suggest that Judge Hale be asked that. I would not want to characterize it. I am afraid I should omit some of the important things he does. He is very busy. General speaking, when informal legal matters come into the office, when we are asked questions in regard to legal procedure, and it is purely a matter of method of pro- cedure, it is taken up with the iCommission or referred to Judge Hale, and he will prepare a letter and explain it. Q. Is Chairman Van Santvoord a lawyer? A. Yes, sir. The commissioners are all lawyers except Commissioner Decker. Q. The secretary is a lawyer ? A. Yes, sir. Q. And a good one. Now, there are no actions pending? A. Yes, there are several actions pending, several appeals pending in certiorari cases, the JSFew Haven appeal, the 'Central appeal and this United Traction Company certiorari is pending. Judge Hale argued one case in the court of appeals yesterday and is arguing one to-day. He appears for the Commission in all matters of this kind, in addition to the enumerable counsel which he gives on general subjects from day to day. Q. Gets up opinions ? A. Yes, sir, for the commissioners, and for any person who is interested from the outside in a case. Q. I do not suppose, Mr. Secretary, that you know anything in regard to the present investigation in reference to the telephones ? FiiTAL Eeport of Joint Legislative Committee 1711 A. I would not care to go into the detail of that. I know in a very general way about it. Q. We will ask the commissioners about that. A. That is a pending matter and I should prefer that the commissioners discuss that themselves. By Mr. Wheden : Q. In the matters which are brought up for formal hearings before the commissioners, where it is necessary to gather and pro- duce testimony at the hearings from different witnesses and ex- perts, does Judge Hale take part in the preparation of those cases for the complainants? A. Why, I should not say that he did generally. He is often consulted by the complainants and he ap- pears at hearings. Q. Take for instance, where the Commission have a hearing on its own motion, say into the service on certain railroad lines, if such hearings are had and not upon the motion of a citizen or a group of citizens, would Judge Hale prepare the evidence? A. Well, Judge Hale would be called in if the commissioner in charge, or the Commission itself, regard his assistance necessary. Of course, it depends on whether they would or not. I do not recall offhand of any such case, although there no doubt are. Q. We found in the first district that it was the practice for the Commission to have a member of their legal staff present usually at their formal hearings, either to conduct the hearing or to advise with counsel for the complainant? A. The fact that all these commissioners are lawyers renders that less necessary, I think, because the procedure is informal — that is, all except Mr. Decker, and he is a man of legal training, although Judge Hale has appeared in eases in that very respect. Q. Now, if you want to make a correction in the minutes, you may look them over. A. (Witness examines minutes of his tes- timony this morning.) Now, Mr. Chairman, the reading of this testimony upon the question of penalty and mandamus proceed- ings, and the interpretation placed upon it by one or two news- paper men, leads me to believe that I can make that a little clearer. Chairman Thompson. — All right. A. In answer to Mr. Wheden's question about whether the Commission — about the mandamus proceedings and penalty 1712 Investigation of Public Sbevice Commissions actions — I would like to have the record read this way : That, to my knowledge, there have been but — so far as my information or knowledge goes, there have been but two penalty actions insti- tuted by the Commission since its organization, one against the New York Central Eailroad, for issuing $30,500,000 of equip- ment trust securities without the consent of the Commission. That is a case which went into the courts as to the authority of the Commission, and after the courts decided that the Commission had the authority, they made an application nunc pro tunc for the Commission, and the penalty action went down. Then there was the case against the Erie Railroad, in regard to a station at Collins. The order of the 'Commission, after the institution of it, after the institution of this action, was carried out, was executed. In connection with that action, also a mandamus proceeding was instituted, but that was discontinued. By Chairman Thompson: Q. The first action was a test case? A. Yes, I think it was. It was a test case. So that, as a matter of fact, in both cases the order was complied with, and the only other actions or mandamus proceedings that have been brought were for the failure to file annual reports, or to comply with the provisions with reference to a report, and those were in every case satisfied. I think per- haps there have been about one hundred dollars recovered all told in connection with actions of that kind. By Mr. Wheden: Q. You are ninety-nine dollars ahead of the first district ? A. But otherwise, so far as I know, and so far as the counsel for the Commission is able to advise me, there have been no violations of orders requiring penalty actions or mandamus proceedings. Q. It is not any connection with the case of the People against Whitridge, which was decided by the court of appeals, in the second district ? A. I would not want to pass upon that. I might have an idea upon it, but I would not want to commit the Commission to it. Q. Do you think they will have those reports here before long? A. I think so. I have one here, Mr. Wheden. I have here, in answer to Senator Thompson's question, a list of all the corres- Final Kepoet of Joint Legislative Committee 1713 pondence complaints before July, 1914. There are thirty-six, I think, of them. (Witness hands list to Mr. "Wheden, who passes same on to Chairman Thompson. ) The other that you asked for, Mr. Wheden, the classification of the present status of the cases, will be here very soon, as to whether they are rate cases or service cases. Q. I notice in this list of all cases open on the records of the Commission on February 1, 1915, which you have submitted, the case of Green against R. B. & E. E. E.. A. Where isi that ? Q. On the first page, under " Commissioner Decker," the first case, 363, relating to fares and commutation rates. Do you know when that case was started ? A. Do you know the number of that case? Q. Three hundred and sixty-three. A. That was disposed of. Q. Three hundred and sixty-three? A. That is an old one. That was received in December, 1914. It was reopened in Oc- tober, 1914, and closed in November, 1914. I think that case has since been closed Mr. Wheden. Q. Do you know when it was commenced? A. I cannot say offhand when that was commenced. Q. From the fact that it was 363, it would indicate it is a very old case? A. Yes, sir. Q. Do you know the facts of the case? A. ~So, I cannot tell you without looking it up. There have been 1,000 cases since I have been here — new ones — and it is pretty hard to follow. Q. I see here the case of the residents of Oneida against the Oneida Railroad, fares and service?' A. Which page is that on? Q. On the first page of the old report, 1725. A. That case came into the office in June, 1910, and Mr. Decker advises me that there is a question of jurisdiction in that case over the com- mutation rates, which is pending in the court of appeals now, and that that is the reason that case has not been disposed of. Q. Has that case been pending in the court of appeals since June, 1910 ? A. It came up during the hearing. Just how it is decided, I would have to look up. Q. Well then, the case of the residents of Newark against the Wayne Telephone Company, service and rates, No. 2185 ; also discrimination; that was received in February, 1911, and the last 171-t IlfVESTIGATIO:S^ OF PuBLIC SeEVICE COMMISSIONS hearing seems to have been in February, 1913. Do tou know whv that has not been disposed of? A. Mr. Decker has made a note to the effect that that case, 21S5. and case 2216, that the compLiinauts were asked whether they desired to cross-examine deponents witnesses, and they have stated that they did not care to do so and were willing to submit the case. That matter is now before Commissioner Decker for disposition; and just the reason for that in those cases. I should think the Commissioners could better explain. Q. I guess you are right about that, Mr. Mott. By Mr. Wheden: Xow, Mr. Chairman, can we suspend for a few minutes until we get that list I asked Mr. Mott to furnish. Acting Chairman Maier. — We will siispend for ten minutes. The Witness. — Does that cover ever^-thing you asked for be- fore the session ? Mr. Wheden. — There was a list of the outstanding service on the street railroad companies I asked for. Eecess of ten minutes. By Mr. Wheden: Q. Xow, Mr. Mott, I have hei-e a statement of formal applica- tions in complaints, which were open and undisposed of before the Commission on March i, 1915. It is arranged by the years in which they were received. I notice that there are two cases open and undisposed of. which were commenced in the year 190S, both of them with regard to the International Railway Company, Xew York Central and Erie Railroad Company, con- cerning interchange of freight cars. Who has these cases at the present time, if you know i A. I think Jiidge Hodson has those cases. Mr. Wheden, at present. Q. Do you happen to know why it is that they have not been disposed of prior to this time I A. I have been advised that those cases involve very complicated questions, and they have been running along for some time ; and after many hearings there was an understanding among the interested persons as to a stipula- Final Report of Joint Legislative Committee 1715 tion that would be satisfactory, that such a stipulation between the railroads and complainants would be filed with the Commis- sion. That stipulation has not been filed, but the Commission is expecting it to be. Q. That is an agreement as to the matter under consideration ? A. Yes, sir, an adjustment. Q. Which would do away with the necessity of an order ? A. Well, an order might follow, but it would do away with the neces- sity for arbitrary action on the part of the Commission. Q. Do you happen to know whether or not there has been any objection from the complainants on account of delay in that case ? A. I do not know that there has been. I think that the com- plainants -and the companiee are cooperating in that case. Q. Cooperating in delaying it? A. For an adjustment. I would not want to go into the details of that case. There are some legal complications involved in it, from the beginning. Q. Then there is case No. 172'5, the residents of Oneida against the Oneida railway, fares and senice, which was com- menced before the Commission in 1910. I believe we have already refeiTed to that case? A. Yes, sir. Q. And in 1911 there were six cases commenced, which are still pending before the Commission and undecided, 2403, 2525, 2582, 2575, 2712 and 2484. Most of those are rate cases? A. Yes, sir. Those are contained in your other statement and the statement of their status. Q. They are called " Pending and undecided," are they not ? A. Yes, sir. Q. Then there are four cases commenced in the year 1912, which are still pending before the Commission, thes'e being 2830, 2734, 2775, 2905 — 1 notice the case 2905, Smith against the International Railway Company, involving inadequate station facilities in Lockport. Do you know whether or not there has been any improvement in the station facilities, whether any im- provement has been made in the station facilities during that period; that is number 2905 ? A. Yes, the record I have of that case ie that a hearing was scheduled and held and the representa- tives of the company announced intended improvements on the extensions of their trolley facilities, and suggested plans for a 1716 Investigation of Public Service Commissions new station vp-Jiicli would be built when such extensions and im- provements were made. This seemed to be satisfactOTy to the complainants, temporarily, and the case was indefinitely post- poned. The Commission is aware of various plans for exten- sions and improvements either on the part of the International Railroad Company or allied companies in and near the city of Lockport, and it is believed that, when such improvements are made to the station facilities, it will satisfy the complainants in this case. That is the record I have from the commissioner in charge of the case. Q. I have no doubt that, when the improvements and facili- ties are given, the complainants will be satisfied; but the point is they have not been made in two years. 'Now, there were com- menced in the year 1913 fifteen cases which are still pending before the Commission, undecided, according to this statement. These cases are numbers 3643, 3937, 3938, 3939, 3940, 3941, 3942, 3931, 3981, 4009, 3829, 3755, 3641, 3454 and 3501 ; and there were commenced in the year 1914 sixty-four cases, according to my computation, cases which are still pending before the Com- mission and thus far in 1915, twenty-nine cases. These are all formal cases before the Commission ? A. Yes, sir. Mr. Wheden. — Mr. Chairman, do you desire to ask any further questions ? Acting Chairman Maier. — I think the Chairman, Senator Thompson, has some questions he wishes to ask Mr. Mott. If you are finished with Mr. Mott to-day, he may be excused and he can come back when we want him. The Witness. — Yes, sir. I do not know whether Mr. Wheden has this statement or not, but in connection with these statements, this one (indicating) is a statement of the status of the cases March 1st. The list from which Mr. Wheden read is arranged in relation to the year when they were received. Now, this list (indicating) states the Commissioners in charge of the particular cases and the status of the case when it was received. I would juist like to have that in some form. Acting Chairman Maier. — Have you also a statement in re- gard to what you call the open correspondence complaints? FixAL Report of Joii^t Legislative CoiiiiiTTEE 1717 The Witney. — This is submitted for anj use you care to make of it. Mr. WTiedeu. — I think it would be a good plan, Mr. Chair- man, to offer the statement of the status of case open before the Commission, February 10th, as an exhibit The Witness. — Exc-ept capitalization and grade crossing cases. Mr. Wheden. — Receive it in evidence as an exhibit and annex it as a part of oui- record. Acting Chairman Maier. — Received. (Statement dated March 1st, 1915, indicating the status of cases open on the records of the Commission, Febnoary 10, except capitalization and gxade crossing cases, received in evidence and marked Exhibit Xo. 37 of this date. This exhibit is copied in the record. See index.) Mr. Wheden. — I will also offer a statement of the capitaliza- tion cases which are under consideration by the Commissiou, which has been prepared and presented by the secretary. Acting Chairman Maier. — You wish to include that in the record ? Mr. Wheden. — Yes. Acting Chairman Maier. — Received. (Statement dated Februai-y 2Sth, 1915, entitled "' State of Xew York, Public Service Commission, Second District, Division of Capitalization,"' received in evidence and marked Exhibit 38 of this date. This exhibit is copied in the record. See index.) The Witness. — There is a long list of -grade croseing cases and there are a good many cases where grade crossing appropria- tions were applied to a particular elimination, and after the order providing for the elimination was issued, that case was closed, so far as any special action on the part of the Commission was con- cerned except to pass on the final accounting; but as to the prog- ress of the work, it is rather difficult to characterize those cases as to whether they are closed or open, and they are not included 1Y18 Investigation of Public Service Commissions in this list; but at any time the Commission or Mr. Wheden desires those cases, I shall be glad to furnish them. Mr. Wbeden. — I believe that is all I care to ask the secretary to-day. I will call Mr. Barnes. Chaeles R. Barnes, called as a witness and sworn, testified as follows: Direct examination by Mr. Wheden: Q. Where do you reside, Mr. Barnes? A. In Eocheeter. Q. What is your official position with the Commission of the Second District? A. Electrical railroad inspector. Q. How long have you held that position ? A. Since the organi- zation of the Public Service Commission. Q. Prior to that time, were you in that same work, engaged in that same work? A. I was. Q. With whom ? A. With the former Board of Railroad Com- missioners. Q. And for how long? A. I have been twenty yeana in that occupation, occupying the same position I do now. Q. With — A. With the former Board of Railroad Com- missioners and with the Public Service Commission. Q. Now, will you tell the Commission just what your work has been with the Public Service Commission of the Second Dis- trict since you came with them ? A. Inspection of railroads as to physical condition, equipment, power supply, investigation of accidents and complaints, investigation as to quality and suffi- ciency of service furnished by the electric railroad companies. Q. What territory do you cover in these inspections? A. The whole of the Second Public Service District. Q. Which is the whole of the State of New York outside of Greater New York? A. Yes, sir. Q. How many assistant inspectors have you in your employ? Al. One. Q. And have you had but one since the creation of the Com- mission? A. The assistant inspector was appointed about three years ago. Prior to that time, I did not have any assistant. ■Q. How many electric railroads are there in the jurisdiction Final Eepoet op Joint Legislative Committee 1Y19 of the Second District? A. If my memory serves me right, I think there are forty-eight operating companies. Q. And how many miles of road are operatel by those com- panies ? A. Practically two thousand. Q. How many cities are included within the jurisdiction ? A- All of the cities in the Public Service District. I never counted those up. Q. You include the city of Buffalo, and Eocheuter, and Troy, and Yonkers, and Albany and Syracuse ? A. All of the cities in the Second District. Q. How many complaints of service on the street railroad lines in the jurisdiction of the Second District have you investigated in the years that you have been on the Commission if you know ? A. I cannot state, that, Mr. Wheden. Q. How do they average? A. Why, on account of my not hav- ing help enough to properly perform the work of the department, I have not myself kept any record of the exact number of com- plaints investigated, except in a general way, for the last year or eighteen months. Q. How have they averaged in that period, can you tell me? A. I have a book here and they are not numbered. It is a record of the complaints and they ai-e not nimibered, and it would neces- sitate counting them up. Q. We have all had information from ilr. ]Mott, I think. How often are you enabled to malce an inspection of the roads within your jurisdiction ? How often do you get around to make an in- spection ? A. In the investigation of accidents and of complaints, I am continuously, you might say, travelling over the different roads in the state; and from my knowledge of the physical con- dition of the different roads, I am enabled to pick out those which, in my judgment, require an inspection, and go over them as fre^ quently as safety requires. Q. Well, with the circumstances under which you work, you are not able to check up the service on these roads very frequently, are you ? A. Not as frequently as should be done. Q. Have you ever made an inspection of the roads — of the street railroads — of Yonkers, for instance ? A. Yes, sir. Q. How long ago was that inspection made ? A. I think that was made in 1912, if I remember right. 1720 Investigation of Public Service Commissions Q. Did you mate a report to tke Commission ? A. I did. Q. Did you make certain recommendationsi to the railroads ? A. I did. Q. Do you know whether or not those recommendations were approved by the Commission and carried out by the street railroad of Yonkers? A. They were approved by the Commission and generally carried out by the company. Q. You made an inspection afterwards to ascertain that fact? A. At different times, yes. Q. Well now, what other general investigations have you made within recent years, say in the last three or four years ? A. I have made detailed and thorough inspections of traffic requirements and service furnished in the cities of Buffalo, Syracuse, Rochester, Binghamton, Ithaca, Albany, Schenectady and Yonkers. I think that is all of what might be called thorough inspections of trans- portation matters in the state. Q. You go over the lines of these railroads and make recommen- dations as to change of route or increase of car service, or what- ever seems to be necessary to improve the service? A. Yes, I study the requirements of a city and then examine the service furnished to meet those requirements, and base recommendations on both. By Senator Mills: Q. Do you wait until you get a complaint before you inspect the road, or do you check them up one after the other and inspect those roads ? A. Senator, in reference to the safety of operation, I do not wait until a complaint comes in. We have certain roads in the state that I make it a point to go over every year regardless of my other duties, because their physical condition is such that I deem it necessary. G'eneral investigation such as I have made in the cities I have outlined usually is on complaint. Q. It usually is as to adequacy of service ? A. Yes, sir. Q. Now, when you find the service is inadequate, do you take it up directly with the railroad officials and submit your findings to them, or do you come back to the Coiimnission and ask them to do it ? A. I make a thorough study of these traffic conditions in the city, and on that study, compile a report which contains recom- FiKAL Repoet of Joint Legislative Committee 1721 mendations. That report is presented to tlie Commis&ioo, ajid if it meets their approval, the Commission sends it to the company. Q. But you do not deal directly with them ? A. ]S!"ot as far as transmitting the reports are concerned, but I am in consultation with the companies while making the invratigations. Q. Now, if the Commission thinks well of your report and sends it to the campany, do you take it up with the company for enforce- ment, or does the Commission issue an order compelling them to put that service in right away? A. In some cases the repoirt is sent to the Company and they are requested to reply to the Com- mission as to their attitude on the recommendation ; and in cases the recommendations have been made the orders of the Com- mission. Q. When they do reply, do you take their word for it or do you check them up ? A. We check them up. Q. It is your duty to check them up ? A. As far as my ability to do so. I don't quite mean my ability, I mean — Q. To the extent of the means at your disposal ? A. Yes, that is it. Q. And you have to check up the traffic lines as to safety and not adequacy of service? A. Especially as far as safety, is con- cerned. Q. Adequacy of service applies more to street railways? A. Tes, sir. But we have largely investigated as to adequacy of service on the Interurban roads. Q. You don't have charge of the steam road ? A. No. Q. But you do have charge of the Interurban service ? A. Yes', sir. Q. Do you have charge of the New Haven service, the sub- urban service in any way ? A. No, sir. Q. What is the practice generally in the Commission as to mak- ing an order on your recommendation, or do the companies agree to improve the service without an order being made ? A. Why, generally, the attempt is made to get the companies to agree to accept the recommendatious without an order. Q. If they do agree, no order is made ? A. No. Q. Now I have before me here a report on investigations of traffic conditions in Buffalo in 1912, which consist of some one 1T22 IXVESTIGATIOX OF PuBLIC SeEVICE CojIiTISSIONS hundred and twenty-five pages. Was that report made by you after an investigation of that service i A. It was. Q. I want to just read the siunmary there, which is on page 122, sununarizing this work of the ser^ace conditions and ti-afiic requirements in Buffalo: '' This report is submitted after an in- vestigation of service conditions and traffic requirements which it is believed is thorough and complete in every detail. The in- vestigation has disclosed a failiire on the part of the railway com- pany to afford a reasonable and adequate sti"eet railroad service in Buffalo, also a tendency on the part of the public and the railway as well to accept as inevitable conditions far from satisfactory. The allegations of the facts, are substantiated by facts; and although ci^ac organizations eager to impress upon the public that Buffalo is abreast of the times and enjoys the benefits of well- organized and tmsui"passing public utilities, may find a disclosm-e of the facts distasteful, yet a determined stand against prevalent inconveniences and annoyances which have been tolerated and en- dured until they have been considered as necessary incidents of operation, will bring about a condition of affairs much more credit- able to civic pride. The welfare of the citizens of Buffalo and the future advancement and prosperity of the city itself is affected by these unnecessary irregularities, and it is believed that the remedies suggested herein will work an effective and lasting benefit to the city at large." Then you proceed to make certain i-ecommendations, twenty- eight recommendations for the improvement of the service on these lines. Plow long did it take you to make that inspection, Mr. Bames ^ A. Four months. Q. You were there continuously, were you, with your assistant ? A. Yes, sir. Q. You covered all the lines in Buffalo ? A. Yes, sir. By Senator :Mills : Q. Was there an order entered? Mr. "RTieden (resuming) : Q. What procedure was followed by the Commission after this report was submitted to them ? A. A copy was sent to the company with a request for an answer as to the recommendations ; the com- oanv took excentions to some of the recommendations, and a date FiKAL Repoet of Joint Legislative Committee 1723 for a public hearing was set, and the Commission went to Buffalo to hold that public hearing. On that day it developed that the municipal authorities had removed a track from one of the streets over which the recommendations contemplated operating some of the lines. The chairman of the Commission at that time — Q. That was Mr. Stevens ? A. Mr. Stevens — deemed that an improper act and for that reason the public hearing was not held, and has not been held since that. There has been no further official action on the part of the Commission since that date. Q. With regard to this report ? A. Yes, sir. Q. Was any order entered ? A. Wo order was entered. Q. 'No formal proceeding was had ? A. ISTone. Q. In this matter ? A. !N"one. Q. And the reason for that was because they tore up the track there? A. Yes, sir, and Mr. Stevens notified the Company and the city's representatives that no further action would be taken until that track was put back. Q. Did they put it back ? A. No, sir. Q. And Mr. Stevens held because the city had done something that the Commission did not approve of, they would not go ahead and compel the railroad company to comply until the city had complied with your recommendation ? A. That was the result. Q. Wow, do you know whether or not any of these recommenda- tions have been followed out by the railways in Buffalo ? A. Yes, they have. Q. How many of them, to how large an extent ? A. May I look at that report? Q. Yes, you can look over your recommendations, and state which have been complied with. A. Well, recommendation 'No. 1 refers to the reconstruction of what was at that time poor track, which has been nearly all complied with. Recommendation No. 2 refers to repairs of 80 miles of track. That recommendation has practically been complied with. Recommendation Wo. 3 refers to the replacing of worn out special work, tracks, special work. That recommendation has prac- tically been complied with. Recommendation Wo. 4 is rather a suggestion that necessary reconstruction of tracks should not be held contingent upon the paving of streets. That has not been complied with. 1Y24 Investigation of Public Service Commissions Eecommeiidation No. 5 refers to improvements in rolling stock, which recommendation has been complied with by a large number of new cars. Recommendation ISTo. 6 is a request or recommendation that the company notify the Commission of why it accumulated a million dollars in depreciation fund and permitted its track and equip- ment to deteriorate to the extent found on the investigation. That never has been complied with. No. 7 refers to equipment, that they cause all their double track cars, passenger cars to be equipped with push buttons, which has been complied with. 'No. 8 refers to the equipment of all cars with proper route and destination sign. That has been complied with. No. 9 refers to attention being given to the details of improv- ing conditions of cleanliness of the cars, and also sanitary condi- tions. That improvement has been made in that direction. No. 10 recommends a car mileage basis for the overhaul of cars ; that has been adopted by the company. No. 11 reads : " That after the new cars ordered have been received, under no circumstances shall a car be put in service with a flat wheel ; that no car with a flat wheel shall be run more than one round trip." That I can't say, as to whether that is being complied with or not. No. 12 refers to a prohibition of operating single truck cars on important lines after 200 new cars which have been ordered are received. That has been complied with, except during the rush hour when some of the single truck cars are being used. No. 13 is a request, or recommendation, that the company fur- nish the Commission an explanation of the increased cost of power per car mile between the years 1908 and 1911 of 10.9 per cent. That has not been complied with. No. 14 refers to an electrical survey of the company's system being made by the company as to the causes for electrolytic action on water pipes and other underground structures. That has not been complied with. No. 15 is a recommendation to the company to add two line wagons for maintenance of their overhead system. That has not been complied with. Final Eepoet op Joint Legislative Committee 1Y25 No. 16 is a recommendation that cars northbound on Wash- ington street do not stop to receive or discharge passengers on the south side of Clinton street. That has not been complied with. No. 17 : " That the practice of layover cars, layover of the cars of the Buffalo Southern & Lancaster-Depew Lines on either side of Lafayette Square be discontinued." That recommenda- tion has not been complied vs^ith. No. 18 is a recommendation that the general nearside stop be adopted. That has been complied with. No. 19 refers to the extension of the company's telephone sys- tem. That has not been complied with. No. 20 is a recommendation as to improvement in the details of investigating with regard to delays to traffic. That has not been complied with. No. 21 refers to a virrecking wagon being maintained at each of the six operating car barns in the city of Buffalo. That has not been complied with. No. 22, a recommendation that the company notify the Com- mission what steps it will take to reduce the number of collisions which were occurring on the city system at that time. That has not been complied with. No. 23, a recommendation for additional examination of appli- cants for motorman and conductor and additional instruction after appointment, and request notification of the Commission as to what the company will do. That has not been complied with. No. 24, a recommendation that a department of public com- plaints be established has not been complied with. Q. Will you read that paragraph on the question of public com- plaint ? A. " Twenty-four, that the company designate an official whose principal duty shall be the investigation of complaints, sug- gestions, and matters of mutual interest to the people and the company. Such designation to be made within thirty days after the receipt of this recommendation." Q. Is it your opinion, Mr. Barnes, that that recommendation will result in benefit to the company as well as to the people? A. It is, yes, sir, for the reason that the complaints at the time this. report was made, received by that company were investigated by the head of the department, causing the grounds of complaint, 1726 Investigation of Public. Seevice Commissiows and I didn't think it was a proper procedure either for the benefit of the company or the public. No. 25, " That the company immediately cause increased effi- ciency in their lost and found department." I have no knovyledge that has been done. ISTo. 26 is a recommendation that the company cause a closer analysis of its travel to be made, to regulate the service to the fluctuations of travel. I have no knovs^ledge that has been done. No. 2T refers to the general rerouting of cars in the city of Buffalo outlined in the report, with a recommendation that they notify the Commission if they will accept the tentative plan of rerouting. A portion of that complaint has been carried out ; the other portions of it I am informed are under consideration at present. No. 28 is a recommendation for a change in operation of some of the lines out from the New York Central depot, to and from the New York Central depot, which has been complied with. Q. Now, were those recommendations promptly complied with as to these cars as the usual coursed A. They have been from time to time complied with up to the present. Q. Is that the last inspection of the Buffalo lines that you have made ? A. As far as quantity and quality of service is concerned. I made an investigation in Buffalo into the question of noises caused by these cars since this report. Q. When was that? A. I think that was in 1913, sometime during 1913. Q. Did you investigate complaints coming from the city of Buf- falo ? A. I have not recently. Q. Since when have you not investigated complaints coming to the Commission from the city of Buffalo ? A. Since Commis- sioner Hodson has been a member of the Commission I have not investigated, I have not generally in,vestigated\ complaints in Buffalo. By Senator Mills: Q. Now, the Commission has an office in Buffalo, hasn't it? A. Yes, sir. Q. In that Buffalo office they have got traffic inspectors, have they not ? A. Yes, sir. FiWAL Eepoet of Joint Legislative Committee 1727 Q. Whose duty it is to check up the possible sei-vice in so far as traffic facilities are concerned on the street railways ^ A. Yes, sir. Senator, those duties are confined to steam railroads as 1 understand it, those duties with reference to the movement of freight. Q. Well, it doesn't touch the street railways at all then? A. No, not that I am aware of. Q. And the Buffalo office doesn't touch that end of it. A. Why, Commissioner Hodson does. Q. To whom do the complaints go at the Buffalo office in so far as the Buffalo street railway service is concerned '< A. I believe the Secretary has already testified that some of the com- plaints go to Buffalo and some go to Albany. Q. And they come to you eventually, or they go to the traffic inspector in Buffalo ? A. No, the traffic inspector in Buffalo is not assigned to electric railroad matters in any way that I know of. Q. When did you make this inspection that you say took you four months? A. The report is dated May 16, 1912. Q. When was it this street was torn up that you told us about ? A. I have no means of stating that date. Q. You can tell us the year ? A. In 1912. Q. Did the tearing up of the street in any may make it im- possible for the railroad company to live up to the order or to those recommendations? A. The recommendation for re-routing included one for the operation on several of the lines there, through Eagle street, which was the street where the track was torn up. Q. Was that such an important change that it made it im- possible for the railway company to comply with this order, or recommendation ? A. Yes, literally. They couldn't comply with the tentative re-routing scheme. Q. In any way? A. Why, they could accomplish the same result perhaps in some other way, but they could not comply with that tentative plan presented. Q. Then since 1912 nothing has been done so far as you are concerned, or as the Commission is concerned, to compel com- pliance with these recommendations? A. No. 1728 Investigation of Public Service Commissions Q. But you say the greater part of them have been voluntarily complied with by the railroads from time to time in the last three years? A. Yes, sir. Mr. Wheden (resuming) : Q. Mr. Barnes, did the Commission after they found that the tracks had been torn up in Eagle street which made it impossible to carry out your suggestion as to re-routing, did they request that you submit another plan for the re-routing of cars there in Buf- falo? A. Who, the Commission? Q. Yes. A. No. Q. They simply dropped the matter entirely ? A. I think, Mr. Wheden, there is a supplementary report, supplementing this, which deals with that track situation. Q. Will you explain that, and if necessary, read it. A. The supplemental report was made in reference to the tearing up of the tracks through Eagle street, the report being made at the direction of the chairman of the Public Service Commission, Mr. Stevens, and perhaps the suggestion might be all that will be necessary to enter in the minutes. Q. That is your report, is it? A. That is my report made September 3, 1912, and the last paragraph of it reads: "For the reasons set forth, it is respectfully suggested that until such time as the company presents a plan for the improvement in its service acceptable to this Commission, which does not involve the use of the tracks in Eagle street between Washington and Main streets, the company's application for the abandonment of that track in that street be denied." The situation was this: The company had an application be- fore the Commission for the abandonment of the tracks through Eagle street. An official of the city government in preparing the street for the improvement, for the pavement, tore up these tracks while the application for their discontinuance was pending before the Commission. Q. Was your recommendation contained in your report of September 3, 1912, adopted by the Commission, or the sugges- tion to the railroad company by the Commission ? A. Yes, it was adopted. Final Eepoet op Joint Legislative Committee 1729 Q. The latter part of it, or your suggestion was adopted ? A. It was adopted, yes, sir. Q. Will you explain, Mr. Barnes, a little more clearly the situation with reference to the handling of informal complaints coming from the city of Buffalo since Commissioner Hodson came on the Commission. In the first place, is Commissioner Hodson a railroad man, was he before he came on the Commission? A. I never knew that he was a railroad man. I don't know what his previous occupation was. Q. Will you go on and explain that matter? A. In the reports which are received in the Albany ofiice, on reports or complaints with reference to service in the city of Buffalo and the immediate vicinity were taken over by Commissioner Hodson. Q. And not turned over to you ? A. No. Q. Do you know what he does with them? A. No, I do not, except in a general way. I don't know what ■ — I am not familiar with the records in cases after he takes them up. Q. Is it a fact that since Commissioner Hodson has come on the Commission you have not made any inspection with reference to complaints coming from the city of Buffalo, except in one in- stance which you stated? A. I think that is true. Q. And Commissioner Hodson has undertaken to take care of those complaints himself? A. Yes, sir. Q. From the Buffalo office? A. Well, while he is in Buffalo, yes, sir. Q. Has he employed there the same as the Commission em- ployed, other traffic inspectors ? A. On electric railroads ? Q. Yes. A. Not that I know of. By Assemblyman Kincaid: Q. Do we understand the Judge is doing his own inspection in Buffalo ? A. I can't say as to that. Q. Is there anyone else engaged in that in receiving those that you know of ? A. Not that I know of. By Mr. ^^Tieden (resuming) : Q. And the same is true of complaints coming from the vicin- ity of Buffalo ? A. Yes, sir. 55 1730 lisrvESTiGATioisr of Public Seevice Commissions Q. You do not handle those? A. No. Well, may I qualify that to this extent : That since 'Commissioner Hodson has been a member of the Commission I had investigated one or two com- plaints in the vicinity of Buffalo, outside of the city of Buffalo. For instance, in the village of LaSalle, I remember investigating a complaint there, and possibly there were others. Q. Do you know whether or not numerous complaints have come from the city of Buffalo since Commissioner Hodson has been in Buffalo? A. Not to my knowledge. Q. Would you say that they did not come? A. No, I don't know. Q. Did you make a report on the Yonkers street railway sys- tem? A. I did. Q. With certain recommendations to the Commission? A. I did. Q. Were those recommendations approved by the Commission ? A. Yes, sir. Q. And submitted to the railway lines of Yonkers? A. Yes, it was. Q. Were those recommendations adopted by the Yonkers Rail- way Company ? A. They were. Q. And carried out ? A. They were. Q. In full ? A. Why, not fully complied with, but as far as it was in the power of the company to do it. What I mean by that is, the recommendation^' included some for double-tracking streets that were, it was understood were to be widened, and those streets had not been widened. Q. When did you last make an inspection in Yonkers? A. I think it was 1912. It is not a printed, report, but Mr. Clark has it. Q. No order was made by the Commission with respect to that report ? A. No, the repoa*t was sent to the company, and the gen- eral manager accepted of the recommendation. Q. You also made a report on the street railway situation in Schenectady, did you not ? A,. I did. Q. Were those recommendations approved by the Commission? A. They were. Q. And the report, by the railroad companies, carried out in FiKAL Kepokt of Joint Legislative Committee 1Y31 Schenectady ? A. Not entirely. . There is a more recent report than the one you have, which is not printed, also. Q. Has any order been made by the Commission based upon this more recent report? A. I am not quite sure. I wouldn't want to state from memory whether there was an order issued in the Schenectady case or not. But I know the report was sent to the company and the company has now before the Commis- sion an application for an extension of time in which to comply with some of the recommendations. Q. Stating that they do intend to carry them out? A. Yes, sir. By Assemblyman Maier: Q. Was there ever a time when your reports were accepted as final by the Commission ? A. As final ? Q. Yes, that is, on the question about that, was there ever one which followed your report to the company, in the last few years ? A. Yes, there has been. Q. In what way? A. Why, the Commiseion in considering my reports have frequently found that some of the recommenda- tions did not meet their approval. By Senator Mills: Q. That is more frequently than was previously the case? A. No, that is ever since the Commission has been appointed, occasionally report which I have presented to the company, some recommendations after consultation with me, have been modified, changed or withdrawn. By Assemblyman Kincaid: Q. Have you in mind, Mr. Barnes, any particular case of that kind within the last six months, where your recommendation to the Commission was turned down ? A. Oh, I didn't quite intend to convey that the Commission had turned down the recommenda- tions. It was only yesterday that I had a conference with the Commission on a report that I made and at their suggestion, or the suggestion of one of the commissioners, a change was made in the report by putting in a definite date when the recommenda- tion should be complied with, which I had omitted. 1732 Ils'VESTIGATIOX OF PuBLIC SeEVICE CoMMISSIOK^S Q. Ill other words, it -was where they thought, or where you were wrong? A. Yes, sir. Q. Have there been other cases where you have made recom- mendations looting to a certain end and the Commission over- ruled you on the proposition? A. I wouldn't want to say that, the Commission didn't overrule me. Q. Have you in mind any case where the Commission has not adopted your recommendation ? A. I do not • know of a case where the Commission has not adopted my recommendation after a final conference with the Commiission. I mean by that that in some cases my recommendations have been modified after con- ference with the Commission; some cases they have been enlarged upon after a conference with the Commission and other recom- mendations have been added. By Assemblyman Kincaid: Q. But the final recommendations always made with your ap- proval after that suggestion? A. Yes, sir. By Mr. Wheden (resuming) : Q. How about your report covering the investigation of the lines in the city of Rochester, what was your experience there? A. That was that the report was sent to the company with a re- quest for a reply as to their attitude on the recommendations and they accepted the recommendations, and all of them have been complied with — Q. They listen to you in that case? A. Yes, I live there. Q. How about Binghamton? A. The same course was pur- sued in Binghamton, the company's approval, and the recommen- dations have been complied with except one for the purchase of new ears. Q. What about the Ithaca ease? A. The Ithaca case, they went into the hands of a receiver, and all of the recommenda- tions have been complied with, — no, I am mistaken, not all of the recommendations have been complied with, but material im- provement has been made in the service as a result of the recom- mendation. Q. What was the result of the recommendations in Syracuse case? A. In Syracuee the report and recommendations were FiWAi Eepobt of Joint Legislative Committee 1Y33 made the order of tlie Commission, and tlie company lias com- plied with nearly all of the recommendations, except two; they are now before the Commission on an application for an exten- sion of time for the completion, compliance with those two recom- mendations, one involves the purchase of an additional ten cars and the other the equipment of a new building, or construction and equipment of a tranefo'rmer station. Q. What has been the result of your experience in handling of informal or coiTespondence complaints? You go out and in- vestigate a case of complaint and make a suggestion to the rail- road company, do you? A. I do. Q. Without conferring with the Commission ? A. In most in- stances. Q. And you find the railroad companies are thoroughly will- ing to adopt your suggestions, especially where they do not cost them much money? A. In most cases, and in some cases where it does cost money. I suppose it might be an illustration of the way we handle these informal cases to cite one. The city of Auburn recently made complaint to the Commission through its mayor and common council against the Auburn and Syracuse Electric Railroad Company, as to the reduction made in the serv- ice, and in the inadequacy of service. That complaint was re- ferred to me and I made a thorough investigation in Auburn, as I have in the other cities mentioned. AftcT that investigation was made, a tentative report was drawn up after a conference held with the mayor and city attorney, and finally with the common council. An agreement was finally reached by or with the com- mon council, and the mayor and city attorney, and the matter was then taken up to the company by me, and the recommenda- tions not only involved, of course, operating expenses, but neces- sitated the expenditure of $59,000, and the company has agreed to the recommendations, and that report is now being prepared and will be submitted to the Commission and if they approve of it, the case is closed. Mr. Wheden: JN'ow, Mr. Chairman, if you desire we will sus- pend at this point. 1734 Investigation of Public Service Commissions Acting Chairman Maier: Yes, Mr. Wheden do you want Mr. Barnes in the morning ? We will now adjourn to , to-morrow morning at 10 :30 a. m. in the Assembly Parlor, on the third floor. Adjourned to to-morrow, Friday morning, March 5, 1915, at 10:30 a. m. MARCH 5, 1915 Committee met at the Asseimbly Parlor in the City of Albany on Friday, March 5, 1915, at 10.30 a. m., pursuant to adjourn- ment taken from Thursday, Miarch 4, 1915. Present: A quorum of the Committee being present. Assemblyman Kincaid, Acting 'Chairman. Appearance : Colonel Hayward, for the Coimnittee. Charles E. Barnes, recalled, testified as follows : Examination by Colonel Hayward: Q. Mr. Barnes, when you testified yesterday of what was the general result of your negotiations and inspections of the different cases turned over to you, as to the electric railway companies that were beneficial, that is, produced beneficial results, in many instances they complied with your reco^mmendations and sugges- tions ? A. Yes, sir. Q. And it is probably also true that in many cases, some cases at least, they would necessarily have complied with them, because it was to their own benefit to do so ? A. Why, I don't know of many ca^es w'here they complied Avith the recoinmendations, where in my opinion they would have done so had not the recommenda- tions been made. Q. I have here a letter of March 2, 1915, from the Rome Chamber of Commerce, Eome, New York, addressed to the Public Service Commission, which I will hand to you and ask you to read it, and say if that is a fair sample of the way your work resulted TiWAL Eepoet of Joint Legislative Committee 1735 tkroughout the State ? A. " Public Service Commission, Albany, N. Y. Gentlemen : Referring to your letter of the 19th ult. ad- dressed to your Mr. Barnes in which we requested an. early inter- view we would say that we wish to express our- appreciation of the promptness with which you met our request. Mr. Barnes was here last week and after going over the propo- sitioGi with us, made recommendations to the New York State Railways relative to instituting a twenty minute service around the belt line in place of the twenty-four minute service in effect at present, by the 15th of April. He also made other minor recommendations, all of which put together are very satisfactory to us and meet our immediate needs. Mr. Barnes' technical knowledge has helped us over a most trying situation and we feel that his recommendation will bring the relief desired from the conditions complained of. Very truly yours, Rome Chamber of Commerce', Saml. H. Beach, President, Merton Jenkins, Chairman Transportation Committee." Q. Does that letter fairly show the result of your work in many cases throughout the State ? A. It does. Q. Have you had the commendation and approval of your work from various Chambers of Commerce in cases where the roads have •complied with the recommendations you made, after you made the demand on them ? A. I have, yes, sir. I might add that the past year seventy complaints have been handled in that way. Q. Seventy complaints? A. Yes, sir. Q. Well now, Mr. Barnes, coming down to the situation here in the city of Albany, with which I presume you are familiar, I find from the files of the newspapers, great agitation in this city cover- ing the service given by the Albany roads ; and I find that numer- ous co'mplaints resulting in a case called Case 2897, Matter of Service, Albany United Traction Company, and that in JTovember, 1912, the West End Association of Albany made a complaint tO' the Public Service Commission of the Second District concerning various matters about cars, increased service, extension of lines, etc., and I take it from the newspaper files, also from the corre- spondence files down stairs here, that there were other complaints, other complaints had been continuously coming in since the year 190'8 ; is that the way you recall it? A. Yes, that is right. 1736 Investigation or Public Service Commissions Q. At any rate, tMs complaint from tli© West End Association was evidently made a formal complaint on vyhicli this case was started, Case 2897, because it appears to be the first one on this file with that number. Now I want to read, Mr. Barnes, into the record, this letter, and I will read it all. " West End Association, Albany, N. Y. "To the Public Service Commission, Second District: " The West End Association, through its committee, wishes to suggest the following changes and improvements to the present service of the United Traction Company which are necessary to the coTofort, convenience and safety of its patrons. " 1. Uninterrupted service. " 2. Cars should be better heated and better lighted. "3. All West Albany cars, excepting those that gO' to the City Line, should go to the West Albany bridge. " 4. Tracks should be extended and cars run across the West Albany bridge for the accommodation of some three hundred families living in the immediate vicinity. 5. The Arbor Hill line should be extended to the West Albany shops where about l,50i0' men are employed who are obliged to walk abo'Ut half a mile to a trolley car. " 6. A destination transfer should be issued permitting the holder to ride on three connecting lines. This would permit a person to take a West Albany car and travel east to Quail street, thence by the A Belt car south to Madison avenue and thence west by Pine Hills line to Pine Hills and the Country Club. It is now necessary to pay two fares to make this journey, otherwise it is neees.sary to go to Lark street and transfer at that point. If means a loss of time and inconvenience of transferring at a point where the Pine Hills cars are invariably crowded. " 7. Provision should be made to take care of heavy travel on Stindays and holidays on the Country Club line. On Sundays and holidays hundreds of people ride to the end of the Country Club line. If you were to leave the cars for a stroll in the fields you will find upon returning to the point where you left the car several hundreds of people waiting to return to Albany. If you were a fighter and brutal enough to knock down women and Final Eepoet of Joint Legislative Committee 1737 trample on children you might succeed in boarding a car in the course of an hour, but if you were s.ati&fied to behave like a human being you would be obliged to wait at least two hours or walk. Additional cars should be provided and an inspector should be stationed to prevent these disgraceful occurrences. The conductor receives the abuse of the angry crowd which should be heaped upon the officials. " 8. More cars should be added to the A Belt service. This would not only accommodate the patrons of that line but it would relieve the congestion of the Pine Hills line. " For the Committee " G. S. King, Chairmcm." ITow, that was in ISTovember, as I have said, 1912. This letter I have read, JMr. Barnes, is fro^m correspondence complaints File No. 7420, File 2402, of the Second District Public Service Com- mission, entitled "Albany West End Association against United Traction Co'mpany." Now, following this letter in jSTovember, which I have read into the record, it appears — that was No- vember, 1912 — I have here from this file referred to a letter of November 27, 1912. The Secretary of the Commission, at that time Mr. Kennedy, wrote to Mr. James G. Hamilton, at that time acting General Manager United Traction Company, Albany, and says : "Dear Sir: There is sent you herewith for your information and suggestion a copy of communication received from the West End Association of Albany in relation to the service of the United Traction Company in the City of Albany." Now, No- vember 30, 1912, Mr. Kennedy, the Secretary, received a reply from Mr. Hamilton, General Manager of the road, as follows: "Dear Sir: I am in receipt of your letter of the 27th iniat. containing copy of communication received by you from the West End Association of Albany, in relation to service in the City of Albany. In reply will say the matters referred to will be given very careful thought, and I will advise you of the action we decide to take in relation to the same. Yours very truly." Now, nothing evidently was done, at least according to this file there is no letter in between until December 16, 1912, when the Secretary of the Conrniie'sion jogg Hamilton up again and says: 1Y38 Investigation of Public Seevice Commissions "Can you not at this time let us have a reply to our letter of ISTovember 27th enclosing communication. from the West End As- sociation of Albany in relation to the service of the United Trac- tion Company in this city." The next day the road, through Mr. Hamilton, writes back to the Commission and says: " In reply to your letter of the 16th inst., relative to com- municaljion received by you from West End Association of Albany in regard to service in the City of Albany, will say : " 1. With the power arrangements we now have I do not be- lieve we will have the interruptions that we have had in the past. There is every reason now why our service should be practically uninterrupted. "2. We have gone over ouj* feeder system generally and are installing Mazda lamps in the cars. This will result in heating our cars better and also lighting them better. "3. In relation to running all of West Albany cars with the exception of those running to the City Line, to the West Albany Bridge ; will say I have taken this matter up with our Operating Department for the purpose of complying with this request "4. In regard to operating acrces the West Albany Bridge, we are not in position at the present time to go into this matter, but we will keep the same before us to be taken up at some time in the future. " 5. We are giving the matter of extending the Arbor Hill line to West Albany, careful consideration. " 6. We are also giving careful consideration in relation to the transfer mentioned. " 7. The service on tlie Country Club line will be properly taken care of at once. " 8. The Belt Line service is being given careful study and if we iind that additional service is required, the sanae will be put into effect. " Yours very truly, James F. Hamilton, Acting General Manager." ISTow, the Secretary sent a copy of the letter I have just read to Mr. King of the West End Association for his inspection, and says in letter of December 19, 1912 : Final Eepoet of Joint Legislative Committee 1739 " We will keep the matter open on our records and have asked the company to advise us as to the matters which are now imder consideration." Then the Secretary of the Commission writes to the railroad, December 19th, to Mr. Hamilton, in which he says: " I have your letter of December 18th in relation to conununi- cation from the West End Atsociation of Albany. "Will you please advise us as to how the different matters under consideration progress." The following evidently occurs, on January 21, 1913, the Secretary again writes to Mr. Hamilton: "At this time the Commission would appreciate receiving further statement indicating what, if any, action has been taken in the various matters referred to in your letter of December 18 on the complaint of the Albany West End Association as to serv- ice by your Company in this city." ISTow at this point it would seem, resulting from complaints that began coming in in 190'8 on this service, the Commiission through its Secretary was in correspondence with the manager of this railroad in Albany. The closing months of 1912 and in January and Eebruary, 1913. Now, I find here, Mr. Barnes, a copy evidently of a letter covering this case number and title, or memorandum in which you say: "A proper investigation of this complaint would involve an investigation of the whole traffic con- ditions in the City of Albany. Other work so far has prevented this from being done. C. E. Barnes, Electric Railroad Inspector." This is dated February 27, 1913, and is addressed " Memoran- dum for Mr. Kennedy." Do you recognize Mr. Decker's hand- writing, are you familiar with it? (Paper shown witness.) A. Yes, that is his signature, that is Mr. Decker's. Q. Initial signature there? A. Yes. Q. You have seen him sign his signature? A. Yea Q. And recognize that? A. Yes. Q. On this memorandum of yours to the Secretary I find this : " Press for reply to Secy. Letter of Jan. 21. M. S. D." Now, I find on February 27th also — A. What year? Q. 1913. I find also — A. Pardon me. What is that date? 1740 Investigation of Public Service Commissions Q. February 27, 1913. Another menioraiidum in the same case for Mr. Kennedy. And I notice, Mr. Barnes, you refer to a letter addressed to Mr. Sims, Vice-President of the United Traction Company, which you say was dated May 13, 1912, akaost a year before, in which you say as follows : " The Chair- man's communication to Mr. Sime, Vice-President United Trac- tion Company, dated May 13, 1912, contains the following: " This Commission recently voted to have Mr. Barnes make a thorough investigation of all matters connected with the street car service in Albany, as soon as he has finished some other work upon which he is now engaged." And then you say " I find no record of the Commission directing me to make such an investigation. C. E. Barnes, Electric Rail- road Inspector," which means that some time prior to May, 1912, this Commission had by its resolution instructed you to look into this Albany situation, and yet in the following year, in February, 1913, you were writing back that answer to this West End As- sociation complaint? A. Yes, sir. Q. And you say that you never knew this resolution was passed, any such resolution as that; is that right, Mr. Barnes? A. That is my interpretation, and my memorandum to the secre- tary, yes, sir. Q. Now, I hand you a small slip of paper attached in this file, and ask you if you recog-nize in whose handwriting that is, and the signature ? A. Commissioner Decker's. Q. ISTow, would it be a correct statement to say that, during this year which I have been tallting about, from May, 1912, to February 27, 1913, that the people of Albany and the press of Albany were continuously asking for improvements on this serv- ice ? A. That is my general knowledge. Q. There was not a time when they let up, was there, Mr. Barnes, that the people of this city and the newspapers were not asking for this increased service, they were asking for it continu- ously during that time ? A. From my general knowledge of the situation I would say that that supposition was correct. Q. I have been through some of the newspaper files, and I do not want to put them in evidence, because they are too long, and they do not want to let them go. I will read this little memoran- FiN-AL Eepoet of Joint Legislative Committee 1741 dum, Mr. Chairman, that the witness referred to and says is in Mr. Decker's handwriting. It is as follows: "The resolution was found, but Mr. Barnes should see me about the matter be- fore doing anything now. M. ,S. D.," and on March 8, 1913, a letter to you — a copy of a letter to you from; the secretary: "Mr. C. R Barnes, 353 Waring Street, Eochester, Isew York: Kef erring to your memorandum of February 27th, in regard to conditions in Albany, Chairman Decker asks that you talk this matter over with him before doing anything else. Yours very truly, Secretary, J. S. K." Is that yours (indicating) " Noted C. R. B. February, 1913 ?" A. It is not my handwrit- ing, but it ib' my stenographer's. Q. Now, do you know, Mr. Barnes, any reason why you, as the Electrical Inspector, were not informed that the Commission had passed a resolution requiring this survey of the Albany service at a time eight months after the resolution was passed by the Commission; and do you know any reason why Mr. Decker should have insisted on your talking to him before you started to do anything on this service? A. I do not know of any reason why I did not receive instructions under the resolution. I have a recollection of the substance of my talk with Commissioner Decker in compliance with his suggestion. Q. That was about when — about May, 1913 — when you say " Noted " there ? A. I think along about that time. Q. "What was that conversation you had with Mr. Decker? Did he give you any reason why he stopped this thing for eight, or nine, or ten months ? A. It was to the effect that Mr. Hamil- ton had recently been appointed General Manager of the United Traction Company, and that Hamilton desired some time to show the Commission that he was going to improve the service. Q. Well, did he tell you why he thought he had a right to stop the action which would necessarily result from a formal resolu- tion passed by this Co'inmisBaon ? A. No. Q. Did he say that he had talked to any of the other members of the Commission and had their approval to stopping the action under this resolution? A. No. Q. And Mr. Hamilton, as a matter of fact, while he may not have been formally appointed, had been acting manager for a 1742 IwvESTiGATiosr OF Public Seevice Commissions year or two before that, had he not, Mr. Barnes ? The letters are addressed to him as such? A. I cannot place the date of that talk that I had with the Chairman in reference to Mr. Hamil- ton, and I cannot, without reference, place the date that Mr. Hamilton assumed charge of the work. Q. From my memorandum I have here, certainly as early as November, 1912, Mr. Hamilton was described as General Man- ager and signed the letters as General Manager ?" A. Yes. Q. Then here is another one, December 18th, he signs as "Acting General Manager ?" A. Yes. Q. And I take it that he had been — whether he was formally elected as General Manager or not — he had been Acting Gen- eral Manager for some time, and I direct your attention to the printed heading and the stationery, which reads : " Office of Acting General Manager, Albany, ISTew York, James F. Hamil- ton." A. Yes. Q. So that at the time Mr. Decker spoke to you, whether he had been General Manager prior to that time or not, he had cer- tainly been Acting General Manager for a year or more before that? A. Yes. Colonel, that is conditioned upon my being right in my assumption that this talk was in reference to this particular occurrence at about the date mentioned. Q. Now, I refer, Mr. Barnes, to your report on traffic condi- tions, city of Albany, United Traction Company, of 1914, " C. R. Barnes, Electric Railway Inspector," and ask you to go through it with me. (Colonel Hayward and witness examine report referred to.) Colonel Hayward. — Mr. Chairman, it appears from the news- paper files that the order referred to by Mr. Barnes in his pre- vious testimony, which he did not get for eight months or a year, was actually made by the Commission May 2d or 3d, 1912, and when I find it in the files, that order will be offered in evidence. It seems to have been taken out of the files, or, as the stenographer says, sequestered somewheres ; but we will get that order and put it in. JSTow, pursuant to this resolution, but some year or two later, did you go into the traffic situation in the city of Albany, Mr. Barnes ? A. I did. Final Eepoet of Joint Legislative Committee 1743 Q. And make an examination? A. I did. Q. And about when was that ? A. The investigation was com- menced January 8, 1914. The report on that investigation was dated June 10, 1914. Q. OSTow, this report that you made then was begun — I mean your work on the report was begun — how long after May, 1912 ? A. January 8, 1914. Q. Nearly two years? A. Yes. Q. And then you got your report in in what month of 1914? A. June 10, 1914. Q. Have you a copy of the report as you drew it ? A. No, I have not. Q. Was the report as it was filed the same as you drew it ? A. The same as the rough draft, shall I call it? Q. Call it whatever you please. In, that report, as you drew it, Mr. Barnes, did you make any reference to the financial situa- tion of this United Traction Company of Albany and the Hudson Valley Eailroad situation? A. I referred in a portion of the report to the findings of the United Traction Company. Q. Well now, with whom was that report filed, what you call your rough draft ? Whom did you show it to first ? A. I had several conferences with Commissioner Van Santvoord, or Chair- man Van Santvoord, on the rough draft, and I think also with the majority, or the whole, of the Commission. Q. What other commissioners were present when you talked this matter over ? A. Why, I had a number of conferences and discussions with the chairman, he and I alone. Q. You mean Mr. Van Santvoord? A. Yes. Q. Well now, you thought that this statement that you have made as to the financial condition of this road was pertinent and had a direct bearing on the situation, did you not ? A. I did at the time I put it in. Q. Was that allowed to go in when your final report went in as such ? A. After discussion with the chairman, I took it out of the report. Q. At whose suggestion ? A. As a result of the discussion with the chairman. Q. Well, when you went there you had it in your report, and when you went there you thought it desirable to have it in your 1Y44 Investigation of Public Seevice Oommissions report, Mr. Barnes, or you would not have put it there ? A. That is self evident. Q. And after this discussion -with, the chairman and before your final report was filed, that part of yonr report was eliminated? A. It was taken out by me. Q. Can you find anywhere, do you suppose, your rough draft ? A. I think I might. Q. Will you look that up and let me know about it later ? I do not mean immediately. I mean after the recess ? A. I do not think it is in Albany. It is not a matter of record. Q. I know it is not in these files. A. It was not an official paper, of course. Q. No, I understand. Well now, did they give you any reason why they did not want your report on this financial condition on the United Traction Company to go in there and become an official record ? A. In the discussion with the chairman, it was suggested that the financial statement which I had in my report was taken from the annual reports of the company to the Commission, and that the Commission already had the information. Q. That same data ? A. That same data, except it was not compiled, and they could compile it, or have their financial expert, or accountant, compile the data, and it would perhaps be more reliable than the compilation which I have made. Q. Do you know whether they ever did require their financial expert to do that ? A. I do not. Colonel Hayward. — I want to offer in evidence this letter that reference has been made to, of May 12, 1914, to Mr. C. S. Sims, Vice-President of the United Traction Company, Albany, New York, from which Mr. Barnes quoted in his communication, which has been previously put in the record, February 27, 1913. This letter is as follows, from Mr. Stevens : " Dear Sir : I have yours of the tenth instant, regarding the service up State Street. This Commission recently voted to have Mr. Barnes make a thorough investigation of all matters connected with the street car service in Albany as soon as he had finished some other work upon which he is now engaged. I have myself noticed to some extent the cars going up State Street during the rush hours, my desk facing the street, where I can see every car that passes, if I only look FiWAL Report of Joint Legislative Committee 1745 out. I had not observed the condition which you mentioned. As a matter of course, if there is not too much service required by the Commission, it ought to be changed. Your very truly, . ... . . . , Chairman." A. May I inquire the date of that ? Q. May 12, 1912, and it is undoubtedly that letter from which you quoted. Colonel Hayward. — Mr. Mott, this resolution of the Commis- sion, directing Mr. Barnes to make this inspection and report on the United Traction Company service in the city of Albany, re- ferred to in the letter of the chairman to Mr. Sims, in 1912 — May, 1912 — have you made an effort to find that resolution ? Mr. Mott. — Yes, sir. We are just now making a further effort. Colonel Hayward. — Does it appear as a part of the oflScial business, and does it appear on your minutes? Mr. Mott. — It does not as far as I know, but we are running it down to make doubly sure of that. By Colonel Hayward: Q. After your report was filed, minus the financial statement, you made some recommendations, did you, about the service, Mr. Barnes ? A. In the report ? Q. Yes. A. Yes. Q. And what happened after your report was filed? A. The report was considered by the Commission and accepted as an exhibit in the case, and sent to the company with the request for them to answer as to their attitude in reference to the recom- mendations. Q. Do you know whether they answered it or not ? A. They did. Q. Did they accept your report, or the suggestions your report contains, as to service, or any part of it? A. From memory, I would answer that by saying they did not accept any of the recom- mendations. Colonel, I understood that is a request to produce the parts that were taken out of the report ? Q. Yes, and would it be fair to say, Mr. Barnes, that that por- tion of the report was taken out at the suggestion, or request, of 1746 Investigatioit of Public Seevice Commissions Mr. Van Santvoord? A. Hardly. It was taken out after dis- cussion with. him. Mr. Mott.— I think, Colonel Hajward, that is the order upon which the investigation is made. (Indicating.) Colonel Hay^'ard. — All right. I offer in evidence the order, signed by Mi-. Kennedy, Secretary of the Commission, with the seal of the Commission on it, dated the first day of May, 1912, as follows: "Ordered, ttat this Commission does hereby institute a general inquiry and investigation into and concerning the routes, service, facilities, rules, regulations, practices, methods and the condition of lines and cars of the United Traction Com- pany of the city of Albany and vicinity, including the same as relating to traffic between Troy and Albany and Eenssclaer. Further ordered, that the Inspector of Electric Eailways be and is hereby detailed to make all necessary examinations and submit a full report to the Commission, the work to commence as soon as may be practicable, in view of other work to which he has been heretofore or may be hereafter actually assigned. Further or- dered, that the United Traction Company be and is hereby di- rected to file with the Commission on or before May 15, 1912, a statement showing all improvements, general repairs, changes of routing, service and facilities, and any changes in rules, regula- tions, practices and methods of operation which it intends to make during the present year, with the dates on or before which the same will be undertaken. By the Commission," It is signed by Mr. Kennedy. There were present at the time this order was entered in May, 1912, Frank W. Stevens, Chairman, Martin S. Decker, James E. Sague and John B. Olmsted. Now, Mr. Barnes, when did you first, as near as you recall, when did you first get this order ? When was it delivered to you, or when did you get any instructions under that order ? A. I do not think I ever received officially a copy of that order. I have no recollection of it, and yet the records may refresh my mind. Colonel Hayward. — I would like to ask Mr. Mott a few ques- tions. It was the rule of the Commission, and it was customary, was it not, in case an order of this kind was made, to give a copy FiWAL Kepoet of Joint Legislative Committee 1747 of it to the electrical inspector as well as to the railroad concemed ajid involved in it. Mr. Mott. — I do not know what the custom at that time may have been, but it is the custom now to do that. It is the custom to call the attention of each head of the department to any matter as to which the Commission takes actioc, in which he is interested. Colonel Hayward. — As well as the carrier ? Mr. Mott.— Yes. Colonel Hayward. — And further, they get an affidavit of service, or admission of service, or something of the kind ? Mr. Mott. — Yes, sir. Colonel Hayward. — Have you searched the records to find out whether that was done in this particular case ? Mr. Mott. — I have not. I might say that, in a case where ah inspector was directed to make an inspection, it would not neces^ sarily f oUow that that would be served on him. It may have been aJid might not have been. 'Colonel Hayward. — But there is part of this resolution, ISlr. Secretary, which reads as follows : " Further ordered, that the United Traction Company be and is hereby directed to file with the Commission on or before May 15, 1912." ISTow, that was) two weeks after the order was entered ; so that the order is that within two weeks they should file a statement showing all improvements, general repairs, changes in roates, service and facilities, and all changes in rules, regulations, practices and methods of operation, which it intends to make during the present year, with the dates on or before which the same will be undertaken. That would necessitate the service of the order on that railroad company ? Mr. Mott. — Yes, sir. Colonel Hayward. — Have you, looked to see whether that was ever served? Mr. Mott. — ISTo. 1748 Ibtvestigatioh- of Public Service Commissions Colonel Hayward. — If there is no record in this file, I would like to have you go through any other file you have anywhere and see if you can find it. Mr. Mott. — I am very sure it was served. The company com- plied with that order except as to the time limit. Colonel Hayward. — I find here: " Ofiice of the Vice-President, C. S. Sims," a letter of May 25, 1912, in which he says: "In reply to the order of the Commission, dated May 12, 1912, follow- ing is a statement, etc., of the improvements, repairs, etc." Mr. Mott. — It was evidently served and complied with sub- stantially. Colonel Hayward. — So that it would appear that the road was given notice of this order, at least in so far as it a,ffected the road, and given an opportunity to say what they expected to do; and yet the electrical inspector of the Cammission was not given a copy of this order or notice of it, pursuant to the pencil memo- randum signed by " M. S. D'." stating that Mr. Barnes is to do nothing in this thing unless he has seen him. You were here when I offered that pencil memorandum in the record ? Mr. Mott. — Yes, sir. Mr. Decker was not the Chairman of the Commission at that time. Mr. Stevens was the Chairman of the Commission. Colonel Hayward. — The memorandum was signed " M. S. D." and if what Mr. Barnes says is correct, it is ]\Ir. Decker's hand- writing. Do you know any reason why this resolution shoiuld not have been brought to Mr. Barnes' attention, and why Mr. Barnes should not have gone ahead pursuant to that resolution of the Commission ? Mr. Mott. — I do not know of any reason. I did not know that it was not brought to his attention; in fact, every resolution is brought to the attention of every inspector, so far as I know, at the time of its adoption or shortly after; and as far as the depart- ment is concerned, Mr. Barnes is the only one who would know. FiWAL Eepoet of Joint Legislative Committee 1Y49 Colonel Hayward. — You were not secretary at that time and haven't any recollection of the circumstances? Mr. Mott. — ISTo. Colonel Hayward. — This is evidently one letter he was not notified of, and that is evident from the pencil memorandum why it was not. Mr. Mott. — I might say that the method now, at the adoption of a resolution or order relative to the work of any chief of division or any inspector, a copy is immediately delivered on the same day, and if not, on the next day, and sent to that inspector and chief ; is not that so, Mr. Barnes? Mr. Barnes. — That is correct. Mr. Mott. — As to what the practice was then, I do not laiow. Colonel Hayward. — Did you ever hear anybody say there had been a change in it ? Mr. Mott. — No. Colonel Hayward. — And that was probably the practice of the Commission for years. Mr. Mott. — I think it was the general practice to do that in some form at least. Colonel Hayward. — So that, in the absence of some deterring influence, that would have been done in this particular case, May 1, 1912? Mr. Mott. — Of course, it would seem logical to do that. Colonel Hayward. — That is all, Mr. Mott, just now. Examination of Charles K. Barnes continued by Colonel Hay- ward: Q. ISTow, acting on your report, then, when it finally did come in, some time in 1914, Mr. Baxnesi, the 'Commission finally got around to making an order, did they not ? A. Yes, sir. 1750 Investigation of Public Service Commissions Q. And tk&t was on the lltli day of December, 1914 ? A. Yes, sir. Q. And it appears from this exhibit, which I hold in my hand ? A. Yes. Q. So that, starting with the complaints in 1908, and with the original order to you, in 1912 — May of 1912, to make an in- spection — A. My letter indicates I did not have it. Q. No, but the order was issued by the Commission in May, 1912, for you to make tliis inspection? A. Yes, sir. Q. That being held up for nearly a year for some reason or other? A. Yes, sir. Q. You did finally make a report in the summer of 1914, and the Commission got around to maldng an order in December, 1914? A. Yes, except that it was the winter of 1914 instead of the summer. It was the winter. Q. What month? A. It commenced January 8, 1914. You mentioned incidentally the summer. Q. That is right. It was January, 1914 ? A. Yes. Q. Then, nearly a year later, the Commission made an order ? A. Yea, sir. Q. Now, can you state • — I do not want to go into this in its detail — but can you state generally what this order covered with reference to increasing transit facilities, etc. ? A. Why, it re- ferred to improvement of several elements of transportation con- ditions, including power, cars, number of seats run — I mean the class of cars when I say cars — number of seats run, the headway on which cars are operated, transfers and almost every element of transportation was found defective and recommendations made for improvement. Q. And did the order, in a general way, follow along the recommendations of your report? A. There were twenty-seven recommendations contained in the report, and all of them were embodied in the order of the Commission except three. Q. Do you remember what those three were? A. One re^ ferred to the construction of curves on the east side of the inter- section of State and Pearl streets; another one referred to the withdrawal from service of the open cars, and the other referred to the speed of cars up the State street hill. Those were not em- bodied in the order of the Commisaion. FiiTAL Report op Joint Legislative Committee 1751 Q. Ifow, do you know whetlier the road has started to comply with the order ? A. The company accepted ten of the orders and promised compliance with them, and has, to a great extent, com- plied. Q. I find here on January 11, 1915, before the Commission, the denial of an application in writing to the Commission, by the road, asking for a rehearing of this case'^ A. Yes. Q. And asking for the eupension of this order of December 14, 1911 ? A. Yes, that I believe was denied. Q. Yes, that was denied. And here I find the admission by Mr. Sims under oath of the order ? A. Yes. Q. The 20th day of January, and also an acceptance of service by the multitudinous complainants who were making complaints ? A. Colonel, I might call your attention to the fact that, interven- ing between the time the report was sent the company and the is- suance of the order public hearings were held on the report. Q. I find here Seneca S. Smith, Chairman Transfer Committee, Pine Hills Association; Tilden Sharp, representing the AYest End Association; Joseph W. Stevens, the mayor; Edward J. Halter, president South End Business Men's Association; James Y. Heed, president of the Chamber of Commerce; Mr. Coffin, secretary of the Chamber of Commerce — those are acknowl- edgments of those — and here is Mr. Hayes, president of the Summit Park Association; Mr. Peters, representing the Arbor Hill Association ; Professor Thomas S. O'Brien, representing the North Albany Improvement Association; Loren Wooley, repre- senting the Woodlawn Association; Mr. Flansberg, the Pine Hills Association; Charles DeEouville, representing the Dela- ware Avenue Section. (At this point Chairman Thompson took the chair.) By Colonel Hayward: Q. I have read those, Mr. Bamee, to indicate the great num- ber of associations, officers and private citizens of the city of Albany, that had been pressing to get this service ? A. Yes. Q. Most of them? I presume it is fair to say, starting back in 1908, in the records ? A. A number of them. 1752 Investigatiojst of Public Seevice Commissions Q. So that wm in January — January 20', 1915. Have you noticed any effort on their part to get busy with, these ordered improvements? A. With ten of them, as I spoke about. Colonel Hayward. — Mr. Chairman, that is all I want to ask Mr. Barnes, unless some of the committee wants to ask some- thing. Chairman Thompson. — Is there any member of the committee wishes to ask Mr. Barnes any question ? By Assemblyman Kincaid: Q. Is it fair to say, Mr. Barnes, that, from yonr investigation, you found that the complaints, made some two or three' years ago were pretty well justified ? A. Yes, generally. Q. And that if your inspection had been made a couple of years ago, as would have been perfectly possible, this condition might have been rectified by this time ? A. It is fair to say that. Q. Now, for how long a period — A. Well, in view of the action of the companies, in resorting to the courts, I do not know whether my investigation would have relieved the situation. By Colonel Hayward: Q. It would have with ten of them ? A. Yes. Q. And probably they would have accepted those ten two years ago? A. Yes, sir. By Assemblyman Kincaid : Q. How long a period of time did that action of Commissioner Decker's delay the proceeding? A. I think that is dated in 1912, is it not? Colonel Hayward. — May 1, 1912, the order was entered. The memorandum from Mr. Decker — and then, in February, 1913, Mr. Kincaid, the record shows it was brought to Mr. Barnes' at- tention, and he said then that he had not heard of it prior to that. Chairman Thompson. — We will take recess of five minutes. By Chairman Thompson: Q. Mr. Barnes, you are the inspector of electric railroads, is that your title? A. Yes, sir. FiKAL Eepoet of Joint Legislative Committee 1753 Q. You have one assistant and a clerk ? A. One assistant and a stenographer which does my work and other work in the office. Q. You undertake to inspect all the electric railroads in the state outside of the first district ? A. I do. Q. You and your assistant. Have you got help enough to make, in your judgment, proper inspections? A. I have not. Q. How much more help do you think you ought to have ? A. In answering that I would say that it has always been my idea with especially the city service in the different cities should be frequently inspected before complaints are made rather than after. Now, to properly perform the other duties and do that work, as I have in mind it should be done, I should have another assistant at a reasonable salaiy and four young men, perhaps at a smaller salary, the young men being employed to check up and count passengers on cars, which should be done almost continu- ously in the different cities, especially during the winter season. Q. Like Buffalo, Rochester, Syracuse, and Albany ? A. And TJtica, and perhaps other cities, Yonkers, Binghamton, wherever required. Q. You think that one extra man would give you an organiza- tion that you could comprehensively take care of this subject? A. And keep in advance of complaints. Senator. Q. In other words take up the questions as you take them up now, these things where you follow up the subjects that are called to the attention of the ComLHiission by means of complaints of citizens? A. Well, to properly attend to them, I would at- tempt to as well as I can, but I can't devote the time necessary to that subject. Q. And that practically interferes with following up the sub- jects, the leads that come to you by means of complaints of citi- zens? A. Yes, sir. Q. But your idea is you ought to have such aii organization in your department as to permit you to take them up on motion of the Commission, and keep the service proper before complaints would have been made? A. That's the idea, yes, sir. Q. And you think that with the assistance you have that another man at a salary which would be reasonable, how much ? A. Well, anywhere from $1,500 to $2,000. 1754 Investigation of Public Service Commissions Q. Those four other men you would want, how much would they cost ? A. Probably $900. Q; A piece? A. Yes, sir. Q. With that you think you would have a department that could handle this situation over the entire state, outside of the first district? A. I do. Colonel Hayward: Q. Including Buffalo ? A. Including Buffalo^. Chairman Thompson (resuming) : Q. I want to get your judgment on another proposition, and that is whether or not there is not more work in this department of yours, electric railways, that is, whether there is more work up-state than in New York, the first district?' A. Well, I think as the records show, and eight or ten years' experience in that New York traxisportation, I would say that there is more work and a larger force necessary, no, I won't quite put it that way ; but there is more work to be done in the second district in the regulation of transportation on electric railroads than there is in the first district. Q. Now, I will ask you another question, and if you do not desire to answer it, you need not. Your salary is $4,5'0'0!? A. At the present time, my salary was raised the first of October. Q. Well, if this question is embarrassing to you, why, say so, but do you think it ought to be reduced ? A. No, it is not em- barrassing to answer that, Senator. I don't thinli it ought to be ; yet I expected it would be reduced or raised and that has never been either. Q. How much of a raise do you think you could conscien- tiously accept if the State were to offer it to you? A. In the performance of my duties here the only way to properly estimate it is by comparison. I understand the man doing the same work I am, in the first district, gets $8,000 a year. Q. Do you think you are entitled to about six ? A. If he is entitled to that for the service to the State, I think my services are worth as much as his. Q. Well, I agree with you, there, but my experience is that Final Ebpokt of Joint Legislative Committee 1755 they get more for the same service down there ? A. Well, maybe I better go down. Q. You don't have anything to do with complaints on steam roads? A. 'No, Senator. Q. Nor complaints in relation to gas or electric corporations ? A. No, no. Q. Furnishing electricity or gas? A. No. Q. Ton have got what you call an engineer of grade crossings in the Division of Engineering and Inspection? A. Yes. Q. That is in that department you have an engineer of grade crossings ? A. Well, I have nothing to do with grade crossing. Q. But you are part of the department or division called Engi- neering and Inspection ? A. Yes. Q. That comes under inspector of electric railways, that is you. A. When the Commission was passing around titles they were not any more liberal in that than they were in salaiy. Q. They put you on the same plane practically as that fellow they call an engineer of grade crossings? A. Yes. Q. What does he do? A. He is an engineer, a civil engineer and has charge of all grade-crossing matters. Q. You didn't have any appropriation in the grade-crossing matters, is there ? A. Well, I am not well enough posted on that department to answer that question. Q. You have not had any appropriation for grade crossings in four years now from the Legislature ?' A. I believe that is true ; I don't know, though. Q. Still in the same department of engineering and inspection of which you have one assistant and a clerk, they have an engineer of grade crossings, an inspector, a draftsman and stenographer ?' A. Yes, sir. Q. They had no appropriation and haven't had any in four years? A. Yes, sir. Q. Do you know the grade crossing fellow's salary ? A. I am under the impression it is the same as mine. Q. Four thousand five hundred dollars ? A. I think that is it. Q. Well now, there is a supervisor of equipment in that depart- ment ; what does he do ? A. Not on grade crossing. Q. No, but department of engineering and inspection? A. Yes, sir. 1756 Investigation of Public Seevice Commissions Q. What does lie do? A. I am only speaking, answering the question from general knowledge. Q. I understand. A. He inspects locomotive equipment of steam roads. Q. He does not inspect the equipment of trolley lines? A. No. Q. You do that, don't you ? A. Yes, sir. Q. So he practically inspects just locomotives on the steam road ? A. Locomotives and passenger, well, possibly freight too. Just the equipment, rolling stock including locomotives. Q. Does he have any more work to do than you do ? A. Well, I am not familiar enough with his work to make a comparison. Q. Do you know what his salary is ? A. ISTo, I don't. Q. He has two assistants, assistant supervisors of equipment of locomotives, boiler inspector, and railroad boiler inspectors, and a stenographer and a clerk ? Now, in that department of engineering and inspection, there is a chief of the division of transportation, what does he do? A. Well, that was a title that was given to the steam road inspector. Q. They have already got a supervisor of equipment ? A. That department takes care of, especially the rolling stock. Q. And this fellow, chief of the division of transportation, he takes care of the road beds and things like that? A. Yes, sir. Q. He has two inspectors of railways and one clerk ? A. Yes, sir. Q. Do you know what his salary is ? A. I think the same as mine. Q. Then this employment the department of engineering and inspection, I suppose, he has those to use in cases of accident? A. JSTot on the electric railroads. I investigate the electric road accidents. Q. You also inspect the electric roadbeds and rolling stock, and everything in relation to electric roads ? A. Yes, sir. Q. And steam roads ? A. ISTo. Q. If there was anything came up with reference to grade crossings on electric roads, that would be left to you? A. No, grade crossings, that is making change of grade crossings I have ■ nothing to do with; but the protection of grade crossings and operation over grade crossings on electric roads I deal with. Final Eepoet op Joint Legislative Committee 1757 Q. Well, practically, the supervisor of equipment, chief of the division of transportation and accident inspector, none of those have anything to do v?ith electric railroads? A. No, sir. Q. In relation to electric railroads, you perform all the duties they perform in relation to steam roads ? A. Yes, sir. Q. l!^ow, in Buffalo I notice they have a traffic inspector; does he in any way have any jurisdiction over electric roads ? A. None. Q. What are his duties ? A. As I understand it, his duties are with reference to the movement of freight. Q. Well, do you as part of your functions performed in Buffalo, outside of your department, do anything in relation to electric railroads? A. As I explained yesterday. Q. I wasn't here. A. Well, since Commissioner Hodson has been a member the greater portion of the matters pertaining to electric railways has been attended to by him. Q. Do you mean he has gone out and made inspections ? A. I hardly think that, but he has handled complaints and held hear- ings and complaints, and now practically all matters referring to electric railroads in Buffalo are turned over to him. Q. And without consulting you? A. The conxmissioner has consulted with me several times on matters of re-routing of cars in Buffalo and other matters in reference to Buffalo electric railway transportation. Q. But not all of them ? A. E'o. Q. So that some of the matters in relation to the operation of electric railways in Buffalo have been handled and disposed of without going through your department? A. Yes, sir. Q. Well now, do you think that is proper organization and management that there should be anything in relation to a subject which your department deals vdth that you shouldn't know about ? A. Senator, to answer that question might involve a criticism of the methods and organization of the Public Service Commission. Do you think I ought to do that ? Q. Well, you know, Mr. Barnes, that we are a committee of the Legislature? A. Yes, I only suggested it. I am not asking to be relieved. Q. And this committee of the Legislature are going through certain forms, they have to go through the forms of a nomination 1758 Investigation of Public Seevice Commissions and election, and they get to be hard-hearted about suck things, and so I presume that if the facts in regard to the Public Service Commission come out we can stand it ? A. Well, may I have the question read? (Question read by the stenographer, as follows: "Q. Well, now, do you think that is proper organization and management that there should be anything in relation to a subject which your department deals with that you shouldn't know about? ") A. Why, in answer to that I might say, No, I don't think there is anything. Q. Because there might be something come up which might have relation to something else in your department that it would be necessary, in your judgment, if that were followed, it would be necessary for you to know the situation, and that might very frequently occur? A. I think so; or I would answer that by saying, it is possible. Q. Now, for instance, in relation to the electric railroads in Rochester, I understand there has been another investigation up there in relation to a three-cent fare, or something of that sort? Did your department have anything to do with that? A. Why, only incidentally, included in complaints of the city, or the peti- tion for a three^oent fare was some matters of service which I was instructed by the Commission to look into. Q. Of course you were advised with reference to the situation as to the three-cent fare in Kochester ? A. Yes, sir. Q. But on the general proposition of the equities of the situa- tion as finally presented to the Commission, did you have sufficient knowledge of that to give an opinion ? A. As to the merits ? Q. Of the controversy, yes. A. ISTo, I wasn't in on that, it was only the physical condition to the railroads. Q. Well now, we noticed down state that they had a library down there. I understand the library is made up of books written by experts on subjects of transportation and various subjects that would naturally come before a Board of Public Service Commis- sioners. Is there such a library in the Second District ? A. There is not, that is, not to the extent — not to any great extent. We take the current technical papers. FiKAL Report of Joint Legislative Committee 1759 Q. That 18, you have some current -writings on these technical matters, and some boolis in your department, accessible to you? A. Yes, sir. Q. But there is no room set apart for such books, up-State, that is called a library i A. No, sir. Q. You have no librarians ? A. ]M"one. Q. I suppose it is necessarj' in matters v^hich come before you to avail yourself of any technical knowledge of the situation which exists or which has been compiled for keeping? A. Oh, yes, yes, books of reference and important information, I Lave myself, available in my private — Q. Anything in the way of precedence would be valuable to you? A. Yes, sir. Q. Do you have occasion to avail yoiirselves of anything. I assume you do, of some of these books, some of these current writings? A. Yes, sir. Q. is there anything else in your department which you avail yourself of in the way of a library that you. can call upon, any- thing except your complaints that you have ? A. Nothing. Q. So I take it you don't resort to any statistics that are filed with the department? A. Yes, I have occasion to refer to the annual reports. Q. Are they regarded as statistics? A. They are compiled, the statistics are compiled from the annual reports published ? Q. Do you have occasion to avail yourself of the statistics ? A. I do. ' Q. Well, in what form are they? A. Made in the annual re- port in book form, setting forth the different items of information. Q. What part of those items of information are valuable to keep? A. Why, nearly everything that is published in that report gotten up by the Commission I think is valuable. Q. flow many men does it take to get that report out? A. I don't know how many men there is employed over there. Q. I didn't ask you that. I asked how many men it would take naturally, working as they do, to get out these books or these annual reports ? A. Well, I am not an accoimtant or statistician, but perhaps I can answer tiiat by telling w'hat was done under the old railroad commission. The old railroad commission got out 1760 Investigation ob' Public Seevice Commissions a report wMoh contained all of the information it deemed neces- sary and was considered valuable, a valuable report, and one man used to get that out. Q. And that was just as valuable as the one they- use now ? A. I think more so. Q. liow, you have a department of statistics here, and in that department you have a chief statistician, an assistant chief statis- tician, two junior statisticians, one accountant, one junior ac- countant, two stenographers, and one bookkeeper, and one sta- tistical derk, and five clerks ? A. If yon will let me answer that last question that you asked me. Senator : To the extent of that information contained in the report now gotten out by the Public Service Commission and the report formerly gotten out by the Railroad Commission, both contained about the same information, but that compiled by the Railroad Commission was in a form for more ready reference and for that reason I think more valuable. Q. In other words, they had one man on the old Railroad Com- mission to get up the book that is now gotten out by this Depart- ment of Statistics ? A. Yes, but you must bear in mind that the Public Service are dealing with great public service corporations, and with more public service corporations than the old Railroad Commission, and more gas and electric companies and telephones. Q. They don't have over double the work, do tbey? A. I shouldn't say so. Q. What is the difference between a statistician and a statistical clerk? A. Well, I can't draw the line and would be unable to answer that. Q. That is a very hard word to pronounce, and I have succeeded pretty well so far, but don't ask me to repeat it or I may fall down on it, but in talking with them you don't say " Good morning, statistician," do you ? A. I don't have occasion to say good morn- ing very often anyway to that department. Q. Now, with the division of Light, Heat and Power, that is in relation to electricity and gas ? A. Yes, sir. Q. And in matters of capitalization, are you called upon when any electric railroads desire to issue more bonds or increase the capital stock or something of that sort ? A.. I never have been ? Q. I don't find any librarian here at i 11, they haven't got any, have they? A. No. Final Eepobt of Joint Legislative Committee 17G1 Q. Now have you had, I assume you have had, considerable experience here in Albany with these matters that are now the subject of investigation by the Commission ? A. I have. Q. Has there been any matters aside from these that you have told us, where your investigations have called matters to your at- tention that required action, in your judgment by the Commis- sion, which haven't been acted on ? A. Matters that I presented to the Commission? Q. Yes. A. None. Q. That is aside from anything you have testified to here? A. There is not to-day any matter that I recall that I have called the attention of the Commission to but what it has been acted on. Q. You don't mean by that it has always been acted upon in accordance with your advice? A. Oh, no. Q. But it has had some action? A. Yes. Q. Has there been any matters that have been acted upon in such a manner as in your judgment calls for any criticism of the action? A. None whatever. Chairman Thompson. — Well, that is all. Colonel Hayward. — You wanted, I believe, to make a correc- tion of your yesterday's testimony ? A. Yes. Q. And in the Buffalo matter ? A. Yes. Yesterday I testified I couldn't remember only one occurrence where I had been called on to investigate matters pertaining to the electric railways in and about Buffalo since Commissioner Hodson had been appointed. I wish to correct that by stating that I call to mind three different occasions where I have at his request investigated matters, and also one occasion where at his request I attended a public hearing given in the matter of rerouting cars ; also I wish to make another correction in my testimony of yesterday where the record shows I said there were forty-eight operating electric railroad companies in this district. The facts are there are seventy-eight. Q. Mr. Barnes, do you consider by proper inspection and super- vision of electric railroads of the district, with the cities in the district,- that expert knowledge, any expert experience is neces- sary? A, I do. 56 1762 Investigation of Public Service Commissions Q. Just tell the Committee along what lines such inspection to be proper and thorough should be conducted, and what technical knowledge is necessary ? A. A thorough and proper investigation of the city street railway system requires technical knowledge to determine the sufficiency and reliability of power supply, type of cars in use, to determine the comfort and convenience of the peo- ple, the determination of conditions of track and roadbed and structures, and as to the safety and convenience and examination of schedules as to convenience of operation, and examination of the operation itself as to sufficiency of service, and analysis of the travel to determine the proper routing of cars, I should say those are the principal requirements. Q. You wouldn't think the situation in Buffalo was peculiar in that it could be done without any inspector or any supervision of any kind, I mean there is nothing peculiar about Buffalo more than any other place ? A. 'ISTot that I know of. Q. All those things are as necessary there as anywhere else? A. Yes, sir, Q. Do you consider Mr. Hodson is a competent man to make that kind of inspection and have that kind of supervision ? A. I don't think the Commissioner would attempt to qualify as a rail- road or transportation expert. Q. Yet he has assumed entire charge up there with the excep- tion you have mentioned here, hasn't he? A. All matters have been referred to him. Q. Have you ever looked through these, in a general way, and know the nature of the hearings that Commissioner Hodson has been holding in Buffalo? A. I have no knowledge of the hear- ings held in Buffalo, except perhaps in some cases in electric rail- way matters. ■Colonel Hayward. — That is all, Mr. Chairman. > Chairman Thompson: Q. Mr. Barnes, you said you thought you ought to have four extra men, four young men, four extra men of the same general knowledge. They could count passengers and so on ? A. Yes. Q. Couldn't you take out one accountant, a junior accountant, and a bookkeeper and a stenographer, they could all go over and FiKAL Repoet oI" Joint Legislative Committee 1763 Q. And the chief statistician and the assistant chief statistician, you could use for some other purpose? A. I am afraid the other fellow needs some qualifications, or should possess some qualifica- tions. Senator. By Assemblyman Kincaid: Q. Don't you think they could serve the State better doing that rather than compiling these dry statistics ? A. My attention has been devoted so closely to my department, I wouldn't be able to answer that. By Chairman Thompson: Q. You said the City of Buffalo needed somebody there who knew something in relation to inspecting street railroads ? A. Senator, I don't think the record shows quite that. Chairman Thompson. — -Well, that is all, Mr. Barnes. Colonel Hayward. — That is all, Mr. Barnes. By Assemblyman Knight: Q. Just one question. I don't know whether you stated you considered you have enough help or not to do the work in your department? A. I have stated that I did not have enough. Q. How much more, in your judgment, do you believe that you ought to have to do the work that is required to be done? A. I think I should have another assistant electric railway inspector, a man with some detailed knowledge of railroad matters and then four that could be classed as young men at a small salary to count passengers in the cars and check up. Assemblyman Knight. — Well, that is all I care to ask. Feank II. Mott, recalled, testified as follows : By Chairman Thompson : Q. I want to get your idea about these statisticians ; I want to know how much you pay the chief ? A. The chief is paid $5,000. Q. The assistant chief? A. And the first assistant is $2,400. Q, And the two junior statisticians ? A. I think $1,800, Q. Each? A. Yes. 1764: Investigation of Public Service Commissions Q. The accountant'^ A. Well, somewliere fifteen to eighteen, I have forgotten which. And the junior accountant fifteen to eighteen, I think it is. Q. And the two stenographers? A. I think they get nine to twelve hundred, that is my recollection. I can give you the exact figures. Q. And the bookkeeper, how much does he get, Mr. Mott ? A. I will get the salary list here, I don't care to answer those ques- tions so definitely from memory. By Assemblyman Knight: Q. How long has the number in this department continued as it is at present, the number of employees ? A. One hundred and fifty-three employees of the Commission; the increases have been very slight. Q. In this department here? A. I think just about the same as it has been three or four years. Q. Has not been any addition ? A. If there had been any, sub- stantially none. Q. There are eight altogether? A. I think so, yes. Assemblyman Kincaid. — Fifteen. The Witness. — Fifteen in the Statistical Department, yes. Assemblyman Knight: Q. That number has continued the same, as I understand, for the last four years? A. Substantially the same for at least two years. Recess until 1 :45 p. m. EECESS After recess, March 5, 1915, 1 :45 p. m. Feaxk H. Mott, recalled, testified as follows : Direct examination by Colonel Hayward: Q. Mr. Mott, in your stenographic bureau, you have a stenog- rapher in charge and eleven stenographers? A. That is in the FiWAL Kepoet of Joint Legislative Committee 1765 Q. Do these stenographers take the record of the testimony when a hearing is held ? A. No. Q. Whom do you have a contract with for that ? A. Colson & Brice are the official stenographers of the Commission in the way of hearings. Q. What kind of a contract have you with them? A. I think I have a copy of the contract, if you want it. Q. How much a folio do you pay them, and for how many copies ? A. I think in round numbers it amounts to about $7,000 a year. Q. I do not mean that. How much do you pay them per folio ? A. Forty cents. Just a moment, I want to get that exactly. It is here. They furnish the Commission two copies of the transcript of the evidence at the rate of forty cents a page for both copies. If the Commission desires more than two copies of any transcript, they furnish it at the rate of seven and one-half cents per page, provided the copy is made at the same time as the first-mentioned two copies are made. Upon orders directed to the Secretary of the Commission, these stenographers furnish parties other than the Commission transcripts at the rate of fifteen cents a page, and for each such copy sold by the stenographers to parties other than the Commission seven and one-half cents is deducted from the forty cents a page charged to the Commission. The Commission is credited with that amount. Q. Is that (indicating) the original contract? A. Yes, sir. Q. Forty cents a page ? A. Yes, sir, for two copies. Q. How many folios do you count on a page ? A. I never have computed it in that way, Colonel. It is stated that the pages shall be eight by ten and a half inches and contain twenty-three lines. It is all based on the page system. Q. And your stenographers that you have — this stenographic force that you have — is for office work, letter dictation, etc. ? A. Entirely. I have here the actual expenditures from year to year for the reporting stenographers, if you care for it. (Indicating. Witness hands statement to counsel, who examines same.) Colonel Hay ward. — Mr. Stenographer, just put that in the record, that page there. (Indicating.) 1766 Investigation of Public Service Commissions (The page indicated by Colonel Hay ward is as follows:) Colson & Brice, Reporting Stenographers. Receipts from Commission : Aug. 1, 1907, to Sept. 30, 1907 $930 73 Oct. 1, 1907, to Sept. 30, 1908 8,916 72 Oct. 1, 1908, to Sept, 30, 1909 8,581 49 Oct. 1, 1909, to Sept. 30, 1910 6,591 09 Oct. 1, 1910, to Sept. 30, 1911 7,730 49 Oct. 1, 1911, to Sept. 30', 1912 8,687 01 Oct. 1, 1912, to Sept. 30, 1913 8,322 89 Oct. 1, 1913, to Sept. 30, 1914 8,188 20 By Colonel Hayward: Q. Mr. Mott, I understand the expenses of the Commission for 1913 increased about $30,000 over 1912; is that right? A. Why, the request of the Commission in 1912 was for something like that amount over the preceding year, and the increases were then made in accordance with the indications of the preceding year. Yes, sir. Q. And what did the increase the next year over the preceding year amount to ? A. It was very slight. I think we asked for the same appropriation this year that we did last year. Q. I thought you asked for $18,000 more? A. We asked for the same that we asked for last year, but they gave us less than we asked for last year. Q. Is your budget for the year from October, 1915, to October, 1916, made up? A. We have made a request, I think, for $405,- 000 for the year 1915-16, but that is a matter just now before the Legislature Committees. Q. And that is an increase of how much over 1914-15? A. I think that is exactly the same amount we requested in 1914, and it is several thoiisand dollars more than we received. By Assemblyman Knight: Q. It is $423,000. Your testimony yesterday was that it was $423,000 — $423,685.90? A. That is correct. That was cor- rect yesterday, because it was taken from the annual report. Yes, that is correct. I stand corrected. The estimates have been sub- mitted for $423,685. Final Eepoet of Joint Legislative Committee 1767 By Colonel Hayward: Q. To get down to it from 1907 along up until 1911, or 1912, you ran along on just about the same appropriation? A. I think there was quite an increase after 1910, Colonel Hayward, on ac- count of the telephones being placed under the jurisdiction of the Commission ? Q. When was that? A. That was in the year 1910, and it came in the appropriation of 1911. This is a comparative statement of the different years. (Indicating). Q. There are no totals shown here, are there ? A. Yes, I think they are there. There are totals on that large sheet of all the divisions. Q. IsTow, here I find 1910-11, $342,739? A. What page is that, Colonel? Q. Page 7, 1911-12, $372-32.3. IS^ow, there was a jump of about $30,000 that year. Do you know what that was for ? A. I cannot except as it appears here. It fully appears in this state- ment. It is fully set forth here by this. I cannot offhand state why that was. Of course, I was not here at that time anyway. Here is the expenses of the Commission from the beginning, showing the different increases from year to year, of each depart- ment, and the summary. Q. Well then, in 1912-13, you got along on just the same money that you did in 1911-12? A. Substantially, yes. Q. One was $372,300 and the other was $373,000? A. Yes, sir. Q. Then for the fiscal year October 1, 1913, to September 30. 1914, it goes up to nearly $406,000 ? A. That was the appro- priation for the expenditures for the year, $398,000. Q. Well now, do you know in a general way what occasioned that increase ? A. I think so, yes, sir, if you will give me that sheet. (Counsel hands to witness the sheet requested). The Capitalization Department was increased $9,661.33. There was an increase in salaries and force. The Statistics and Accounts Department, $728.62. That was an increase in salaries. Tele- phone and telegraphs, $521.66; tariffs, $460; light, heat and power, $740; general ofiice increases, $7,752.19; secretaries to the Commission, $178.46. The net increase was $17,257.10. 1768 Investigation of Public Seevice Commissions Q. The two biggest items of which were the Statistical Bureau and the General Office? A. General Office and Capitalization. These were all recommended in the preceding year, the year 1912. Q. Then, in addition to that, the Legislature gave you, in 1914, a special fund of $100,000 for telephone investigation? A. Yes, sir. Q. 'Now, do you think that the increase in the General Office and the Capitalization Bureau were both necessary ? A. Why, I should say, generally speaking, that to carry out the functions of the Commission properly, they were necessary. Q. You think they were as necessary as an increase in Mr. Barnes' department, which was the inspection of electric rail- roads? A. I have not any doubt that Mr. Barnes' department should have been increased, but I think that it does not necessarily follow that the others should not have been increased. As to the relative importance of it, that is a matter which the Commission determined. Q. They determined it that way ? A. They determined it that way. Of course, these items to some extent were increases in sal- ary and could not have been applied to Mr. Barnes except as the Legislature appropriated it. I think you will find in three annual reports that the Commission requested — I think in 1913, when Commissioner Decker was Chairman, that he requested that that department be increased, and that was done again in 1914. Q. l^ow, was anything done in your New York office except telephones and telegraphs ? A. They received a great many gen- eral complaints and sometimes petitions, and transmitted them to this office. Of course, their main function related to telephone matters. Q. They are under your Division of Telephones and Tele- graphs? A. Yes, sir, Mr. Sweet is assistant to the chief of the Telephone Division. Q. Does that office require the attendance of a Commissioner? A. ISTot constantly. Of course, hearings are frequently held there. Q. What on? A. On all subjects arising in that vicinity, In Long Island and sometimes Westchester. Q. Then why do you charge that whole ISTew York office up to the Division of Telegraphs and Telephones ? A. The occasion Final Report of Joint Legislative Committee 1769 for the establisliing of the office, in the first instance, was that the Commission had jurisdiction over the telephones of Greater New York, as well as the rest of the State, and that the service matters may be looked after better by a person who is adapted to that par- ticular line of work. Q. That office is in the Metropolitan Building down there ? A. Yes, sir. Q. Have you got a list of the service hearings that have been held at that office ? A. I can get you a list. That has not been prepared separately, but we shall be very glad to prepare that. Q. Will you do that? A. Yes, sir. Of all the hearings, you mean? Q. Yes. A. In fact, it is stated on page G of the report for 1913 that there were held in New York City last year forty-one hearings. Q. Now, I find here on your detail of expenses from July 1, 1 907 — that is the first year of the Commission — and then for the subsequent fiscal year, from October 1st to September 30th. from 1907 to 1914, inclusive, that, for the year 1907, which was a few months — A. Three months, I think. Q. Yes, three months — hotel and meals, $914. Then for the fiscal year 1907 and 1908, $7,233. The same item, 1908-1909, $8,072; 1909 and 1910, $8,315. Now, 1910-11, that item jumps up to $13,836 ; in 1911-12, it jumps up to $18,699 ; in 1912-13 it comes up to $21,316; in 1913-14, $22,294. So that in the fiscal year of 1914, it is just three times as much as it was in the full year of 1907-08 ? A. I think it may be said that there are more than three times as many things done, or three times as many parts of the State covered. These inspectors have to have their expenses paid, and examiners, who have to examine corpora- tions, have to have their expenses paid. I think it may be said generally that the Commission is very reasonably careful in not permitting improper expenses. Q. You do not mean to tell us that the activities of this Com- mission, outside of the city of Albany has increased so that it is three times what it was in that year, do you ? A. I think so. Q. How has your number of inspectors increased? A. The number has grown, as you will notice there. The telephone in- 1770 Investigation of Public Service Commissions spectors were all added in 1910-11. I think they were appointed by the Legislature of 1910. That accounts for that. Q. That is no greater increase, then. The next year it jumps from $13,000 to $18,000 ? A. That is a question purely of judg- ment on the part of the Commission as to the extent to which in- spections and examinations shall be carried. Q. Well, now, what inspectors have you in these departments ? A. Well, there are the two electric railroad inspectors; there are the examiners and inspectors. Q. The two electric inspectors — you had two of them in 1907- 08, did you ? A. I think only one. I think that was — I will have to look that up. I think the statement was that one was ap- pointed later. Q. When? A. I cannot say when those men were appointed, Colonel. I shall be glad to furnish you the number of inspectors each year. Q. They would all be here in this Division of Engineering In- spection? A. Yes, sir. Q. That is all the inspectors you have in that division? A, There are some examiners. In the Capitalization Department there are some examiners, and there are some examiners in the Division of Light, Heat and Power. Q. Where are your statistical examiners, in the Division of Sta- tistics ? A. Capitalization, I should have said. There are nine in the Division of Capitalization and one assistant, one junior ac- countant, eleven officers and the chief, which would be twelve. Q. How many of those did you have in 1907-08, do you know? A. That division was not organized until 1910-11. I think in 1911 it was organized. That is another reason for the increase. Q. It organized, then, at about its present size? A. Oh, no, it has grown constantly until the last two years. Q. Now, what do those examiners do in that Division of Capi- talization ? A. When capitalization applications are presented, they examine the books and records and property of the companies and report to the Commission. Q. Before the Commission takes any action? A. Usually. Not in every case, but generally speaking, that is true. Q. Why do they not in every case ? A. If there is some special Pinal Report of Joint Legislative Committee lY7l Q. AVhen you start these examiuers out, do you always wait until you get their report before you take action? A. I think that is generally so. ■ There may be some cases where that has not been done. Q. Why do you start examiners, or inspectors, out on that work and take action before you have their report ? A. I cannot recall a case where that has been done. Q. I may be able to recall a case to you. A. Where action was taken before the report was received ? Q. That was so in the case of the New York, Westchester and Boston, was it not ? A. When was that ? Mr. Wheden.— 1913, I think. The Witness. — That was before this Capitalization Department was organized. My recollection is that that was before the Capital- ization Department was organized, that particular case. By Colonel Hayward: Q. Has it been the general practice of the Commission to rely on the results of the inspection by the Division of Capitalization before taking official action ? Would you say that ? You say that is what it is for? A. I should say, generally speaking, so far as I know, Colonel, that has been the custom ; but I do not mean to say that the Commissioners were in every case bound by the con- clusions, but that forms the basis of their determination. Q. Well now, you are going to get a list of all the hearings and the subjects, etc., that have been held down in this "New York office for a couple or three years ? A. Yes, sir. There were sixty- six in the year 1913, and forty-one in the year 1914. Colonel Hayward. — Do you want to ask anything. Senator ? By Chairman Thompson: Q. I want to know about those proofreaders ? A. What about those? Q. In your general office, you have a general, and under him you have an executive clerk and a chief clerk of records, and a superintendent of compilation — I suppose that is a difference — • and you have two proofreaders. Now, we have been going through the Statisticians' Department, where you have a chief statistician and an assistant chief and two juniors and accountants, and sub- 1112 Investigation of Public Service Commissions accouutants and bookkeepers aud steuograpliers, clerks aud sub- clerks. Now, Mr. Earnes, who is the inspector of electric rail- roads — who thinks you are a little stingy in giving him a title — he says that he has not got help enough to do his work, but he "would like an assistant — he now has an assistant who receives something about $1,500> a year — he would like four others that knowhow to count, so that they can take counts of how many peo- ple were riding, etc. ; and we arranged that he could have the chief statistician or the assistant statistician, and the two junior accountants and the bookkeepers, and that would just about fix him ? A. Was that a question, Senator ? Q. It is going to be. And we concluded that those statisticians were not very important. They did not get out as good a book now about statistics as they used to under the Railroad Commission, with one man. He got out a better book than all these fifteen or sixteen people there now. That is what his idea was. So we ten- tatively gave him the assistant chief statistician and these two junior accountants, and an accountant and bookkeeper and sta- tistical clerk, and think you have still enough back there in that department. That is all tentative, from talking it over with Mr. Barnes on the witness stand this morning, and he thinks you have plenty left in your Division of Statistics after that is all over; and I was wondering if these proofreaders and typecopyists and three clerks and the superintendent of compilations, whether they did not have something to do about these statistics ? A. You mean in the main ofiice ? Q. Yes. A. I think not, sir. Q. That superintendent of compilations, what does he do? A. He is one of the busiest men in the Commission. That is Mr. Eoot, who has charge of all the publications of the Commission, reading the proof and taking care of it. Q. Proof of what? A. Of the opinions and all the printed matter of the Commission. Q. And they do not pass on the testimony, these proofreaders, they do not pass on the testimony that is taken and advise the Commission whether it is proof or not? A. Oh no. That is a proofreader in the newspaper sense of the term. Q. They simply compare copies of opinions? A. Yes. Final Eepoet of Joint LegislxVtive Committee 1773 reading of the proof of the opinions and other publications of the Commission, which are printed. Q. What do you have that is printed outside of the opinions and decisions, your annual reports? A. Well, there are certain quarterly reports relating to railroads — steam and electric rail- roads — which are printed. This (indicating) is a sample of what is done quarterly. Then there are the reports of train de- lays — train delay reports — which are printed. Q. Assemblyman Kincaid wants to know who you make these quarterly reports to ? A. They are made to the Commission and sent out by the Commission after printing. By Assemblyman Kincaid: Q. Who are they sent to ? A. To the railroads and others who express a desire for them. There are a great many requests for the publications other than those. By 'Chairman Thompson: Q. Are these statistics? A. Yes, they are the abstracts of the quarterly reports made to the Commission. Q. This quarterly report, marked 3-G, comes from information that is in your Division of Statistics ? A. Yes, sir. Q. And who puts it in this shape? A. Mr. Root, who has charge of the publication. He is one of the proofreaders. Q. He is the fellow who is chief clerk, or is he the superinten- dent of compilation and publication ? A. Superintendent of com- pilation and publication. Q. He goes to the Statisticians' Department and gets informa- tion from which this is made? A. I think the Statisticians' De- partment sends it to him and he causes it to be printed and the proof read and taken care of. Q. And you get four of them in a year ? A. Four of .those. Q. And you get one annual report ? A. An annual report of three volumes. Q. And what else do you have printed, how many opinions? A. The opinions of the Commission. Q. How many of those are there? A. I cannot tell you, but there was a large number last year. Q. The law requires them to be printed and forwarded to the 1774 Investigatiok- of Public Seevice Commissions Legislature with your annual report? A. Those are the orders. Q. And thej have to have the proof read ? A. Yes, sir. Colonel Hajward. — You might ask the witness, for the pur- pose of comparison, how they beat the down-State Commission a year and a half in getting out their report. Chairman Thompson. — I think that is so, but we do not care to commend the up-State Commission upon their speed at that. You make a report in January? A. We get the preliminary report, •and the orders are now printed. The preliminary report contained in this volume, and the orders, which are now printed. Those are just about ready to go out for last year. Colonel Hayward. — You file your report, the same as the First District, in January, after the Legislature convenes ? A. Yes, sir. Chairman Thompson. — You get yours ready in a year and they get theirs ready any time in three ypars*? The Witness. — I think the first volume was printed and dis- tributed in April this year, for last year. That is the earliest it has ever been gotten out. Chairman Thompson.^ I do not want in any way to criticise the present secretary or any other secretary up-State. The Witness. — I say that to indicate what this printing de- partment does in handling these matters. By Colonel Hayward: Q. l^ow you have to file an annual report with the Legislature, do you not ? A. Yes, sir. Q. In January of each year? A. Yes, sir. Q. Now, the report you filed in January, 1915, was for the year 1914, was it not? A. Yes. Q. Now, that was filed, in due time, with the Legislature ? A. Yes, sir. Q. Now, a year ago in January, you filed the same kind of a report with the Legislature. That was in January, 1914, and that report was for the year 1913? A. Yes, sir. Q. Now, how long did it take you, under the provision of the law requiring you to h^vp that report printed, to get in printed Final Kepoet of Joint Legislative Committee 1775 form for circulation among the public, as the law provides, the report of 1913 ? A. I think the first two volumes of the report of 1913 were sent out about the 2Sth of December, 1914, and the other volume is about ready to go out; and the first volume of 1914 is about to go out. Q. The 1913 report was filed in January, 1914, a year ago last January, and under the law, it says after this report has been filed with the Legislature, it should be printed for the use of peo- ple interested in these subjects? A. Yes, sir. Q. So it took you a year after you filed it with the Legislature to get it printed — the first two volumes — and at least fifteen months have elapsed and the third volume is not out yet; is that correct. A. It is not entirely correct, for the reason that the law does not provide that all of those shall be filed with the Legislature. It provides they shall make a preliminary report. Q. And copies of the orders ? A. Yes, but the other — this statistical matter — is not necessarily filed with the Legislature. Q. But the theory of the law is that the public shall have the benefit of these printed annual reports as soon as possible, is it not? A. Oh, yes, that is true, yes, sir. Q. And the fact that you do not have all that ready to file with the Legislature in January each year is no sign why you should not have it ready for printing? A. It should be gotten out as rapidly as possible. Q. Answer my question. The fact that all the matter that goes into the printed report does not necessarily have to go into the re- port for the Legislature is no reason for the printed report being delayed one year or fifteen months after the Legislature report is in ? A. ■No, not in itself. Q. Tell the reasons for the delay. A. The only reason I can give is that the Statistical Department and Printing Department of the Commission, with all the force it has, is constantly occupied in this work and is unable to get it out any more rapidly than they do. It is a subject of constant discussion among the Commission and Statistical Department, to see if it cannot be expedited, and I understand that the Interstate Commerce Commission's reports are delayed much longer than ours for the reason of the human failure to get them out quicker. That is one of the reasons where Mr, .Burp?/j wai piist^fen ia s&fwg tbflt th§ force wm too pmt> Q. Are there not a good many features of tliat report that could be carried along and kept up from day to day ? Suppose, for in- stance, the Commission, in J^ovember, asked you, the secretary, for a report of that year up to ISTovember? A. Of the general work? Q. Yes. A. I would give it to them. Q. You would have it in a day or two ? A. Under our system, we could get out almost anything we have done in a rough way. Q. And I expect you could do the same regularly? A. We have it every month. Q. Then why can you not take that and print what you have got after you file it with the Legislature? A. The only reason I can give for that is that there are 1,058 corporations subject to the jurisdiction of the Commission. This Statistical Department analyzes the annual report of those corporations and the quarterly reports of railroads and street railroads. That makes about 1,700 reports which they are required to analyze, besides their other general statistical duties. Q. These are those reports they are required to file with the Commission ? A. I think September is the last one, and quarterly from that time on. Q. So that all the annual reports, then, from September to January, for that analysis — A. They are filed as of September 21st. I have forgotten just the length of time after that. Q. I will say you are better than the up-State crowd, at that? A. Thank you. Q. They are about two years behind. Q. That very question has been the subject of discussion, and for the reason it has been, we have tried to inaugurate a system of printing orders by the Commission as they are issued. The Commission has passed a resolution authorizing that to be done, so that, at the end of this year, the first volume of the preliminary report and the orders can go ou^ shortly after the first of the year. They will go out in April this year. Q. You must have copies of the orders? A. Yes, but that would have to be done monthly. We are starting a system. Q. In the previous reports filed with the Legislature, you have not filed the copies of the orders of the Commission ? A. I think last year we filed typewritten copies. TiifAL Repoet of Joint Legislative Committee ITTT Q. I do not care whether they are typewritten or how. A. I think we just filed typewritten copies to comply with the law. Q. And have you done that this year ? A. I think that was not done this year. Q. It was not done in the First District, either, so far as I can find, it has never been done? A. I think it has never been done except last year, so far as I know. Last year we got out type- written copies and sent them to the Legislature, one copy. Q. Well, now, let me read this to you: " Section 16 of the Law : All proceedings of each Commission and all documents and records in its possession shall be public records, and each Commis- sion shall make an annual report to the Legislature on or before the second Monday of January in each year, which shall contain copies of all orders issued by it and any information in the pos- session of the Commission which it shall deem of value to the Leg- islature and the people of the State. Five hundred copies of each report, together with abstracts of the reports to such Commission of corporations and persons subject to its supervision, in addition to the regular number prescribed by law, shall be printed as a pub- lic document of the State, bound in cloth, for the use of the Com- missioners, and to be distributed by them in their discretion to corporations and persons interested therein." That is the part you say they have not complied with, did not comply with this year ? A. I think that has been construed as not being mandatory so far as those orders are concerned. Q. Who construed it as not being mandatory? A. I do not quote anybody as saying this, but I understand Mr. Stevens did. Chairman Thompson.— Is there any record of that ? The Witness.— No. By Colonel Hayward: Q. It says : " Which shall contain copies of all orders issued by it and any information in the possession of the Commission which it shall deem of value to the Legislature and the people of the State." When do you think that would be of the most value to the Legislature and the people of the State, when the report is filed or a year and a half later ? A. Of course, that depends en- tirely upon the attitude of the Legislature. Sometimes they do not pay any attention to the reports and sometimes they do. -1-1 It) -l-iN VIliBnWATlUiX OJ<- JTUBLIC OEHVICE VyOMMlSSIOJN B Q. We had a peculiar instance of it when this Committee went down to Xew York. This report which was to have been filed with the Legislature by the second Monday of January would have befen of inestimable value to this Thompson Committee, and we had a terrible time trying to get things that the law says should be printed and filed, and I am wondering if the situation here is not the same? A. Oh, no. Did you get this? (Indicating.) Q. Yes, but that has not copies of the orders. A. But this has. (Indicating.) Q. What other information is in the possession of the Commis- sion, which the Commission deems of value to the Legislature or the people of the State, which is not in this report I A. It is con- tained in this report (indicating) except the analysis of the Com- mission's reports of corporations. Q. What will be in your printed annual report that is not in that document that you hold in your hand? A. Xothing except the orders. This, with the orders, constitute the first volume, which is about to go out. Then the second and other volumes, con- tain the statistical reports of the railroads, street railroads and domestic corporations. Q. Let me read this again : '"All proceedings of each Commis- sion and all documents and records in its possession shall be public records, and each Commission shall make an annual report to the Legislature on or before the second Monday of January, of each year, which shall contain copies of all orders issued by it and any information in possession of the Commission which it shall deem of value to the Legislature and the people of the State. Five hun- dred copies of each report, together with abstracts of the reports to such Commission of corporations and persons subject to its supervision, in addition to the regular niimber subscribed by law, shall be printed as a public document of the State, boimd in cloth, for the use of the Commissioners, to be distributed by them in their discretion to corporations and persons interested therein." That is the diflFerence. When it comes to the printed copies of the abstracts of the reports made to the Commission, did you comply with this law to the extent that you filed with the Leg- islature by the second Monday of January all the information the Commission has of interest to the people: except only the abstracts of the corporstipuf' rppprts to the Cojiipiwsipn ? A, Except the orders, FiKAL Eepoet of Joint Legislative Committee 1779 Q. So that the orders are the only things you left out ? A. Yes, sir. Q. And you get that around fourteen or fifteen months later ? A. No, we get it around eleven months later this year. Q. The first two volumes, do they have abstracts? A. It had the orders. That was sent out in December, 1914, for the year 1913. Q. In January, 1914, you filed something similar to this? A. Yes, sir. Q. Xow, all that you got out following December was this (in- dicating) plus copies of the orders ? A. Yes, sir. Q. How did it take eleven months to have this reprinted, with copies of the orders, that you must necessarily have had all the time? A. I think one explanation in addition to what I have given was that the first volume was ready, but it was held from being sent out for the second volume. Q. What did the second volume contain? A. Reports of elec- trical and street railroads. Q. And the third? A. Abstracts of companies, electrical cor- porations and miscellaneous corporations. Q. Do you not think that has been farcical ? A. I think it should be turned out earlier, but I do not see how it should be under the limitations of the help that the Commission has. I think it is a physical impossibility. Q. You got this out for the Legislature and you had the in- formation in your possession at that time, these copies of the orders, and you did not get that out for eleven months. It did not take the Statistical Bureau eleven months to put those orders in shape for printing, did it? A. I think orders could have been gotten out considerably earlier. We have demonstrated that this year by getting them out in April. Q. Well now, how does it come, Mr. Secretary, that these two great Public Service Commissions — I include the First District and the Second District — of the State of N"ew York, as liberal as the State has been to both these Commissions, how does it come that you could not get these reports out in less than a year or a year and three months, when Poor & Moody, a private concern, private publishers, get those out in thirty to sixty days, contain- ing the same information practically as yours, and perhaps a little move ? A, I would say Mv, Scudder would be able to answer ih&t, 1780 Ibtvestigation of Public Service Commissions Q. They do get them out ? A. I know this Commission has not been able to do it with the force they have. Q. You say in January, 1914, you had in your possession the report that you filed with the Legislature, and you had also in your possession copies of the orders, and that although you did file with the Legislature as the law requires you to do, and you had the orders, that you did not get that printed until the follow- ing December, eleven months later. Was that because you did not have a snfficient force in your Statistical Bureau or any other bureau? A. iN'ot as to the orders. Q. As to the orders in a report you did file with the Legisla- ture ? A. We filed the preliminary reports with the Legislature, and the orders were a part of that. Q. All volume one contained was the preliminary report plus the orders, and you had that in January ? A. Yes, sir. Q. And you did not get it out until December? A. That is true, last year. Q. Then why did you say it was because of inefficiency of the employees of the Statistical Bureau ? A. I did not say that. Q. I understood you to say you could not get it out for that reason ? A. I did not say due to inefficiency. Q. Did I say " inefficiency ? " A. Yes, sir. Q. I meant " insufficiency." A. That does not have anything to do with the publishing of the orders. Q. Suppose you had 150 men in that bureau, what would you have done with them between January and December with refer- ence to volume I of that year ? A. ITothing. Q. Then it was not because you did not have enough men in there? A. iN'o, not as to volume 1. So far as the publication of volume 1 is concerned, the system has been to issue that with volume 2. This year, as to the report of 1914, that is changed, so that, by making a special effort and neglecting some other other things, we are enabled to get that out about the 1st of April. To meet the criticism which you to some extent make, I can say that that is not necessarily — the real delay which I meant to re- fer to especially as to the foreign railroads, abstract of corpora- tions - — • Q. Abstract of these reports? A. Yes, sir, and that is Avhat these publications relate to. Q. Well now, what things did you put off this year and have to FlBTAL EePOKT of JoINT LEGISLATIVE CoMMlTTiiE I'TSl neglect in order to do this '. A. I do not know as 1 can specify, but Mr. JRoot, the superintendent of that division, has told me that he has had to delay this third volume of 1913 in order to get these orders out and try to comply with the statutory require- ments; and we got them out also to afford the Commission the opportunity of reading them in print, if they cared to do so. Q. I may be very simple, Mr. Secretary, but I do not see why it should be necessary to delay any other work in order to print the stuff you had in typewritten form in January of this year '. A. That is the condition that we have been contending with. I cannot make it any clearer. Q. You had it downstairs '. A. Y es, sir. Q. Why did you not take it aud send it down to the printer I A. 1 ha\e had nightmares over that subject, and everybody has had before me. This condition has been a constant difficulty. Q. Was not all that was needed an A. D. T. messenger to take that down to the printer and tell them to get to work on it ? A. Oh, no. Chairman Thompson: Q. Who pays the costs for printing this report '. A. The State. Q. Is it charged to you or the Legislature '. A. To the Legis- ture. Q. That is, you did not have to have any appropriation in your department to cover the cost of printing l A. Xo. Q. So that the minute you file it with the Clerk of the Senate, your responsibility ceases, does it not '. A. Well, I do not think it ceased just that way. We read the copy. Q. Why should you read the copy '. You deliver the copy to the Clerk of the Senate and they get it printed and pay for it themselves. Why should you read it \ A. We are required to take charge of all that work. Senator; to read the draft, to com- pare it to make sure it represents the orders of the Commission. It should not properly be left to anyone else. Q. I Imow you did do that, but is there any law that requires it \ A. I do not know. By Colonel Hayward: Q. Pid you not examine the report you filed with the Legisla- 1782 Investigation of Public Seevice Commissions Q. That, plus your orders, is the first volume of your printed report? A. Yes, sir. By Chairman Thompson: Q. As far as I can see, I wish you would explain it so perhaps we can understand it as you do; but this law requires you, be- tween the 1st and 15 th of January, to file with the Legislature a complete report. jSTow, you say you have not got help enough here, but you have got all these statistics. All you have got to do is to marshall them together in a report, and if you do send in a gen- eral alarm down there, you can gather twenty-six stenographers; and if you had twenty-six stenographers working in December, you should be able to get it in typewritten form so as to file it by the required time? A. 'No one connected with the Commission has ever been able to do it, and I do not think any one will be able to do it, with the greatest diligence. Q. Your department was concerned in seeing that the report was printed in the way you wanted it printed rather than seeing it was filed with the Clerk of the Senate? A. Oh, yes, we con- cerned ourselves with the actual printing and proofreading and all that sort of thing. Q. And that is why you have to have those proofreaders, very largely ? A. Yes, sir, and the opinions. Q. And the superintendent of compilations and publications? A. Yes, sir. °j By Colonel Hayward: Q. And, of course, if you got through your proofreading the first three months of the year, there would not perhaps be any- thing for them to do in the next nine months? A. They are constantly engaged. Q. On what ? A. On the publications of the Commission. Q. What do they consist of ? A. I should like to have you call Mr. Boot. He is a very intelligent man and knows all about it. By Chairman Thompson: Q. All the compilations of the year 1913 have been printed by this time for the year ending December 31, 1913? A. Except the last volume. Q. Is it out yet? A. No. Final Report of Joint Legislative Committee 1783 By Colonel Hayward: Q. When was the volume of the 1912 report, due to be filed with the Legislature January 1, 1913, in the hands of the public? A. I came here in June, and it was some time after that. Q. June of what year? A. 1913. By Chairman Thompson: Q. Will you send an assistant to your office and bring us here just one sample copy of everything that was printed during the year 1912 for your department? A. I should be very glad to do so. Colonel Hayward. — You mean, Mr. Chairman, printed cover- ing the year 1912, because they might have been getting out the other reports during that time? Chairman Thompson. — Yes, everything for the year 1912, everything that they thought was worth while to print and proof- read. By Assemblyman Knight: Q. Then this volume 2, the Statistical Report, contained the same matter as these quarterly reports? A. No, not the same matter. Of course, annual reports are something of a duplication of the quarterly reports. These quarterly reports are gotten out more for the information of the public, due to the many demands which the Commission receives from corporations and people in- terested in corporations for abstracts, before the annual reports are printed. Q. What, in addition to what is contained in those quarterly reports appears in your volume 2 of your annual reports ? A. There is very little. Q. What is volume 3 ? A. These quarterly reports, by the way, have only been gotten out — I think last year was the first year they were gotten out. It was started last year. Q. Volume 2 contains substantially the same matter that has been heretofore published in these quarterly reports in some form ? A. There are some additions. Q. What does volume 3 contain ? A. Electrical, gas, telephone and telegraph reports, and abstracts of the annual reports of gas and electrical and telephone and telegraph corporations. 1784 ls-7ESTIGAT10S OF PuBLIC SeEVICE CoMMlSSIOJfS Q. Where do the opinions of the Commissioners appear in jour report ( A. Thej appear in a volume of opinions, a separate vol- ume. There have been about three volumes published, and there are about enough for another one now. They are gotten out in pamphlet form until there is a sufficient number to warrant get- ting out a special volume. Q. They are not published each separate year? A. Xo. By Colonel Hayward: Q. Suppose you took these four quarterly reports that Mr. Knight has been talking about and put them together with McCill fasteners, how near would you have an annual report to the Com- mission ( A. I think there would be a good deal more to put in. Q. And when is the last quarterly report for the year ready ordinarily i A. Sometimes it is quite a while getting in after the time has expired. Q. About how long ? A. I have known it to be two or three months. Q. Is your rejxirt for the last quarter of 1914 ready yet ? A. Xo, it won't be ready for a month at least.. Q. That will be for the last quarter of 1914 ? A. Yes. sir. Ey Assemblyman Knight: Q. "When was this one of September 30th published. It pur- ports to run up to September 30th. A. Very near the first of the year. By Colonel Hayward: Q. So that before you get the report for the last quarter of 1914 out, the first quarter of 191.") will be due? A. Yes, but vou have a certain time in which to file those reports, and you have to make the abstract after they are filed. That also accounts for some of the delay. Q. Do you not think that if this Commission had to rely on the sale of their reports to make a living, the same as Poor &r 2iIoody do, it might be possible to get them out on the same schedule ? Chairman Thompson. — Who is that i Colonel Hayward. — They publish reports containing the same information as this Commission, but they get them out in about FiisrAL Kepoet of Joint Legislative Committee 1785 By Colonel Hayward: Q. Do you not think, Mr. Secretary — I am asking for your opinion — that, when the Legislature passed this law in which it said that the Commission should make an annual report, and that. in addition to this typewritten report that goes to the Legislature, that 500 copies of that report should be printed as a public docu- ment of the State, for the use of the Commissioners, and the pub- lic, to be distributed by them in their discretion to corporations and persons interested therein, that the framers of this law meant something entirely different than what you do up here and what they do in the First District? Do you think you comply in any year with the mandatory provisions of this law ? A. I would not like to pass on the conduct of the former Commission, Colonel Hayward. I am simply stating what my experience has been. I agree with you that the orders and reports should be gotten out with reasonable promptness, but I do not think the failure to do so — the matter of filing those orders, anyway — is a matter of vital consequence. I think the matter of sending out the report is. Q. What good is the report of 1913 — it was not sent out that year, all of it ? A. ISTot all of it Two volumes were out. Q. What good is the annual report of 1913, which is not sent out yet, to the Commissioners or to the public, for whose benefit the State says this great expense shall be made. A. Of what benefit is it? Q. Yes. A. Well — Q. There has not been any for the last year, has there? A. I cannot say as to that, except I say that the people asking for these reports indicate that they are greatly interested in them, even at the time they are published, and if you will permit me one further answer — although not responsive to your question — as a further answer, I would call attention to the fact that this second volume, in addition to the steam and electric abstracts, which this quarterly report contains, the second volume contains the reports of express companies and sleeping car companies and inspections of railroads. That is in addition to the abstracts of the quarterly reports. Q. Did you ever get out more than 500 copies, do you know? A. Oh, yes, always more. Q. About how many do they get out, do you know, Mr. Mott ? A. It seems to me it is 2,000. 1Y86 Investigation of Public Service Commissions Q. Did you ever have to pay for it — you do not have to pay for it, or the Commission does not — but did anybody ever dis- cover what it cost to get out this annual report? A. I think it was during Chairman Stevens' time, I think there is some record down there; of some correspondence and negotiations with the printers on that subject. I shall be glad to look that up if you care to have me do so. Q. Can you send the young man down and see if he can find it now? A. (Witness instructs messenger to go and get the papers requested.) I think that was taken up and they tried to simplify the whole proceeding, and gave it up in despair. By Chairman Thompson: Q. I want to ask you about this Poor & Moody a little further. Do you know about them? A. I know they have a publication, but I cannot tell you about it. Q. They published the proceedings and reports of your Com- mission for the benefit of interested persons, persons who might be interested enough to pay for it ? A. I cannot go into that at all, Mr. Chairman. I have no private information. Q. Do you know that they exist? A. I know there is such a publication. Q. And you know they publish it and distribute it to people who pay for getting it out? They get that information to the public quicker than you do. Colonel Hayward. — About a year quicker. The Witness. — They get out their publications quicker than we do. By Chairman Thompson: Q. That is the reason they get money for it, because they get it out ? A. They do not get out the same reports. Q. Yes, but they get out certain information and get it out picker ? Colonel Hayward. — I think they get out the same information which Mr. Mott and Mr. Whitney say delays them in getting out their reports, which is the abstract of the reports of the corpora- tions. Final Kepoet of Joint Legislative Committee 1Y87 By Chairman Thompson : Q. Poor & Moody are able to get pay for their publications be- cause they get them to the people who want it quicker than they can- get the reports of the Commission? A. Do you know how many people they employ? Q. I do not know, but I think you should answer that question if you know. A. I do not know, but they have an army of em- ployees. Q. I do not want to go on and criticize. These things, I know, go on in the Courts. The Supreme Court, the Appellate Division, will get an opinion, which they will turn over to their official stenographers and not the Clerk of the Court, and will hold up that opinion for months, and the publishers get it into the hands of lawyers before the official reports, and they get money on that basis; and I ask you if that is done? A. I cannot answer any question with respect to the comparison of methods or expense or the inclusion of matters. Colonel Hayward. — What the Chairman means is perhaps this : Have you ever head of such a thing before, that the Public Serv- ice Commission of the two districts, if they got out their reports promptly, would interfere with the sale of these published manuals that cover the same ground? A. Any suggestion that that was the reason? Q. Yes. A. I never heard it before. By Chairman Thompson: Q. You have a lot of books there ? A. Sea,ttered around, yes. Q. And how much do you suppose those boo^s would cost ? A. I will give you the exact figures on that. The^e is quite a library in Judge Hale's office. Q. Do you suppose you have $10,000 worth ? A. I presume they may be worth that altogether. Q. Did they cost that? A. Just offhand, I should think so. Q. And in looking after those-books, do you have anybody in the whole department who looks after that ? A. No. The capital- ization publications are usually over at the Capitalization Division. The purely law books are in charge of Judge Hale, and the other books are in the Engineering Department. 1788 Investigation op Public Service Commissions Q. You ihave somebody who keeps a list of them, do you not ? A. One of the clerks, Miss Betts, in our office, keeps a list of all the books and keeps track of all the books constantly in addition to her other work. Q. And the only librarian j'ou have for $10,000 worth of books is a woman clerk, who on'ly devotes part of her time to it ? A. Yes, sir. By Assemblyman Kincaid: Q. Mr. Mott, on the question of this quarterly report, now, as I understand it, they managed to struggle along without these quarterly reports until about a year ago ? A. Yes, sir, I think it was about a year ago. Q. Then they were first published ? A. Quarterly. Q. And you said it was in response to a crying demand all over the year, as I understand it, that they were published? A. I would not say a crying demand. I do not think I said that. I think it was in response to more requests for these reports. Q. How many of those reports do you print? Whom do they go to ? A. It seems to me there are about 500 of these quarterly reports ; that is my recollection. Q. And then they are mailed out at the expense of the Commis- sion? A. Yes, sir. Q. Whom do they go to? A. Particularly to the corporations interested; that is, to the electric and steam railroads. Then, we have a great many people who ask that these publications be sent to them, who ask that all publications be sent to them. Where they ask that all publications be sent, these reports are sent ? If they ask only for particular publications, these reports are not sent. Q. You also said, as I remember it, when the railroad reports came in, that it was necessary to analyze them. What do you mean by that? A. They analyze the reports and abstract them. I think " analyzing " and " abstracting " amounts to the same thing. Q. You take out the same figures from those reports and put them on another sheet of paper ? A. They not only do that for the purpose of the report but they show that for the purpose of having the companies comply with the requirements of tlie Com- mission with respect to their reports. That analysis involves both Fi:n'al Report of Joint Legislative Committee 1*789 elemeiits, so tliat if a corporation has not complied with the terms of any order, or of the statute, or of the system of accounting pro- vided by the Commission, the attention of the corporation is called to it by this division. That is another part of liheir duties. Q. That is all. By Colonel Hayward: Q. Do you draw any deductions from these annual reports of the companies for the benefit of the public ? A. I think no de- ductions in the broad sense of the term. Q. They are abbreviations of the annual reports ? A. I should say they were abbreviations of the more important elements that enter into the report. Q. So you do not really analyze the reports as a matter of signifi- cance and moment to the public ? You abbreviate them ? A. I do not think that would be quite fair, to say that. Q. What do your analyses show ? A. I think the report would speak for itself on that. Assemblyman Kincaid. — I think it does. Colonel Hayward. — I think it does, too. Assemblyman Knig'ht. — It is a uniform form of report, is it not? A. Yes. By Colonel Hayward: Q. Just to give you an example of that, !Mr. Mott, we took the reports filed down there in the First District, of the New York and Queens County Railroad, and made a little analysis of it, that the Public Service Commission never thought to make, show- ing that the Interborough had looted that railroad by selling it power and unsuitable cars to such an extent that the New York and Queens became bankrupt and will use that as a defense. Does your Commission attempt to make an analyses of those matters ? A. I do not know just how to answer that question. I think the reports contain facts which would disclose the condition you in- dicate. Q. The reports themselves would disclose those same facts, would they not and show what I had to do, that is not in the report lYOO Investigation of Public Service Commissions actually filed with the Commission ? A. I think they are largely because of the different forms. Q. You give less than the report gives, as a matter of fact ? A. That is true. Q. So that anybody who took the reports themselves would get more than the report you give? A. Yes, but the question is whether they would get it in the intelligent form they do in those reports. By Assemblyman Knight: Q. Do you not have a form of report that you issue to the rail- road corporations, to be made by them ; you have, have you not ? A. Yes, sir, Q. Is not this information contained in the quarterly reports simply a copy of the report that is made by them to you ? A. At this time I do not recall anything in addition as to railroads. Q. Is it not exactly the same? Do you not simply print the copies of those reports in this form ? A. Oh, I think not. Q. I mean so far as state railroads, operating railroads, are con- cerned ? A. It is an abstract of those. Q. It seems to be a uniform form, but I thought perhaps, from the appearance of it, you simply published in this form the copies of the reports made by the railroad companies ? A. That is largely true; but as Colonel Hayward has suggested, there are some things omitted. Q. Are there any particular parts you recall which have been omitted ? A. I do not recall what those parts are. By Colonel Hayward : Q. Do you make any investigations to iind out whether or not the reports of the corporations are correct ? A. Oh, yes, that is another function of the Statistical Department. Q. How do they do that? A. They start with the first report and they have the history of the corporation from year to year. If they see there is any special item in the report that calls for particular investigation, that is taken up and letters are addressed to the companies. Q. How often in your report can you find where they have un- earthed anything in the companies' reports? A. That is con- stantly occurring here in this district, more through error than FiXAL Repoet of Joint Legislative Committee 1791 through motive; but those things are occurriug constantly. Maiij letters are constantly brought over to me from the Statistical De- partment to corporations, asking them to eon-eet or submit dif- ferent elements in their report. Q. How does that go into your report? A. It does not go in until it is finally corrected. Then it is recorded as the report of the Commission. If the Commission has to take any action, of course it is done. Q. What action has the Commission taken ? A. I do not recall except in the case of some corporations for not filing reports. Q. If some corporation does not make its report, does not get its report in, you jack them up? A. Yes, or if some corporation has made an improper report. Q. What corporation has made an improper report ? A. I can- not give 1;he names offhand, but there are several corporations who have made unnecessary or incorrect reports with respect to their equipment, and we have written to those corporations to make proper corrections. I can give you a list of a number of them un- doubtedly, if you care for it. I would not want from memory to mention any corporation for fear I might be mistaken. Colonel Hayward.- — That is all. Senator Cromwell. — Mr. Mott was sending a messenger to his office. Do you want him to withdraw for the time being? The Witness.— I sent down to get the files for the year 1912. Colonel Hayward. — Before you leave, Mr. Mott, will you do this for the Commission on this question of hotel and meals : You started in 1907-08 at $7,000 and ran up to $22,000 in 1913-14. I want you to give me a tabulation on this which will show this : Whether the increase from $7,000 to $22,000' has been necessi- tated by the increase in the departments that have been making these inspections, or whether the original crowd that started out have just got more expert in making an expense account Find out how many there were originally back there in some of these years, and what their individual account was then and also iu 1914. You understand what I want? The Witness. — Yes, sir. ; 171)2 Ijnvestigation of Public Sekvice C^ommissions C'olouel llay ward. — Do it iu tlie I'onii luost coiiveiiieut for you. The Witness. — Yes. Assemblyman Knight.— You mean by that a statement of the expense account of each one of the employees '( ■Colonel Hayward.— Hardly that. 1 simply want to show the comparative number between 1907-08 and 1913-14. Assemblyman Knight. — You ought to have, if tliey have got it, the items for each of the Commissioners and each of these other men. I suggest, in connection with what Colonel Hayward has just asked you to present, that we ought to have a separate state- ment of the expenses of each of these men that go to make up this $2'2,000. The Witness. — Of course, that will be a very long job, but we can get it out for you. Assemblyman Knight. — You can give it for each of the Com- missioners ? The Witness. — Oh yes, I think I have that now for the ]iresent Commissioners. Colonel Hayward. — We have that for the Commissioners. The Witness. — Would that cover what you had in mind? Assembly Knight. — Yes, I think so, with what the Colonel has already asked for. Colonel Hayward. — I want to see those who started out, and the increase in the number of men, and whether the average per man has remained about the same, or whether the average per man has increased. The Witness. — T can furnish that by Monday. Colonel Hayward. — That is all right. Mabtin S. Decker^ sworn as a witness, testified as follows: Examination by Colonel Hayward. Q. Mr. Decker, when did you come on the Public Service Com- Final Report of Joint Legislative Committee 1^93 Q. You were an appointee of Governor Hughes ? A. Yes, sir. Q. Then you have been reappointed once since then? A. 1910. Q. What month in 1910 were you reappointed? A. As of Feb- ruary 1. Q. So your second term expired this last month ? A. Yes, it has expired. Q. You are in the same situation up here as Mr. Ma'ltbie is down in New Yoi'k ? A. Yes, sir. Q. You two are the sole survivors of the original Hughes Com- mission? A. Yes, sir. Q. There is nobody that antedates you, antedates your service on the Commission? A. No, sir. Q. We found some of the Commissioners down in the First Dis- trict when we asked them something said " That was before I came on the Commission." That woundn't apply in any case to you up here, would it? A. I don't think so. Q. Because there was no Commission ? A. I don't see how it could. Q. We had up this morning, Mr. Decker, this case ISTo. 2'897, covering service on the street car lines in the City of Albany, and we found this morning while Mr. Barnes was on the stand that along about 1908 there began to come into this Commission com- plaints about the service here in Albany, from various officials, citizens and taxpayers' associations, etc. ; that that matter went along until November, 1912, when a Committee calling itself the West End Association of this city, finally succeeded in getting the the Commission to take it up ; we found that the Commission had a hearing on that matter ; — not that I mean to say it was up be- fore that, I am mistaken about that — we found that after these complaints came in, from 1908 until May, 1912, the Commission finally got around to make an order Which was made on the first day of May, 1912, ordering, among other things, the Inspector of Electric Railways to make the necessary examination and submit a full report to the Commission ; that he should begin work as soon as it was practicable and keep at it until he finished it ; and that the United Traction Company should file with the Commission a statement showing what improvements they intended to make. Now, it seems that your notice, although there is no record of it in your files, must have gone to the railroad, because they answered ' 57 1794 IlSrVESTIGATIOTiT OF PuBLIC SeEVICE COMMISSIONS it about the 25th of May — they were directed to answer on the 15th of May, but as a matter of fact, answered on the 25th. We found also this moring that the man who was to make this in- spection didn't hear anything about this order of the Commis- sion until about a year later, or around the following February of 1913, because on February 27, 1913, nearly a year after this order was made directing Mr. Barnes to make this inspection, Mt. Barnes writes a memorandum in which he refers to the com- munication of the Chairman to Mr. Sims, Vice-President of the United Traction Company, dated May 13, 1912. Who was Chair- man that year ? A. Mr. Stevens. Q. Then Mr. .Stevens had written this direction and given it to Sims, nearly a year later Mt. Barnes discovered it, and reading this letter from the Chairman to Mr. Sims, the Chairman says: " This Commission recently voted to have Mr. Barnes make a thorough investigation of all matters connected with the street car service in Albany, as soon as he has iinished some other work upon which he is now engaged." Mr. Barnes says he found no record of the Commission directing him to make any such investigation. And on that order is a pencil memorandum, which I show you, Mr. Decker, is that in your handwriting? (Paper shown wit- ness.) A. That is my writing. Q. In that letter you say the resolution was passed, but Mr. Barnes should come and " see me before doing anything, M. S. D." Do you Temember telling the Secretary that Mr. Barnes should not go to work on this job after the Commission had passed a resolution that he should ? A. Oh, no. Q. How was that ? A. I don't recall the connection now. Per- haps I could look it up for you later on. Q. Yes, I would be glad to have you go back as far as you want to. A. There was an order against the United Traction Company as I recall it prior to this resolution whifiagara frontier power sorely needed in that locality. There is no other power in sight, and this was one of the two divisions of export power men- tioned by President Taft when Secretary of War. Now, it was not only necessary to give the people of the Niagara frontier this addi- tional power, but in our judgment we deemed it best to hedge this corporation round with such restrictions that that power would not only be brought in and be distributed to consumers and not sold wholesale, but at lower rates than it had ever been before maini- tained in that section. I think that is what is accomplished in its opinion, if the Canadian-American Power Company complies with the stipulations fixed in the Commission's opinion. The only opposition to this application at the hearing, of any real conse- quence, was the Niagara Falls Business Men^s Association, and the only witness in behalf of that association stated clearly that he wanted cheap power. Now, I think that parts of the opinion, the written opinion having been referred to, if it meets with the judgment of the Committee, in its fairness of judgment, I think and I ask that this whole opinion be made part of this record, the majority opinion. Chairman Thompson. — It may be made a part of the report, as part of the record, the opinion as part of the record, and not as an exhibit. Final Report op Joint Legislative Committee 1821 Opiniokt Deckee, Chairman: The Canadian-American Power Corporation, a new domestic corporation, is before the Commission asking authority under sec- tion 68 of the Public Service Commissions Law to commence con- struction of its transmission and distributing system and to com- mence business, in the way hereinafter described. It is also ask- ing authority under section 69 of that law to issue certain com- mon and preferred stock, assigned by it as follows : Common stock : For qualifying shares $500 00 For acquisition of a power contract hereafter de- scribed 2,999,500 00 Preferred stock, 8 per cent, cumulative : For acquisition of stock and bonds of the I^iagara Falls Electrical Transmission Company 435,000 00 For construction purposes 500,000 00 Total $3,935,000 00 The question whether our consent under section 68 of the law should be granted depends principally upon the case involving the issuance of capital stock. This power company has been formed to bring into the United States at the Niagara frontier electrical current generated in Canada by Niagara river hydraulic power, and the generating company is the Electrical Development Company of Ontario, Ltd., of which the Toronto Power Company, Ltd., is lessee. Mr. S. R. Bertram and others entered into a contract with the Toronto Power Company and the Electrical Development Com- pany to take during a period of thirty years 46,000' horsepower of electric current produced by the seller on the Canadian side of the International boundary, for a stipulated price of $12.50 per horse- power, to receive it at the plant in Canada, and transmit it into the United States. This amounts to an aggregate yearly payment of $575,000, and to $17,250,000 for the thirty-year contract period. This amount must be paid, regardless of sale or non-sale by the purchasers. The contract was taken by and in the name of the Baltimore Utilities Company. Connected with this, it is 1822 Investigation" of Public Seevice Commissiows uaderstood, is the purchase for $435,000, as an agreed price, of the stock and bonds of the Magara Falls Electrical Transmission Company, which operates to some small extent, and controls the Niagara Falls Gas & Electric Light Company by ownership of capital stock. This latter company sells gas and electricity. The two companies last named own certain franchises and are possessed of certain rights which would be available to some extent to the Canadian-American Power Corporation in case it is permitted to engage in the distribution and sale of electricity in and about the Niagara frontier. This contract or agreement is between the Electrical Development Company of Ontario, and Bertram, Gris- com & Company. Objections have been raised to the " capitalization " of this $12.50 per horsepower contract for Canadian power. These objections are based upon a claim that the contract is not subject to capitalization at all, upon a claim that the capital stock allowed for acquisition of the contract should be so limited as not to fur- nish a basis for high rates, and incidentally, the license restrictions of the Canadian government are stated as having bearing upon the question. Governmental Limitations Upon the Export of Electric Power from Canada The Canadian government requires the taking out of a yearly license permitting exportation of Niagara electric power. Upon the limitations existing as to the exportation of electric power from Canada into the United States, it appears that for many years, under the so-called Burton Act, and by action of the Canadian government, a very large amount of Canadian-produced Niagara electric power has been and is now being imported into this coun- try at and about the Niagara frontier, and is being distributed for light and industrial power and railroad purposes within the State of New York in many places, embracing Syracuse to the east, the southwestern part of the State, territory south of Lake Ontario and Buffalo, and Niagara Palis in the west. The companies dis- tributing this imported power have issued stocks 'and bonds in very large amounts based upon their business of distributing Cana- dian power. This applicant is now seeking to enter the same field. Without going into details, it seems sufficient to say that the pro- EiJSTAL Report of Joint Legislative Committee 1823 hibition of exportation from Canada of ttis present electric power which now comes into this country would paralyze business and industry of many kinds and would deprive numerous localities of electricity for light. American-produced Niagara power is so far from supplying the vital needs of the sections of the State above described that the immediate results of such prohibition would plainly amount to a great public calamity. The Electrical Development Company enjoys rights obtained from the Canadian Park Commissioners, and which were granted under authority of the Ontario Provincial government, including the right to export electric current not to exceed 50 per cent, of its plant capacity. The form of securing a license yearly from the Dominion government is required by the Dominion law, but such license has been granted yearly to the other great producing elec- trical corporations of Canada, and no reason appears for appre- hension that any discrimination would be made against the Elec- trical Development Company or the Toronto Power Company, lessee. We have nothing before us but the suggestion that the Dominion of Canada may at some future time forbid this exporta- tion. This Commission must assume that international relations affecting so important a subject as the means of continuing great industries which have grown up in reliance upon the use of this imported power, and as well the interests of the Canadian pro- ducing companies themselves, have become fixed and subject only to such changes as will fully protect the great commercial and in- dustrial interests and rights now served by this power brought from Canada. The time has long since passed when governments proceed ruthlessly from pure national rashness or anger to destroy the settled accepted commercial relations and formally vested rights of persons and corporations. It is suggested that in the case of natural gas the Canadian government has prohibited exportation, and this is cited as bear- ing upon the matter, l^atural gas, a product of the earth, dimin- ishes in supply from use. The protection of local consumers against the exhaustion of gas wells in the future is a natural desire, and one which might well be the subject of prohibitive legislation. The Niagara river, draining the Great Lakes territory, will flow on continuously forever, despite its use for producing electricity. The fact that Canada has preserved its natural gas for its citizens, 1824 InvestiOatioh oe- Public Service Commissions and has provided for the exportation of Niagara electric power, demonstrates its recognition of the distinction here drawn. Cana- dian production of Niagara power may be and probably will be increased as demand in and out of Canada increases, and to the full extent possible the same must also be stated as to American- produced electric power. The controlling view here must be that this contract entered into by the parties in good faith and entail- ing obligations upon both the vendor and vendee, being now enforceable, will under conceivable relations between the two gov- ernments continue to be operative. If the contract involved the securing of special permission for the exportation of a volume of power in excess of the percentage of capacity allowed by Canada to other and very large producing companies for export purposes we would have a different and exceedingly doubtful situation, but this case presents, as to the governmental restrictions, no su'ch diflSeulty. The Price The price charged for this Canadian electric current is $12.50 per horsepower. The Hydro-Electric Commission of Canada has been enabled to contract for Canadian-produced Niagara electric power at a much lower figure, delivery taken at the producing plant, and this contract price runs down as low as $9 per horse- power, depending upon the quantity taken. For a considerable period such discrimination has been practiced in favor of Canada and against distributing companies in New York, and many claims have been made, sometimes under much excitement, that our people in New York, with its numerous industries, electric lines, and general power users, are suffering outrageously by comparison with the favored companies and users of power in Canada. It was not good business policy for our New York companies at the outset to take on these contracts at prices so high as to compel, in a city like Buffalo, twenty-five or thirty miles from the Canadian line, an intermediate company to pay so much as $16 per horse- power to supply part of the power users in Buffalo, and to make the Buffalo General Electric Company pay about $25 for such current, and base its prices to the public thereon. This Buffalo electric power situation resulted largely from the old practice of forming numerous companies with almost unlimited power of capi- Pinal Report of Joint tiEGisiATivE Committee 1825 talization to do a limited business within a limited territory. All sensible men must agree that taken as a whole the Buffalo and Jfiagara frontier electric development from Niagara power, be- cause unregulated at the outset, and practically not at all until 1905, has been an economic disappointment. The financial and corporation methods employed have been followed with high rates to the public at large. The price for Canadian power to the American company seems fixed only at such figure as the American company can accept and do business upon, not at a price comparable with that at which power in like quantities is sold for use in Canada. In saying this we refer to the producing companies and not of course to any regu- lation of the Canadian government. The difiiculty at present is that under existing law no way to change the discrimination ap- pears to exist. We are using all of the power made on the New York side, and all that has been brought from Canada, and the demand for more power in Western New York is insi'Stent and being urged with great force. No power, other than this par- ticular lot of 46,000 horsepower here represented for immediate or early use, is in sight. The industries and the people want it. Under these impelling conditions this Commission must do the best it can with an unsatisfactory general power situation in Buf- falo and vicinity. , The Cataract Power & Conduit Company has no true economic place in Buffalo. The Buffalo General Electric Company or some other corporation should be the sole distributing company. The Niagara Falls Power Company, both Canadian and American, should sell power to that company at the lowest price consistent with expense and investment and maintenance. The power before us in this contract should be sold to the Buffalo distributing com- pany, and in such sale there should be no need for the formation and operation of the Canadian- American Power Corporation. We go so far as to say that this particular contract should be re- formed, so that the price at the Electrical Development Company bus bars should be the same as the price charged there for like quantity of power used in 'Canada. If there shall not be a general change, and that soon, in the price generally paid to producing companies by distributing companies in and about the Niagara 68 1826 iNVESTiGATioisr OF Public Seevice Commissions frontier, the interposition of the United States government and the State government in the conservation of the great hydraulic power of Niagara for electric development and use by industries and cities and towns of New York may be confidently expected. When we say, as we have, that this contract price and other similar contract prices in Buffalo and vicinity are quite unsatis- factory, we speak, necessarily, from consideration of conditions which ought to exist. Unfortunately, we must deal with the situa- tion that has been forced upon us by the formation of companies and issuance of securities and the making of contracts before this law became effective. So far as we are advised, these existing contracts of which we have spoken are legal and enforceable. It is to be noted also in this ease that no existing company has stated at the hearings or has otherwise declared that it stands ready now to take over this contract and thus avoid the occasion for the operations of this applicant company as a new corporation in the Western New York electric field. On the other hand, there is justification for belief that some of the companies will desire to buy large parts of this very power from the applicant corporation. In such a peculiar situation the best that this Commission can do to protect the public is to prevent, so far as possible, the charging of high rates to its customers by this new company, and to notify all concerned now that the measure of reasonable rates for this new company to charge will be lower, and as much lower as justice will permit, than those which are charged by existing companies upon the Niagara frontier. This record shows a general shortage of electric power on the Niagara frontier, a failure on the part of existing companies to improve their service by securing such required additional power, and the rates charged by the producing companies tend to keep up the cost of electricity to the people. These facts constitute good cause for permitting another company to enter the field under regulations as to service and rates, and thereby diminish the short- age conditions that now exist, while providing a lower average rate basis. The Contract The Baltimore Utilities Company is a holding company con- trolled by Mr. Bertram and his associates, with which the contract has been made for the formal purpose of conveying the contract to Final Eepoet of Joint Legislative Committee 1827 the Canadian-American Power Corporation. The Baltimore com- pany cannot under the Public Service Commissions Law take and hold more than 10 per cent, of the stock of an electrical corpora- tion. It follows that if any stock shall be permitted to be issued on lacoount of this contract, such stock must go to the actual owners of the contract, and must thenceforth be held only by those author- ized under the law to hold stock of an electrical corporation. It is important before the proceeding to deal with the contract in and of itself to discuss and rule upon the nature of the contract, what its status would be in the future business of the applicant company, and to compare this contract and a stock issue on account thereof with our decision respecting a similar contract in the Cata- ract Power & Conduit case, brought against that company by the city of Buffalo, 3 P. S. C, 2d D., 656. As to the nature of the contract, it must be held that by such a contract the purchasers of this power acquired a valuable right. It confers for a stated consideration a right to demand and receive from the seller a great amount of electric power to be furnished daily for thirty years. Eights acquired under an assignable con- tract of this character are saleable for value. The purchasers, par- ties to the contract, have acquired the right to 46,000 horsepower, continuous for thirty years, at $12.50 per horsepower, per annum. They may bring it by a short transmission line into the United States at the International boundary. The price paid to the Cataract Power & Conduit Company under its contract is $16 per horsepower at the Buffalo line. These purchasers, parties to the contract, have undertaken to pay for this 46,000 horsepower, beginning January 1, 1914, the sum of $575,000 per year, or $17,250,000 during the thirty years. They say we have taken on this contract in the belief that the power so purchased by us can be sold at a very considerable profit, and part of that profit prop- erly comes to us as a reward for our energy and enterprise and the faith we have manifested in executing the contract and under- taking to pay the price stipulated in the contract. There is noth- ing to indicate that these purchasers are standing in the light of mer« brokers for the Electrical Development 'Company, the pro- ducer. It is stated definitely that this is a real contract conveying rights and exacting all of the State's considerations. The ques- tion is what, if any, payment should this Commission permit the 1828 Investigation op Public Seevioe Commissiow^" Canadian-American Power Corporation to make in connection with the assignment of this contract to it by the present holders. Much has been said in this case about " Capitalizing this Con- tract." l^o contract of this nature should be capitalized. Taking out stock to represent all estimated available profits is a practice not to be indorsed. The Canadian-American Power Corporation is indeed asking that very thing. It is computing the cost under this contract with the cost of production by steam power, and it is suggesting that the difference should indicate the proper basis of capitalization. In almost the same breath it says, in its presenta- tion of the matter, that such capitalization, stated to be about $7,000,000 should be reduced to $3,000,000. As was said so well by Commissioner Stevens in the Cataract Power & Conduit case, this reduction of claim from the logical one based on the higher sum to the lower based on an arbitrary estimate, gives up the whole argument for capitalization based on lower producing cost as com- pared with steam production. It confesses that the basis for " Capitalizing the Contract " rests not upon estimated steam power cost, and proceeds then to use the basis of obtainable profits, and so the argument on that basis is immediately taken up and urged. Neither argument is sound. The harnessing of the always flood- ing ISTiagara river to produce electric current for light and power is permitted by the State and the two nations to provide those necessities cheaply to the people. A Public Service Commission having our present power would have regulated the issuance of securities as well as the formation of companies in ways based- upon value for expenditure and the necessity of proposed com- panies, with resulting rates to the public for light and power much lower than those now prevailing on the Niagara frontier. To say now that steam power cost is the measure of hydraulic power capi' talization does not appeal to any sense of fair play or proper public protection. To say now that the applying company may take some arbitrary basis and claim that capitalization to that amount is justified by assumed possible profits is equally indefensible; This Commission abates not one jot its ruling or the basis of its ruling in the Cataract Power & Conduit case with reference to the contract there involved, or with reference to this contract as that ruling may have bearing here. In the Cataract case, the Commission was not asked to capitalizie EiWAL Report of Joint Legislative Committee 1829 A contract, but it was asked to add to the property value of the Cataract company's property the sum of $2,000,000 capital stock as representing the value of its contract for power with the Niagara Falls Power Company, and so thereby increase the value of its property upon which in that case we must allow a reasonable rate of return. That was exclusively a rate case. In this case we are not asked to do anything of that kind. All that this applicant is requesting here is that stock may be issued for the acquisition of this contract. Nothing is said about the inclusion of stock issued for that purpose in estimating the value of property devoted by this applicant to public use in some future rate case. All of the opposition to the issuance of stock for acquisition of the contract in this case is based upon the fear or belief that if stock is so allowed by this Commission for that purpose now, such stock must be added to other property value of the applicant company, when in a future rate case we may be called upon to value the property and fix a rate of return thereon by which to fix the company's charges for public service. Such fear or belief is entirely unfounded. If this business contract must be valued in a rate case and added to the value of property actually devoted to the public use, then every contract for supplies should be valued; then the company's contracts for the sale of light and power to its customers in such a case should be valued ; then, indeed, every specious plea for added valuations in rate cases should be granted. The amount of stock issued by a public utility company for its proper corporate purposes does not fix the rate of return or have anything to do with fixing the rate return. The amount of stock stated in shares merely represents the division of the ownership of the property into so many parts. It is also the basis of dividend declarations. It does not follow that the surplus earnings of a company must always be made to yield a given rate of return upon the shares. Fuhrmann vs. Buffalo General Electric Company, 3 P. S. C, 2d D., 739. We are dealing here with the issuance of shares for the acquisi- tion of this contract. In the Cataract case, supra, we dealt with ■already isstied shares as the claimed basis on the part of the com- pany to represent part of the property on which it is entitled to earn a return. We held in that case that shares of stock paid for 1830 Ibt^'estigation of Public Service Commissions the Locke contract with the I^iagara Power Company could not be included in and added to the value of property on which the rate of return was to be figured. The same reasoning would apply in a rate case involving this company. That, however, is very far from saying the Cataract company was not entitled to acquire the Locke contract at some price. If we were so to hold it would be entirely possible for astute individuals to take these contracts per- sonally, by actual agreement or by mutual understanding, and by concerting available production create such demand for industrial power as would render the public clamorous for supply at high cost and at the sacrifice of all approvable valuation principles. We do not think the applicant has sustained its claim for a pay- ment of $3,000,000 in its stock for these contract rights. For acquisition of the contract, or for reward to those who have given their expert services, who have expended money for organization of the company, who have taken on the risk of becoming contract- ing parties, both to the contract and the agreement to purchase the ISTiagara Falls properties by taking over stock control and debts, and who must defer their hope of profit until the new com- pany gets into full business operation, the true basis is what the new company can afford to pay and thereafter properly serve the public with current at relatively low rates, giving due considera- tion, within that limitation, to the view of a liberal reward to the projectors of this enterprise. Every electrical corporation has its cost of production, its trans- mission cost, its distributing cost, and its general operating ex- penses. After these are deducted from its gross operating reve- nues, its gross income results. From such income it must deduct its fixed and other interest charges, rentals and other general deductions, if any, and the remainder constitutes the corporate income for the period to which all of these items apply. This corporate income may be used for dividends and other corporate purposes. If the electrical corporation does not produce its own power but purchases it from some other company, the price it pays consti- tutes for it the acquisition or production cost. To this are added the transmission and distributing costs and general operating charges. That would be exactly the case with the Canadian- American Power Corporation. The contract it acquires will con- Final Eepobt of Joint Legislative Committee 1831 stitute a valuable right, and the moment the company engages in business under and with that contract, such contract becomes a business facility. It takes the place of the producing plant and represents the net cost of production. In this case there is no producing plant involved to be valued in a future rate case. What this company pays for acquiring the contract is represented in the rate of return upon its property which it has constructed and put into public use. The amount so paid in stock, or with cash real- ized from the sale of stock, is not a basis on which to figure a rate of return. It is a sum, which, as with all of its other stock, repre- sents the equity in shares of the company. When the company has left over a certain sum applicable to dividends, the stock issued for the acquirement of this contract and all of its other stock will benefit thereby. In no other way can the purchase price of the contract be considered. Our problem here is not at all a question of property value to be figured in a rate case. It is at what stock basis we will permit it to organize for business with the acquisition of this contra Western Union Tel. Co. within the State. Commission is informed that the petitioner has brought a proceeding of the same character in the Supreme Court. 3378 December 22, 1914. Eeopened. Petition for rehearing from Oswego River Power Transmission Company in connection with former ap- plication for permission to maintain and operate an electric trans- mission line upon State lands on the berme side of the Oswego canal in Fulton. This case was closed July, 1914. 3454 February 27, 1913. Made a formal case. Residents of Utica, Rome and other cities v. New York State Rys.— service. Now under investi- gation by Inspector Barnes. 3649 June 20, 1913. Received. May 21, 1914. Hearing closed. Residents of Glenford v. U. & D. R. R;— establishment of station. Ready for determination. May properly be decided with case SG&S and 4009. 3755 August 19, 1913. Made a, formal case. May 21, 1914. Hearing closed. Residents of Olive v. U. & D. R. R. — no station at Sand Hill. Ready for determination. May properly be decided with cases 3649 and 4009. 3937 3938- 3939 November 1, 1913. Received. November 23, 1914. Hearing closed. 3940 3941 3942 'Lewis V. New York Tel. Co. Seatori v. New York Tel. Co. Dagwell V. New York Tel. Co. Anderson v. New York Tel. Co. Cole V. New York Tel. Co. Griffiths V. New York Tel. Co. These are complaints as to telephone rate between New Hartford and Utica and Whitesboro and Utica. Briefs recently submitted. 4009 December 2, 1913. Received. May 31, 1914. Hearing closed. Resi- dents of Olive V. U. & D. R. R. Co. — -establishment of station. Ready for determination. May properly be decided with cases Nos. 3649 and 3755. 4116 January 31, 1914. Received. March 27, 1914. Answer filed. Village of Ft. Plain v. Glen* Tel. Co. — increased rates. Case necessarily held to await valuation of respondent's property in case No. 4176 (Edwards v. Glen Tel. Co.) and case No. 4184 (Griffin v. Glen Tel. Co.) 4146 February 21, 1914. Received. Association of Ice Cream Manufacturers V. Express Companies — charges and regulations. Briefs filed. Sim- ilar complaint is pending before the Interstate Commerce Commis- sion, and this case is properly held to await determination of that Commission. 4149 February 24, 1914. Received. Sterling Salt Company v. Erie R. R. Co. et al — discontinuance of joint rates. Awaiting determination- upon suspension of rates by Interstate Commerce Commission. 4152 February 26, 1914. Show cause order issued. Discontinuance of al- lowance to or joint rates with various short line railroads by connec- ting railroad common carriers. Opinion rendered on South Buffalo PiXAL Repokt of Joint Legislative Committee 1845 Case No. Railway rates. Other matters involved awaiting determination upon suspension of rates by Interstate Commerce Commission. 4176 March 12, 1'914. Received. March 5, IflHS. Next hearing. D. Ed- wards et al. V. Glen Telephone Co. — toll rates between Johnstown and Cloversville. Valuation of respondent's property involved. 4184 March 18, L914. Received. March 5, 1915. Next hearing. N. D. Griffin v. Glen Tel. Co. — increased rates, between Johnstown and Gloversville. Valuation of respondent's property involved. 4190 March Ifl, 1914. Received. Canajoharie Board of Trade v. Glen Tele- phone Co. — rates and service. Case necessarily held to await valuation of respondent's property in case No. 4176 (Edwards v. Glen Tel. Co.) and case No. 4184. (Griffin v. Glen Tel. Co.) 4299 May 14, 1914. Made a formal ease. New freight tariffs containing regulations and ■charges for spotting cars. Tariff suspended by this Commission. Held to await determination of same matter pending before the Interstate Commerce Commission. 4335 May 27, IS 14. Received. Lockport Light, Heat & Power Co. — ap- plication for permission to increase its rates. Hearing scheduled for July 23, 1914, but adjourned to a date to be fixed. Case waiting for advice from petitioning eompany as to readiness for hearing. 4403 July 8, 1914. Received. Mayor of Lockport v. Niagara, Lockport & Ontario Power Co. — rates for electricity. Hearing scheduled for October 30, 1914, but adjourned upon request of complainant's counsel. Case waiting for advice from complainant as to further hearing. 4449 August 7, 1914. Received. January 11, 1915. Hearing closed. Feb- ruary 20, 1915. Briefs to be filed. March 22, 1915. Time for filing briefs extended to United States Gypsum Company v. New York 'Central R. R. Co. and other railroad companies — rates. 4452 August 11, 1914. Received. January 25, 1915. Hearing scheduled but postponed. Residents of Fleischmanns v. Ulster & Dela,ware R. R. Co. — improvement of approaches to station and of station grounds. Case partially heard. Now held upon agreement of parties pending filing of proposed settlement. 4550 October 8, 1914. Received. January 15, 1915. Hearing closed. Com- plaint of Women's Club of New Rochelle in matter of terminal con- nection of Westchester Electric Railroad Company with New York, New Haven & Hartford R. R. station in New Rochelle. Conference between company officers. Mayor of New Rochelle and others to be had and Commission to be notified. 4705 January 5, 1915. Made a, formal case. February 1, 1915. Hearing closed. February 10, 1915. Brief of Syracuse Milling Company filed. February 11, 1915. Brief of company filed. Syracuse Milling Company and Watertown Milling Company v. New York Central Railroad Company, relating to milling in transit charges. 4612 October 30, 1914. Received. November 21, 1914. Answer of company received. Complaint of Henry Hirschberg of Newburgh against the Central Hudson Gas & Elec. Co. — rates. This case is ready for a hearing. 1846 Investigation of Public Seevice Commissions Case No. 4806 February 23, W15. Received. Closed. Petition Municipal Gas Co. of Albany to refund or set off against bills of certain customers cer- tain inadvertent overcharges for electricity. COMMISSIONEB HODSON 515 October 13, 1908. Received. 621 December 4, 1908. Received. 3614 May 28, 1913. Received. International Ry., N. Y. C, Erie R. R.— interchange of freight cars. Several hearings have been held and matter is awaiting' stipulation of interested parties. 3575 October 28, 1911. Received. 2712 December 28, 1911. Received. 2734 January 15, 1912. Received. December 11, 19'14. Hearing closed. Perkins v. Buffalo Gen. El. Co. These cases originated prior to the year 1913, and in one of which Cliairman Stevens held a hearing before that year and closed the case although no decision was made therein. At the earnest solicitation of the complainant the cases were grouped together and a hearing had, at which time it was announced that an order would be recommended to the Commission closing all the cases because the complaints as to rates and service antedated the decision in case 2590, settling all questiojis of rates and service of the respondent in Buffalo; except that there was one question in one of the cases regarding dangerous wires on a pole in front of complainant's premises. A new complaint has been made by Mr. Perkins and that case, having the same number as one of these three cases (2575), is now in the hands of Commissioner Irvine, and when it is determined all three of these cases may be closed. 2775 February 14, 1912. Received. June 1, 1914. Hearing held and ad- journed indefinitely. Hornell Mayor v. Hornell Gas Light Co. — natural gas supply in January and February, 1912. 3931 October 23, 1913. Made a formal case. June 1, 1914. Hearing held and adjourned indefinitely. Increased toll rates by Fed. T. & T. Co., N Y. Tel. Co. and Amer. T. & T. Co. from Hornell. At the hearing Mayor Nelson announced that he was not sure that he wanted to proceed any further with the cases, and asked that they be ad- journed indefinitely and until sucli time as he should bring them up. The complainant has never asked for another hearing and the Mayor has been repeatedly asked if the cases should be closed. 2905 May 8, 1912. Received. Smith et al. v. Int. Ry. Co. — inadequate sta- tion facilities in Loekport. A hearing was scheduled in this case a long time ago. At tliat time the representatives of the company announced intended improvements and extensions of their trolley facilities and suggested plans for a new station which would be built when such extensions and improvements were made. This seemed to be satisfactory to the complainants, temporarily, and the case was indefinitely postponed. The Commission is aware of various plans for extensions and improvements either on the part Final Report of Joint Legislative Committee 1847 Case No. of the Int. Ry. Co. or allied companies in and near the city of Lock- port. It is believed that when such improvements are made to the station facilities it will satisfy the complaints in this ease. 3981 November 19, 1913. Received. July 25, 1914. Hearing closed. Alex- ander - Town Board v. D., L. & W. — flagman at crossing. Improve- ments at the crossing have been agreed upon, but there is some diffi- culty in arriving at the details because of the procurement of adja- cent land. The status of the case is satisfactory to the complainants. 4079 January 3, 1914. Received. June 3, 1914. Hearing. Case held indefinitely. Binghamton - Mayor v. D., L. & W. — protection at gi-ade crossings. Considerable correspondence has been had concerning the closing of this ease and complainants' counsel has announced that all of the crossings are satisfactorily protected except Emma street and that they are about to install an electric bell at Emma street. As soon as this work is done the ease may be closed. 4147 February 15, 1914. Received. March 26, 1915. Hearing. F. M. Bradley of Barker v. N. Y. Tel. Co. ; number of subscribers on a party line. Possibility of adjustment being made at hearing. 4163 March 5, 1914. Received. July 31, 1914. Hearing. Angelica - Village Trustees v. Producers Gas Co. — service and charges. Parties seem to feel they can get together and adjust their own difiiculties. A settlement has not yet been reached but is probable. 4215 April 2, 1914. Made a formal case. June 4, 1914. Hearing and adjourned indefinitely. Groton - Village v. L. V. R. R. — protection at grade crossings. Negotiations to be had with railroad officials to the end that satisfaction of the complaint be obtained with recourse to the Commission. 4250 April 17, 1914. Received. January 29, 1915. Hearing held and adjourned to a date to be fixed. Buffalo Gas Co. v. Iroquois Nat. Gas. Co. — gas for illuminating purposes. Judge Kenefick and Louis L. Babcock, the attorneys in the case, were engaged in court in an important matter and could not proceed. Later date of hearing to be agreed upon. 436S June 17, 1914. Received. July 24, 1914. Hearing held and adjourned indefinitely. Health Commissioner Fronczak v. N. Y. C. — condition of milk platform, schedule of trains, etc. There will probably be no further complaint during the winter months, although the Health Commissioner has the matter in hand to procure the improvements before warm weather. 4405 July 11, 1914. Received. March 8, 1915. Hearing. Portage Road- Res. V. So. Shore Nat. Gas & Fuel Co. — rates. It is to be finally adjusted at the hearing. 4478 September 1, 1914. Received. February 13, 1915, 'Hearing held and closed. No. Tonawanda-City v. Niagara Lt., Ht. & Pr. Co. — refusal to furnish natural gas. The Commission is asked to order the com- Olosed pany to resume such service; the case also involves the price of gas and the condition of the mains and pipes in Tonawanda. The case will be closed at the hearing. 4497 September 10, 1914. Received. 1848 Investigation of Public Service Commissions Case No. 4565 October 15, 1914. Received. Ma/rch 1, 1915. Hearing. Perry -Trus- tees and Warsaw Board of Trade v. Pav. Nat. Gas Co. — discounts in price of natural gas. 4557 October 7, 1914. Received. October, 19, 1914. Answer received. lona- Res. V. N. Y. C. — proposed change in passenger train service. 4599 October 26, 1914. Received. December 7, 1914. New petition received superseding that of October 26. January 25, 1915. Answer of Int. Ry. received. January 28, 1916. Answer of Erie R. R. received. No. Tonawanda - City v. Erie — asking for the stationing of a flagman at Saeyers Creek Road grade crossing. 4620 November 11, Wi4. Received. November 18, 19'14. Answer received. Julius J. Eyring v. No. Buff. Nat. Gas Fuel Co. — charge for service pipe and meter connections. Correspondence with reference to this matter has been had and it is expected that it will be disposed of soon. 4623 November 11, 1914. Received. March 1, 1915. HeaTing. John B. Weber of Lackawanna v. Buffalo Southern Ry. Co. — asking for through car from Hamburg, etc. Report is to be made at the hear- ing as to whether such schedule of stops as the company agreed to shall be made permanent. 4654 November 25', 1914. Received. February 18, 1915. Hearing held and closed. Canaseraga - Res. v. Erie — as to taking off of certain trains. Case held open pending conference between parties. 4660 November 27, 1914. Received. December 16, 1914. Answer received. Adams - Bd. of Trade v. N. Y. C. — Touting of sleeping car from Watertown. 4664 November 30, 1914. Received. Dewitt C. Main — petition to operate auto bus line between Albany and Guilderland. 4674 December 7, 1914. Received. C. A. Keller — petition to construct electric plant in- Mannsville. 4679 December 16, 1914. Received. January 8, 19'15. Answer received. Wolcott - Res. V. N. Y. C. — proposed taking off of passenger trains. 4704 December 7, 1914. Received. February 27, 1915. Hearing. Buffalo -Res. V. International Ry. — rerouting of certain lines. 4717 January 13, 1915, Made a formal case. I. W. Colburn of Lock Berlin v. Empire United Rys. Inc. — as to shelter station not being heated. Early hearing requested. COMMISSIONEB EmMET 4272 April 30, 1914. Received. December 2, 1914. Hearing closed. Janu- ary 25, 1915. Respondent's brief filed. Patrons of the Albany Southern v. A. & S. R. R. — fares. Briefs are voluminous and the case ' is one involving the study of a large mass of figures. This study is nearly completed and expect to present conclusions with proposed final order to the Commission within the next two weeks. 4345 June 1, 19il4. Received. March 25, 1915. Answer due. Hudson P. Rose V. Westchester Ltg. Co. — faiilure to extend mains in village of Hastings. The company's answer has not yet been received, the time to answer having been repeatedly extended by written stipula- Final Repoet of Joint Legislative Committee 1849 Case No. tion between the complainants and respondent, which said stipula- tions are on file with the papers in the case. Case will be ready for a hearing as soon as Issue has been joined. 4428 July 25, 1914. Received. March 1, 1915. Answer due. James T. Lennon, Mayor of Yonkers, v. Yonkers El. Lt. & Pr. Co. — rate fot electricity. Owing to repeated stipulations between the complain- ants and respondents the case cannot be heard until issue has been joined. 4429 July 25, 1914. Received. March 3, 1915. Answer due. James T. Lennon, Mayor of Yonkers, v. Westchester Ltg. Co. — rates for gas. Whenever the parties are ready to proceed the case will be heard and determined. 4502 September 11, 1914. Received. Petition Northern Adirondack Power Co. for consent to lease for two years the works and system of Edward C. Crosby. The president of the company informed the Commission last September that the franchise had not yet been found and asked that nothing further be done in the matter until further advice. The case is still being held awaiting the receipt of such advice. 4653 November 24, 1914. Received. February 19, 1915. Hearing held and closed. The L. I. R. R. Co. — complaint of the Progress Society of the Rockaways as to taking off of passenger trains. It developed when issue was joined that a question of joint jurisdiction with the First District was involved. It then transpired that a similar case was before the First District Commission and had been decided in favor of the complainants, and that a motion was now pending for ■a, reopening of the case. It was stipulated by respondent at the hearing that a decision in the pending case must await the determi- nation of the motion for a reopening of the First District case. If the motion is denied the company will comply with the request of the Progress Society, thus eliminating any action by this Commis- sion. This case may, therefore, be regarded as closed although no formal order of closing has yet been entered. 4667 December 5, 19a4. Received. March 4, 1915. Hearing. N. Y. C. & H. R. R. R. Co. — complaint of Park Hill Residents Association of Yonkers as to passenger train service on the New York & Putnam Div. The case promises to be an important one, and it is regarded as doubtful whether, in justice to the various interests involved, it will be possible to close without taking a very considerable amount of testimony. There is no expectation that it will be possible to close the case at the end of the next hearing. 4711 January 7, 1915. Received. March 2, 1915. Hearing. Red Hook Light & Power Co. — complaint of residents of Red Hook as to illu- minating power, prices, etc., for electricity furnished. Ready for a hearing. 4742 January 22, 1915. Received. February 9, 1915. Answer of company received. D. & H. Co. — complaint of Herbert S. Loud as to fare on trains crossing Troy and Green Island bridge. 4790 February 6, 1915. Received. N. E. R. R. Co. — petition to discontinue its Edgewood station, Suffolk county. 1850 Investigation of Public Service Commissions Case No. 4803 February 15, 1915. Received. Long Beach Power Company — com- plaint as to price charged by it for electricity to residents of Long Beach and to the village. COMMISSIONEK IEVINE 331 October 20, 1914. Reopened. December 18, 1914. Hearing closed. Petition N. Y. C. that flagman may be discontinued between Roches- ter and Windsor Beach (R., W. & 0. Div.). Hearings were held November 19 and December 18, 1914. The case was referred to Mr. Vanneman. He has made report and final order will be proposed in a few days. 2484 August 21, 1911. Made a formal case. June 29', 1914. Heaa-ing closed. Res. Otego v. Del. & Otsego L. & P. Co. — negotiations have been in progress which would seem to lead to a satisfactory settle- ment. If the settlement cannot be brought about within a very short time an order will be entered recommending the closing of the case. 2533 November 2, 1914. Reopened. January 8, 1915. Hearing held and adjourned to later date to give petitioner opportunity to submit further data. February 26, 1915. Hearing scheduled but adjourned. Empire United Rys. Inc. — petition under sec. 184 Railroad Law for approval of a declaration of abandonment of a portion of its con- structed route. Further data was recived February 3 and the oppo- nents of the application are now considering whether they desire to oflFer anything further. 2830 March 19, 1912. Received. March 3, 1913. Hearing closed. Wood- ruff Hotel Co., Watertown, v. N. Y. Tel. Co. — rates. Case was held to await decision in case of State Industrial School against the N. Y. Tel. Co. Since then it has been held in an effort to procure an equitable settlement. 4155 February 27, 1914. Received. ) ^^ , „,„,.„. , ^ An-n T TO Tm^ T. -J ^November 6, 1914. Hearing closed. 4372 June 18, 1914. Received. J ° 4386 June 24, 1914. Received. August 1, 19'14. Answer received. 4418 July 20, 1914. Received. 1 „ ^, ^ ^ - , j. i A AC, A Tiooim^ -D • J yBoth cases set down for oral argument at 4424 July 23, 1914. Received. J Albany. Complaints against the Mountain Home Telephone Com- pany — rates and other matters. Complainants in Case 4418 sought relief not within jurisdiction of Commission; they have agreed to present case on rates and service and ask that no hearing be held until after March 15. Complainants in Case 4386 do not desire to proceed until the determination of a case pending in the Supreme Court. Case 4424 is to be heard with 4418. After Cases 4424 and 4418 are heard an order will be entered recommending that Case 4386 be closed unless the complainants are then ready to proceed, and that the pending cases be consolidated for the purpose of receiv- ing the telephone com,pany's evidence which will apply to all. 4305 Nov. 30, 1914. Reopened. February 17, 1915. Hearing held and closed. Briefs have been filed. Geo. L. A. Quirin et al. v. Western N. Y. & Pa. Tr. Co. — as to changing location of tracks in Olean ; and Charles A Mitchell et al. against such change. The case was adjourned to Albany, February 17, for the purpose of arguments before the Commission, a serious question of jurisdiction involved. Final Report of Joint Legislative Committee 1851 Case No. 4472 August 20, 1914. Received. January 18, 1915. Last hearing. Feb- ruary 23, 1915. Brief of company received. Henry iSheehan v. Addison Gas & Power Company— price of natural gas. 4592 October 13, 1914. Received. January 18, 1915. Hearing. February 23, 1915. Brief filed. Addison Gas & Power Co. — petition under section 68 of the P. S. C. Law for approval of amendment to its local franchise, etc. The cases were heard at the same time (Janu- ary 18) and the hearing adjourned on the application of J. 0. Sebring, who appeared for Mr. Sheehan, to February 19 in order that he might determine whether he wanted to introduce further evidence. He pays no attention to letters on the subject and notice has been sent him that the hearing will be closed and the case decided. 4479 September 2, 1914. Received. November 12, 1914. Brief of Erie R. R. filed. Bd. of Trustees of Elmira Hts. v. Erie R. R. — protection of 14th and 11th streets grade crossings. Awaiting brief of complainant. 4586 October 19, 1914. Received. December 2, 1914. Hearing closed. Brief to be filed within three weeks. Village of Weedsport — peti- tion under section 68 of the P. S. O. Law for permission to erect an electric plant. On calendar for discussion. 4602 October 27, 1914. Received. January 6, 1915. Hearing closed. C. Ougheltree of Poughkeepsie v. N. Y. C. — passenger fares. Company ordered to furnish further information which has not yet been received. 4641 November 17, 1914. Received. January 29, 1915. Hearing closed. Ogdensburg Bus. Men's Ass'n v. N. Y. C. — taking off of passenger trains between Ogdensburg and Dekalb Junction. Company to fur- nish certain data. 4647 November 23, 1914. Received. February 19', 1915. Hearing scheduled but adjourned. Colgrove & Schoonover — operate bus line. Hear- ing adjourned. 4649 November 23, 1914. Received. January 26, 1915. Hearing closed. Willsboro, Essex County -Res. v. D. & 'H. — train service. The com- pany has offered to propose a plan satisfying the complaint. Case held open awaiting its receipt. Company has been asked to expedite matters. 4698 December 24, 1914. Received. February 3, 1915. Hearing closed. Waterford - Bd. of Trustees v. D. & H. — light at station and pas- senger train service. Order will be recommended in a few days. 4716 January 12, 1915. Received. January 23, 1915, Answer received. Hamilton - Res. and Business Men v. N. Y., O. & W. — freight train service. A hearing will be set as soon as the foregoing pending cases can be handled. 4745 January 25, 1915. Received. February 9, 1915. Answer received. Jamestown, Westfield & Northwestern R. R. Co. — complaint of Schultz & Lyne et al. as to freight rates. Early hearing requested. 4787 January 28, 1915. Received and referred to Highway Commission. Owen J. Jones — petition to operate an auto bus line between the city of Rome and Lake Delta. Ready for a hearing. 1852 Investigatiobt of Public Service Commissions'' The Commission Case No. Approval of Franchises 3829. September 18, 1913. Received. South Shore Gas Co. — approval of franchise town of Islip, and proposed lease of franchise by petitioner to the Suffolk Gas & Electric Light Company. On September 25, 1913, the petitioner was advised by the Chief of the Capitalization Bureau that a hearing in the matter could not be had until certain lawsuits brought against the South Shore Gas Company by a Mr. Shiebler had been concluded, and on June 8, 1914, Commissioner Decker confirmed this in a letter to the treasurer of the petitioning company. Telephone Rates 4089 January 14, 1914. Made a formal case. February 27, 1915. Hearing. Investigation of rates and charges by the New York Telephone Com- pany within the city of New York. Gas and Electric Rates 4346 June 1, 1914. Received. March 25, 1915. Answer due. Time extended by stipulation. Mayor of Mt. Vernon v. Westchester Ltg. Co. — rates for gas and electricity. 100 January 27, 1915. Petition for rehearing. 474 1 ,„„ y March 11, 1915. Hearing. 1554 "I Petition of residents of Portchester et al. v. Westchester Ltg. Co. for 1584 1 rehearing. Transfer of Stock 4521 September 28, 1914. Received. March 5, 1915. Hearing. Petition of Pavilion Natural Gas Co. and Pittsburg Gas & Oil Co. as to transfer of stock. ■ ,, Separation of Plant 4640 November 7, 1914. Received. January 7, 1915. Hearing closed. February 23, 1915. Briefs filed. Joint petition of Lima-Honeoye Light & R. R. Co. and Lima-Honeoye Elee. Lt. & R. R. Co. for separation of lighting plant and railroad. Construction 4555 October 8, 1914. Received. ■ March 1, 1915. Hearing. Petition of Niagara River & Eastern R. R. Co. under sections 9 and 89 of the R. R. Law and section 53 of the P. S. C. Law as to construction. 4784 February 4, 1916. Received. Petition of Elmira Water, Light & R. R. Co. for permission to construct wires, conductor poles, pipes and fixtures for transmitting and furnishing electricity in town of Chemung, Chemung county, etc. . , Question of Transfers 4702 December 29, 1914. Received. Feb. 4, 1915. Answer received. March 17, 1915. Hearing. Complaint of the Civic League of Albany against United Traction Company and Schenectady Railway Company aa to transfers. Final Report of Joint Legislative Committee 1853 Case No. Consolidation 3306 January 26, 1915. Reopened. February 4, 1915. Conference. Joint petition of New York, Westchester & Boston Ry. Co. and Westchester Northern R. R. Co. for consolidation. Telephone Contracts 4369 June 16, 1914. Made a formal case. June 16, 1914. Order issued by Commission to telephone corporations. Matter of the termination by telephone eorporations of contracts in existence iSeptember 1, 1910. Railroad Equipment 4794 February 10, 1915. Order issued by Commission that investigation bo made. February 24, 1915. Hearing held and closed. In the matter of Lehigh Valley R. R. Co.'s locomotive equipment. Street Railway Matters 3501 March 28, 1*13. Made formal ease. March 10, 1915. Conference. Street Ry. Employees Ass'n v. Int. Ry. Co. and other companies as to vestibuling of cars, air brakes, and other matters. Passenger Fares 4807 February 23, 1915. Made formal case. March 8, 1915. Hearing, In the matter of increases in commutation fares by the Long Island R. R. Co. FoBMAL Cases in Which Either (a) Answers have not been received, or (b) Complainants and respondents have requested that they be held open, or (c) The Commission is awaiting report of inspectors, or (d) The Commission is awaiting advices from Highway Department or other public body, or (e) The Commission has issued general orders on its own motion and as to which some future action may be required. 4600 October 26, 1914. Received. Goldsmith & Tuthill et al. v. The Long Island R, R. Co. as to increase in freight rates. 4607 October 29, 1914. Received. April 12, 1915. Answer due. Time extended by stipulation. Edward Stetson Griffing as Mayor of New Rochelle V. Westchester Ltg. Co. as to prices for gas and electricity. 4725 January lis, 1915. Received. January 25, 1915; New petition figjfins*; Genesee & Wyoming R. R. filed. February 5, 1915. Answer of Penna. R. R. received. February 23, 1915. Supp. order No. 1 issued by Commission. Sterling Salt Co. v. Penna. R. R. Co. — rates. 4755 January 28, 1915. Received. February 25, 1915. Answer received. Complaint of City of Gohoes v. New York Telephone Company as to rates, etc. 4766 January 30, 1915. Received. February 25, 1915. Answer received. Complaint of Village of Waterford against New York Telephone Com- pany and American T. <& T, Co. as to rate9. 1854 Investigation of Public Service Commissions Case No. 4793 February 11, 1915. Received. March 15, 1915. Answer due. Carrol et al. V. N. Y. C. — rates on Fluxing stone. 4804 February .., 1915. Received. Complaint of 28 purchasers against Eden Gas & Fuel Co. as to price of service. 4805 February 17, 1915. Received. Complaint of City of Watervliet against N. Y. Tel. Co.— rates. ■Street Railway Matters 2371 November 24, 1914. Reopened. In the matter of transit conditions in the city of Syracuse and adjacent territory. Petition of New York State Railways for an extension of time in which to comply with subdivisions J, E and F of section 10 of order of May 25, 1911. Under investigation by Inspector Barnes. 4670 December 7, 1914. Received. March 1, 19il5. Answer due. Com- plaint of city of Auburn against Auburn & Syracuse Electric R. R. Co. as to diminution in street car service. 4740 January 20, 19il5. Received. February 8, 1915. Answer of company received. February 13, 1915. New petition received. Complaint of Board of Trustees of St. Joseph's Cemetery against Auburn & Syra- cuse Elec. R. R. Co. as to service. 47&1 January 29, 1915. Received. March 3, 1915. Answer due. Com- plaint of residents of New York Mills and Utica against New York State Railways, as to passenger car service between Utica and New York Mills. Steam Railway Matters 4598 October 26, 1914. Received. Complaint of the city of North Tona- wanda asking for the stationing of flagmen at two highway grade crossings during the night. 4671 December 10, 1914. Received. Complaint of residents of Elgin, Ulster county, against Central New England Ry. Co., asking for shelter station. 4759 January 28, 1915. Received. February 25, 1915. Request by attorney for complainant that no hearing be set for one month. Complaint of Cornelius Mealey et al. against Hudson Valley Ry. Co. as to increase in passenger fares, reduced fare books, etc. 4767 January 30, 1915. Received. February 19, 1915. Answer received. Complaint of residents of Hyde Park, Dutchess county, against New York Central R. R. Co. as to passenger train service at night. In view of answer the complainant has been asked if it satisfies complaint. 4816 February 19, 1915. Received. N. Y. C. R. R. Co.— complaint of the Randall Grape Juice Co. of Ripley as to l,CO0-mile book good east of Buflfalo, not being good west of Buflfalo, and Lake Shore having been consolidated with the Central. Construction 4718 January 11, 1915. Received. Petition of Albany Southern R. R. Co. under section 68 of the P. S. C. Law for permission to construct in the town of East Greenbush, Rensselaer county, electric line for transmitting and furnishing electricity to the public, etc. FiKAi, Eepoet of Joint Legislative Committee 1855 Case No. Auto-Bus Applications 4668 December 4, Wli. Received and referred to Highway Commission. Petition of Everett 0. Wager to operate auto-bus line between Troy and Bennington, Vt. 4684 December 19, 1914. Received and referred to Highway Commission. Petition of Stephen C. Goldsmith to operate auto-bus line between Albany, Slingerlands and other places. 4786 January 30, 1915. Received and referred to Highway Commission. Petition of Clyde T. Griffith to operate an auto-bus line between Albany, Slingerlands and other places. 4788 January 22, 1915. Received and referred to Highway Commission. Petition of John J. Neil to operate an auto-bus line between Geneva and Newark via Phelps. Miscellaneous Matters 4546 October 7, 1914. Made a formal case and order issued by Commission. In the matter of quarterly reports of Railroad Corporations and Street Railroad Corporations. This is a Commission matter. 4776 January 18, 1915. Order by Commission on its own motion. In the matter of the proper distribution of expense due to changes in con- sumers' apparatus made necessary by change in form of electric cur- rent supplied by operating companies. 4789 February 5, 1915. Received. March 2, 1915. Answer due. Complaint of Joseph P. Covert of Highland v. Central New England Ry. Co. as to placing of freight cars at Highland station for unloading. Matters Before Judge Hale 4547 October. 7, 1914. Court order filed. Buffalo & Susquehanna Ry. — suspension of service between Wellsville and Buffalo by court order. 4659 November 25, 1914. Received. In the matter of failure and neglect on the part of the Walton Home Tel. Co. to furnish information required to complete its annual report for 1913. Report filed by Mr. Hasbrouck and order issued by Commission directing its counsel to begin proceedings against company. 2205 August 26, 1914. Reopened. Residents of Dexter v. Jefferson County Tel. Co. and New York Tel. Co. relative to toll charges between Dexter and Watertown. On November 2, 1914, the New York Tel. Co. served on the Commission a writ of certiorari and copy of peti- tion of Supreme Court and of the order of the Supreme Court — service admitted by Judge Hale. 2590 Complaint of Louis P. Fuhrman as Mayor of the city of Buffalo against Buffalo Con. Elec. Co. and the Cataract Power & Conduit Company as to price charged for electricity. This case has been closed several times. On September 12, 1914, on stipulation of coun- sel for the city of Buffalo, and for the Commission, an order was entered discontinuing the appeal of the city of Buffalo from the order of the Special Term of the Supreme Court dismissing the writ of certiorari because not sued out within four calendar months of the date of the Commission's order sought to be reviewed. 1856 ■ iNvEsTiflATiOir OF PuBLrc Service Commiissions^ Case No. 2897. May 1, 1912. Made a formal case. July 21, 1914. Hearing closed. December 11, 1914. Order issued by Commission. January 8, 1915. Answer of company received. Albany investigation — United Trac- tion Company. 4333 May 26, 1914. Received. Jean M. Savercool v. Ovid Elec. Co. et al. Formerly one of Commissioner Irvine's oases, but now in the hands of Judge Hale for prosecution. 4404 July 10, il914. Received. October 14, 1914. Closed. November 9, 1914. Reopened. December 7, 1914. Closed. February 10, 1915. Writ of certiorari served on Commission. Petition of the trustees of the village of Bath under section 68 of the P. 'S. C. Law for a certificate of authority to build, maintain and operate works and systems for supplying electricity for light to members of the public as well as for municipal purposes. The following are matters instituted by the Commission and not included in list of open cases : 1502 Investigation of a proper quality standard for artificial gas. 4152 Discontinuance of allowance to or joint rates with various short line railroads. 4299 New freight tariffs containing regulations and charges for spotting cars. 4369 Matter of the termination by telephone corporations of contracts in existence September 1, 1910. 4546 In the matter of quarterly reports of railroad and street railroad corporations. 4776 In the matter of proper distribution of expense due to changes in consumers' apparatus. 4794 In the matter of the Lehigh Valley R. R. Company's locomotive equipment. The following are cases which have been closed but referred back to the Commission for xehearings, amendments, etc., and not considered as open lOO, 474, 553, 1554, 1584 Westchester Ltg. cases. 331 Commissioner Irvine. N. Y. C. petition that flagman be discontinued. 1272 Commissioner Decker. Petition N. Y. C. for rehearing to discontinue Mahopac Falls as a station. 1284 Commissioner Decker. Petition Great Bear Lt. & Pr. Co. to extend its lines. 2371 Unassigned. Transit conditions in Syracuse. 2533 Commissioner Irvine. Petition Empire United Rys. for declaration of abandonment. S306 The Commission. Joint petition N. Y., Westchester & Boston Ry. and Westchester & Northern R. R. for consolidation. 3378 Commissioner Decker. Petition Oswego River Pr. Trans Co. for rehearing. Pinal Report of Joint Legislative Committee 1857 The following are cases which have been closed but referred back to Judge Hal€ on writs, failure to furnish information, etc., and not considered as open cases : 2205, 2590, 2S97, 4547, 465fl, and 4404. (See previous sheet of matters before Judge Hale.) EXHIBIT No. 38 STATE OF NEW YORK Public Sebvice Commission — ^ Second District Division of Capitalization February 28, 1915. Memorandum The following is a condensation of the list of cases hereto attached: No. of Cases To Whom Referred 4 Commission for final decision, hearing, etc. 13 Division of Capitalization which are now in progress with the excep- tion of three which are held until examiners are available to begin examination of companies' books and accounts. 4 Engineers for examination of physical property, etc. 8 Company for further information, etc. *29 Total. Received and reopened during month per Appendix B 7 Closed during month per Appendix C 9 There are held open for record purposes for compliance with stipulation, etc., as detailed in Classes E, F and G — 38 cases. Respectfully, WM. H. TAAFFE, Chief Division for Gapital\^(i,tion. CLASS A Awaiting decision or hearing by the Commission: Case No. Applicant To Whom Assigned 3427 Shiebler vs. Suffolk Gas & Electric Co . . . Decker — Final decision. 4749 Cataract Power & Conduit Co Hearing. 47S5 International Railway Co Chairman. 4817 'Columbia Telephone Co Unassigned. CLASS B Cases under or awaiting examination by the Division: Case No. Name and Status Character 1080 Long Island Railroad Co Funding. Supplemental petition filed August 22, 1913, examiner's report being tran- scribed. *Thi8 includes one case which is shown as two, being assigned to two different classes. 59 1858 Investigation of Public Seevice Commissions Case No. Name and Status Character 2'690 Mohawk Gas Co Reimbursement. Now under examination at office of com- pany. 2691 Schenectady Illuminating Co Reimbursement. Now under examination at office of com- pany. 3921 Hannawa Falls Water Power Co Reimb. & N. Const. Now under examination at office of com- pany. 3973 Malone Light & Power Co Reimb. & N. Const. Awaiting preparation of final report. 4141 Nassau & Suffolk Lighting Co Reimb. & N. Const. Examiner's report being transcribed. 4367 .Sodus Gas & Electric Light Co Funding. Awaiting preparation of final report. 4378 Rochester Railway & Light Co Funding. Now under examination at office of com- pany. 4419 Wayne Telephone Fdg. & Reimb. Examination of accounts begun; tem- porarily suspended. 4529 iGranville Electric & Gas Co New Construction. Examiner's report being prepared. 4709 Freeport Railroad Co Funding. Awaiting examination. 4808 Chuctanunda Gas Light Co Reimbursement. Awaiting examination. 481 Empire Coke Co Fdg. & N. Const. Awaiting examination. CLASS C Referred to Engineers: 3921 Hannawa Falls Water Power Co Electrical. 4«28 Snyder Gas Co Gas. 4701 Catskill Mountain Telephone Co Telephone. 4809 Geneva, Seneca Falls & Auburn Railroad Co Transportation. CLASS D Waiting for the petitioner: Case No. Applicant Character 2683 Schenectady Railway Co Reimbursement. Company preparing detail of fixed capital. 2862 Middleport Gas & Electric Co Fdg. & N. Const. Waiting for answer to correspondence. 2983 Westchester Lighting Co Fdg. & N. Const. Waiting for answer to correspondence. 3485 Ithaca Gas Light Co., et al Fdg. & N. Const. Company considering proposed final re- port. Ftxal Report oi'' Joint Legist^ativk Cojijiittee 1859 Case No. Applicant Cluiractcr 3500 Delaware & Hudson Co Reiuiburseraent. Company considering proposed final re- port. 4080 Albany Southern Railroad Co Reimbursement. Company considering proposed final re- port. 4153 Federal Telephone & Telegraph Co New Construction. Held at request of company. 4515 Saugertles Gas Light Co Fdg. & N. Const. Company considering proposed final re- port. CLASS E Closed as to authorization of securities but held open until stipulation is complied with, books are corrected pursuant to order, etc. (Not included in tabulations.) Case No. Name and status 1332 East Greek Electric Light & Power Co. Report of Electrical Engineer referred to company. 1497 Westchester Street Railroad Co. Company to file distribution of Fixed Capital. 2104 Buffalo Creek Railroad Co. Proposed order combining previous authorizations under consideration by Commission. 2434 Upper Hudson Electric & Railroad Co. Company preparing analysis of accounts. 2684 New York State Railways. Company complying with stipulation. 2704 Buffalo General Electric Co. Allocation of Fixed Capital under cor- respondence. 3109 International Railway Co. Bound copy of additional Fixed Capital details to be furnished. .?301 Rockland Light & Power Co. Proposed closing order under considera- tion by the Commission. 3342 ]>epew & Lancaster Light, Power & Conduit Co. Waiting for opening entries. 3345 Consumers Natural Gas Co. Waiting for company. 3424 Central New England Railway Co. Awaiting preparation of final report. 34G0 Empire United Railways, Inc. Waiting for company to make journal entries. 3490 Long Island Gas Corp'n. Form of mortgage in correspondence. 3618 Peoples Gas & Electric Co. Final report being transcribed. 3668 Halfmoon Light, Heat & Power Co. Company preparing analysis of accounts. 3915 Hornell Electric Co. Waiting for company. 4008 Orange County Traction Co. Final report being prepared. 4013 Buffalo, Rochester & Pittsburg Railway Co. Company considering proposed final report. 4082 Empire Gas & Electric Co. Waiting for affidavit of journal entries and filing of special report. 4104 Central New York Gas & Electric Co. Waiting for aflidavit of journal entries and filing of special report. 1860 iNVESTIGATIOISr OF PuBLIC SeEVICE COMMISSIONS Case No. Name and status 4140 New York Central & Hudson River Kailroad Co. Discussion of accounting methods to be had. 4165 Wayland-Steuben Power iCo. Company to amend its distribution of Fixed Capital. 4212 Elmira Water, Light & Railroad Co. Supplemental analysis of Fixed Capital under examination. 4270 Federal Telephone & Telegraph Co. Company to file inventory. 4340 Jamestown, Westfield & Northwestern Railroad Co. Company to file inventory. 4359 Batavia Traction Co. Company's proposed opening entry awaiting revision by Div. of Cap. 4365 Lehigh Valley Railway Co. Report of Examiner being prepared. 4387 Salmon River Power Co. Under examination at office of company. 43S4 Randolph Light & Power Co. Waiting for answer to correspondence. 4439 Home Telephone Co. of Jamestown. Awaiting examination. 4442 Darien Telephone Co. Company to accept order and file affidavit of journal entries. 4519 Northern New York Power Corp'n. (Columbia Mills.) Company to accept order and file special report. 4642 St. Lawrence River Power Co. Awaiting examination. 3731 Federal Telephone & Telegraph Company. Proposed order under con- sideration by Commission. CLASS F Reopened to secure reports as required in the order (not inclvided in tabulations) : 642 Delaware & Otsego Light & Power Co. Final report being prepared. 1441 Elizabethtown Terminal Railway Co. Hearing to be held in Elizabeth- town. 390'1 Canadian-American Power Corporation. Hearing to be held. CLASS G Non-capitalization cases assigned to the Division (Not included in tabulations.) : 4539 St. Lawrence River Power Co. To be held until accounts of petitioner and the Hannah Falls Water Power Oomipany have been examined in connection with other pending cases. APPENDIX A List of all open capitalization cases: Class Case No. Applicant Delaware & Otsego Light & Power Co. Long Island Railroad Company. East Creek Electric Light & Power Co. Elizabethtown Terminal Railroad Co. Westchester Street Railroad Co. Buffalo Creek Railroad Company. Upper Hudson Electric & Railroad Company. F 642 B lose E 1332 F 1441 E 1497 E 2104 E 2434 TiwAL Eepoet of Joint Legislative Committee 1861 Class Case No. Applicant D 2683 Schenectady Railway Company. E 2684 New York State Railways. B 2690 Mohawk Gas Company. B 269il Schenectady Illuminating Company. E 2704 Buffalo General Electric Company. D 2862 Miidleport Gas & Electric Company. D 2983 Westchester Light Comipany. E 3109 International Railway Company. E 3301 Rockland Light & Power Company. E 3342 Depew & Lancaster Light, Power & Conduit Company. E 3345 Consumers Natural Gas Company. E 3424 Central New England Railway Company. A 3427 Shiebler v. Suffolk Gas & Electric Light Company. E 3460 Empire United Railways, Incorporated. D 3485 Itha,ea Gas Light Company et al. E 3490 Long Island Gas Corporation. D 3500 Delaware & Hudson Company. E 3618 Peoples Gas «& Electric Company. E 3731 Federal Telephone & Telegraph Company. E 3668 Halfmoon Light, Heat & Power Company. F 3901 Canadian-American Power Corporation. E 3916 Hornell Electric Company. B-C 3921 Hannawa Falls Water Power Company. B 3973 Malone Light & Power Company. E 4008 Orange County Traction Company. E 4013 Buffalo, Rochester & Pittsburg Railway Company. D 4080 Albany Southern Railroad Company. E 4082 Empire Gas & Electric Company. E 4104 Central New York Gas & Electric Company. E 4140 New York Central & Hudson River Railroad Company. B 4141 Nassau & Suffolk Lighting Company. D 4153 Federal Telephone & Telegraph Company, E 4165 Wayland-Steuben Power Co. E 4212 Elmira Water, Light & Railroad Company. E 4270 Federal Telephone & Telegraph Company. E 4340 Jamestown, Westfield & Northwestern Railroad Company. B 4357 Sodus Gas & Electric Light Company. E 4359 Batavia Traction Company. E 4365 Lehigh Valley Railroad Company et al. B 4378 Rochester Railway & Light Company. B 4387 Salmon River Power Company. E 4.394 Randolph Light & Power Corporation. B 4419 Wayne Telephone Co. E 4439 Home Telephone Co. of Jamestown. E 4442 Darien Telephone Co. D 4515 Saugerties Gas Light Co. E 4519 Northern New York Power Corporation et al (Columbia Mills). B 4529 Granville Electric & Gas Company. (r 4539 St. Lawrence River Power Co. 4628 Snyder Gas Co. B 4642 C 4701 B 4709 A 4749 A 4795 B 4808 C 480« B 4810 A 4817 1862 Investigation of Public Service Commissions Class Case No. Applicant St. Lawrence River Power Company. Catskill Mountain Telephone Co. Freeport Railroad Co. Cataract Power & Conduit Company. International Railway Co. Chuctanunda Gas Light Co. Geneva, Seneca Falls & Albany Railroad Co. Empire Coke Company. Columbia Telephone Co. APPENDIX B Cases received and reopened during February, 1915: Case No. Applicant 2104* Buffalo Creek Railroad Co. (Reopened.) 4387* Salmon River Power Co. (Reopened.) 4558 New Berlin Light, Heat & Power Co. (Reopened.) 4642* St. Lawrence River Power Co. (Reopened.) 4749 Cataract Power & Conduit Co. (Reopened.) 4795 International Railway Co. 4808 Chuctanunda Gas Light Co. 4809 Geneva, Seneca Falls & Albany R. R. Co 4801 Empire Coke Co. 4817 Columbia Telephone Co. 3731* Federal Telephone & Telegraph Co. (Reopened.) APPENDIX C Cases closed during February, 1915: Case No. Applicant 3497 Central Hudson Gas ■&, Electric Co. (From Class E.) 3659 Wallkill Valley Electric Light & Power Co. (From Class E.) 3916 Dansville Gas & Electric Company. 4039 Tracy Development Co. (From Class E.) 4111 Phoenix Gas & Electric Co., Inc. 4519 Northern New York Power Co. (Columbia ilills.) (Transferred to Class E.) 4558 New Berlin Light, Heat & Power Co. 4673 Auburn & Syracuse Electric R. R. Co. 4707 Buffalo General Electric Co. 4746 Erie Railroad Co. 4748 Erie Railroad Co. 4750 Auburn & Syracuse Electric R. R. Co. Total closed 12 Closed from Class E, which are not included in tabu- lations 3 Net 9 * Assigned to Class E, which are not included in tabulation. (Net re- ceipts 7.) Final Kepoet of Joint Legislative Committee 1863 EXHIBIT "A" of March 5, 1915 DOMINION OF CANADA Inland Revenue Department A License to Export Electrical Energy Under the Provisions of the Electricity and Fluid Exportation Act, 6-7 Edward Vll, Chap. 16, and the Eegulations Made Thereunder. License Number is hereby granted to the doing business at in the County of and Province of to export or to sell for export from Canada during the fiscal year ending 31st March, 191 , electrical energy at a rate not to ex- ceed at any time during the continuance of the license, kilowatts, provided: (a) That momentary indications in excess of the authorized quantity, due to short circuits, grounds, etc., will not be considered as violations of this license, and (b) That maximum demands, or peaks of load curves, will not be considered as violations of the license when such peak does not exceed 25 per centum of the quantity herein stated, and that the maximum demand or peak load does not continue for a longer period than one hour at any time, and that the total duration of such peaks shall not exceed two hours in twenty-four hours. This license being only for one year, licensees must not enter into any contract which they will not be able to carry out if this license is not renewed, or if the Electricity and Fluid Exportation Act or the Regulations made thereunder are changed. This license is subject to the Statutes of Canada, now in force, or hereafter to be enacted and also to the provisions of the Regu- lations regarding electrical power, etc., approved by the 'Governor General in Council on the 4th day of November, 1907, and to any Regulations which may hereafter be made, which Statutes and Regulations are made conditions hereof. 1864 Investigation of Public Seevice Commissions Every contract made under this license shall contain a clause or clauses ex;pressly setting forth that it is made by virtue of this license, which is subject to the Electricity and Fluid Exportation Act and any amendments that may be made to it, and also is sub- ject to the Regulations made or which may be made by the Gov- ernor Oeneral in Council regarding the same ; and every contract made under this license shall have attached thereto a copy of this license and of the Electricity and Fluid Exportation Act, and of the Eegulations approved by the Governor General in Council on the 4:th day of November, 1907. This license, if renewed, shall be subject to the terms and con- ditions of such Eegulations as may be made from time to time, either by Statute or the Governor General in Council. Countersigned by Deputy Minister of Inland Revenue. Chief Electrical Engineer. Dated at Ottawa, this day of 19 ... . EXHIBIT " B " of March 5, 1915 FEANCHISli; From the Commissioners of the Queen Victoria Niagara Falls Park to the Syndicate This Ageeement made this 29th day of January, A. D. 1903, Between The Commissionees of the Queen Victoeia Niagaea Falls Paek, acting herein on their own behalf and with the approval of the Government of the Province of Ontario, here- inafter called " The Commissioners," of the first part ; AND William MacKenzie^ of the City of Toronto, Capitalist, Heney Mill Pellatt, of the same place, Capitalist, and Feedeeic Nicholls, of the same place, Capitalist, herein- after called " The 'Syndicate," of the second part. Wheeeas, For convenience and to prevent ambiguity it is agreed and understood by and between the said parties hereto and is hereby declared as follows, that is to say : (a) The expression " The Park " wherever it occurs herein, shall be understood to mean the Park proper, namely. The Queen FiwAL Eepoet of Joint Legislative Committee 1865 Victoria Niagara Falls Park, south of its original boundary in front of the property formerly known as The Clifton House and running easterly to the Niagara Kiver. (b) The expression " The Commissioners," where it occurs herein, shall be understood to mean not only the Commissioners of The Queen Victoria Niagara Falls Park — as representing the Government of the Province of Ontario in the premises — named as parties hereto of the first part, but also their successors and as- signs and those who for the time being may be Commissioners of the Queen Victoria Niagara Falls Park or other representatives of the Government of Ontario. (c) The expression " The Syndicate," 'wherever it occurs herein, shall be understood to mean, not only the individuals above named as parties hereto of the second part, but also their and each of their heirs, executors, administrators and assigns. And Wheeeas, The 'Syndicate having applied to the Commis- sioners for the right to take water from the Niagara River at a certain point or points in the Park, in order that the Syndicate may thereby generate and develop electricity and pneumatic power for transmission beyond the Park. And Wheeeas, By the Act of the Legislature, 62 Victoria, Chapter 11, it is enacted as follows: " The said Commissioners with the approval of the Lieutenant- Governor in Council may enter into an agreement or agreements with any person or persons, company or companies, to take water from the Niagara River, or from the Niagara or Welland Rivers, at certain points within or without the said Park for the purpose of enabling such person or persons, company or companies, to generate, "within or without the Park, electricity or pneumatic, hydraulic or other power, conducting or discharging said water through and across the said Park, or otherwise in such manner, for such rentals and upon such terms and conditions as may be embodied in the agreement or agreements, and as may appear to the Lieutenant-Governor in Council to be in the public interest." And Wheeeas, The Syndicate desire to secure the right to con^ struct their works in the Park, and the Commissioners have agreed to permit such construction upon the terms and conditions herein- after expressed and contained, or intended so to be, and in pur- 1866 Ikvestigatiok of Public Service CoMiitssiONS suauce of the statutory powers in the preceding paragraph set forth. Xow, Therefoee, This Agreement Witistesseth as follows, that is to say : 1. For the purpose of generating electricity and pneumatic power or any other jDower to be transmitted, and capable of being transmitted, to places beyond the Park, the Commissioners hereby grant 'to the Syndicate subject to the consent and approval of the proper authority, and save as hereinafter limited, a license irre- vocable to take from the waters of the Magara River within the Park a sufficient quantity of water to develop 125,000 electrical, or pneumatic or other horsepower for commercial use. Provided also that these presents are not to be construed as ex^jressing or implying any covenants by the Commissioners for title or quiet possession. 2.. 'For the purposes aforesaid the Commissioners further grant to the Syndicate the right to construct, and build and do, and per- form, and operate, the works as hereinafter described and located in pink lines upon the map or plan marked " N " hereto annexed and entitled " Plan attached to agreement dated January 29th, 1903, made by the Commissioners of the Queen Victoria Niagara Falls Park with William MacKenzie, Henry Mill Pellatt and Frederic Nicholls for power privileges within the Parh," and which plan is identified by the seals and signatures of the parties hereto. 3. The several works which the Syndicate are by these present's authorized to perform and do may be more particularly described as follows : Reference being made throughout to the above mentioned map or plan marked " K"." (a) From a point at or near A to a point at or near B to construct a gathering over-fall masoni-y dam, the rest of the said dam to be level with the surface of the ordinary water level of the river at the point A. (b) From a point at or near B to or near the points C, D, E and F successively to construct a masonry dam and over- flow weir, the crest of which from B to D to be approximately two feet, and from D to F approximately three feet lower than the general level of the water in the forebay. FixAL Report of Joixt Legislative Oommittee 186Y (c) At or near the point C to construct a substantial masonry pier to direct the passage of ice from the intake to the river below the works. (d) From or near the point H to or near the point G, and from or near H to or near K to construct masonry revetment walls. (e) From or near the point A to or near the point R, and from or near the point H to or near the point C, and from or near the point T) to or near J to construct permanent masonry sheet ice booms to prevent floating ice which may enter the intake from passing into the forebay. (f) To construct a power house with gate house, rack, screen, penstocks, wheel pit, etc., etc., within the 'area marked P K L M. The power house to be of size and capacity ap- propriate for the machinery and appliances for the genera- tion of 125,000' electrical horsepower. (g) To deepen the bed of the river within the area enclosed for the intake and forebay and extending to such a distance eastwards and up stream from the point A as may be found necessary to conduct to the intake sufficient water at lowest stages of the river for the generation of 126, 000 electrical horsepower in the power house of the company, and a suf- ficient quantity of water in addition thereto to keep the weirs from B to E full to the level of the crest of the gathering overfall masonry dam A B. (h) To construct a masonry lined tail race tunnel of capacity sufficient for the discharge of the water required in the works. The 'tunnel to extend from the wheel pit to a point of discharge below the Horse Shoe Fall, located be- tween the points and JST on the plan. (i) To erect a transform'er house at some point east of the power house site, of the dimensions necessary for the stepping up of the electrical power given off by the electrical ma- chinery in the power house to the voltage required on the transmission lines. (j) To carry the electricity generated to points beyond the Park by means 'of overhead wires or cables, or by means of underground conduits. 1868 Investigation of Public Service Commissions (k) To construct temporary coffer dams in the bed of the river wtere required, in order to facilitate and permit of the construction of any of the permanent works referred to in subsections (a) to (g) inclusive. 4. The SjTidicate agree to observe and perform the regulations contained in the agreement between the Commissioners and Suther- land Macklem, so far as it relates to tihe supply of water from the Niagara Kiver to the Mansion grounds and premises known as " Clark Hill," and to the stipulations in the subsequent agreement relating to the water supply iHade between the Commissioners and James H. Smith, the present proprietor, and his beirs and assigns. 5. The rights and privileges described in subsections (a) to (k) of paragraph 3 of this agreement, are granted subject to the rights in the bed of the river heretofore granted to tbe Ontario Power Company, of Niagara Falls, for its power development, which said rights, granted as aforesaid to the Ontario Power Com- pany, are indicated in purple lines on the map or plan marked " ]Sr " attached hereto and described as " Intake Works of the On- tario Power Company of Niagara Falls," and none of the works to be performed under this agreement, either those intended to be of a temporary character, such as coffer dams or other methods of diverting the water of the river in order to facilitate construction, or those designed to be of a permanent nature, shall in any wise interfere with or incommode the Ontario Power Company in the proper and efficient construction or operation of its works as these are defined on the said map, and the Syndicate shall make all such provision for the carrying off of the natural drainage water, or waters, which may be required to be pumped by the Ontario Power Company from its excavations and works, as shall place tbat com- pany in as favorable a position for the execution of its works of construction as if this agreement had not been entered into. 6. The works hereinafter specified and embraced in the follow- ing subsections (a) to (f) inclusive, and authorized by the Com- missioners to be done and executed by the Syndicate by these presents, and the manner in which the same may from time to time be proposed to be performed or varied shall before being commenced be submitted by the 'Syndicate to the Commissioners, accompanied by suitable plans, profiles, specifications and eleva- Final liEroitT of Joint Legislative Committee 1869 tions as the case may require, and the scenic and general features thereof shall be approved by the Commissioners in writing. This approval shall in no wise relieve the Syndicate from responsibility for the stability and effectiveness of its works, but it is intended to secure as far as possible a degree of harmony in outline and treatment compatible with the location and with the works in a public Park. The works to which such apjjroval are required, and shall not be proceeded with without such approval, are the following : (a) The location of the temporary coffer dam required to shut out the waters of the river from the space to be occupied by the works of the Syndicate. (b) The design and location of the overflow masonry dams and weirs, sheer ice booms, revetment walls, and piers for im- pounding and regulating the flow of water to the power house. (c) The design and location of the power house and wheel pits including the works and structures for regulating the flow of water at the penstock inlets. (d) The lines and levels for the filling of the grounds about the site of the power house and out into the river to the north thereof, and the method of protecting the same from erosion. (e) The tunnel for carrying away the waste water from the wheel pit, the means of access to the mouth of the tunnel below the Falls, the method to be used in disposing of the ■excavated rock, and the supply of timber and material for the lining of the tunnel. (f) The design and location of the transformer house and the method of conducting the electricity to points without the Park. 7. Where the high tension transmission lines are carried over the Park surface to points beyond the limit of the Park, non- conducting guard wires, or other means of protection, shall be placed beneath the transmission lines in such manner that in case of accident to any of the wires carrying electricity all danger to persons or vehicles passing may be prevented. 8. The Commissioners will define on the ground the area of the Park surface which may be occupied for the temporary storage 1870 Investigation' of Public Seevice Commissions of materials, to be used in the construction of the works in the Park, and also for the erection of such buildings or appliances as the Commissioners may consider necessary for the uses of the Syndicate or of its contractors during construction. The area to be so occupied will of necessity, be limited, and the period during which the Park territory may be used for this purpose shall not exceed four years from the date of agreement for the initial in- stallation of machinery to generate 25,000 horsepower, nor more than eighteen months for any subsequent partial development up to the completeion of the full installation of 125,000' electrical horsepower. 9. The Commissioners may require all good surface soil, which may be found at any point where works are to be constructed, to be removed and deposited in heaps at convenient points. This good surface soil shall be used as a top dressing for all areas which may be disturbed by the operations specified, or for covering over any waste material taken from the excavations in the Park. Should the quantity of good soil so obtained be insufficient, in the opinion of the Commissioners, to afford a proper covering for such new or disturbed areas, the Syndicate shall obtain from without the Park, sufficient good soil for this purpose, but the quantity of good surface soil which the Commissioners may require to be brought into the Park and used as a covering or top dressing, shall not exceed 10,000 cubic yards. 10. For the purpose of construction and to remove or receive supplies of materials and machinery, the Syndicate may build, subject to the approval of the Commissioners, tramways, roads and such other appliances and structures as may be necessary for the prosecution of the work but these appliances are to incommode to the least possible extent the ordinary travel in the Park, and shall be removed as soon as the works for which they are required are completed. 11. The Syndicate shall have the right to use as power in the construction of any of the foregoing works either steam, elec- tricity, compressed air, or water. 12. Any excess of waste or refuse material taken from the ex- cavations of the forebay, power house, wheel pit and tunnel, which the CojBmissioners do not desire to use as filling within the Park, Final Report of Joint Legislative Committee 1871 shall be taken away by the Syndicate and deposited outside the Park limits. 13. The Syndicate undertakes to complete all the filling up, grading, leveling, sodding or covering with good surface soil and other works affecting the surface of the Park, and to have removed all tramways, buildings and other constructions, material or ap- pliances used in carrying out their operations in the Park within one year from the time fixed for the completion of any fractional instalment under this agreement. 14. The license hereby granted is for the term of fifty years, commencing the first day of February, 1903, the Syndicate pay- ing therefor a clear yearly rental of $15,000, payable half-yearly on the first days of October and April in each year, and in addi- tion thereto payment at the rate of the sum of $1 per annum for each electrical horsepower, generated and used, and sold or dis- posed of over 10,000 electrical horsepower up to 20,000 electrical horsepower, and the further payment of the sum of seventy-five cents for each electrical horsepower generated and used, and sold or disposed of, over 20,00€' electrical horsepower up to 30,000 electrical horsepower, and the further payment of the sum of fifty cents for each electrical horsepower generated and used, and sold or disposed of, oyer 30,000' electrical horsepower; that is to say, by way of example, that on generation and use and sale or disposal of 30,000 electrical horsepower, the gross rental shall be $32-,500 per annum, payable half-yearly, and so on in case of further de- velopment as above provided, and that such rates shall apply to power supplied or used either in Canada or the United States. Such additional rentals as shall be payable for such generation and sale, or other disposition as aforesaid, to the Commissioners shall be payable half-yearly at the rate above specified on the first days of August and February in each year for all the power sold in the said several half-yearly periods from the day of sale; and within ten days after the said first days of August and February in each year on which such additional rentals shall be payable respectively, the Treasurer, or if no Treasurer, the head officer of the Syndi- cate, shall deliver to the Commissioners a verified statement of the electrical horsepower generated and used, and sold or disposed of, during the preceding half-year, and the books of the Syndicate 1872 Investigation of Public Seevice Commissions shall be open to inspection and examination by tlie lOommissioners or tbeir agent, for the purpose of verifying or testing the correct- ness of such statement; and if any question or dispute arises in respect to such return or of any statement delivered at any time by the 'Syndicate to the Commissioners of the quantity or amount of the electrical horsepower generated and used, and sold or dis- posed of, or of the amount payable for such additional rentals, the High Court of Justice of Ontario shall have jurisdiction to hear and determine the same and to enforce the giving of the informa- tion required. The Syndicate has paid contemporaneously with the signing of this agreement the sum of $30,000', being the first two years' rental in advance, being up to 1st of February, 1905. Provided always that if 'any part of the said rent, whether pay- able under this paragraph or in respect of the renewal term or terms in the following paragraph, shall be in arrears for three months, whether legally demanded or not, the Commissioners, or if not then an existing corporation, the Government of the Prov- ince of Ontario, may re-enter on the premises or any part thereof in the name of the whole, and thereupon this agreement shall de- termine, and the remainder 'of the term then current shall ter- minate, as well as any renewal or renewals thereof which under this agreement may be claimed. 15. If at the end of the said period of fifty years the Syndicate desire to renew for a further period of twenty years, and shall give notice in writing to the Commissioners at least twelve months be- fore the expiration of the fifty years' period, they shall be entitled to and shall receive a further lease of such rights for the period of twenty years more at the same rental as above provided, unless the Lieutenant-Governor in Council shall desire a readjustment of said rent as below provided, and similarly the 'Syndicate shall be entitled at their option to two further renewals at twenty years each at same rental, subject to the same qualifications, the object and intention of this stipulation being to confer upon the Syndi- cate the right to an original term of fifty years at the rentals here- inbefore specified, and to three further terms of periods of twenty years each at said rentals, making 110 years in all, and the Syndicate shall then give up, or at the expiration of the first term of fifty years, or any subsequent term of twenty years, if un- ■ renewed in accordance with this agreement, the works, premises, ,Ma Final Eepoet ov Joint Legislative Committee 1873 rights and privileges by this agreement created without any claim for compensation with liberty to the Siyndicate to remove their machinery. In case the Syndicate desire to terminate the lease, they may do so during the first period of fifty years upon three months' notice in writing to the Commissioners, or in case the Commissioners are not then an existing Coi'poration, the Govern- ment of the Province of Ontario, payment of rent up to the time of the termination of such notice being made upon the giving of such notice. At the end of the said period of fifty years the same rentals as are hereby reserved shall continue to be paid by the said Syndicate unless the Lieutenant-Governor in Council shall desire a readjustment of the said rent, in which case the rentals for a further period of twenty years shall be readjusted by agreement, and in the absence or failure of agreement by the parties hereto, then the rentals for such further term shall be ascertained by three arbitrators or a majority of them, one of whom shall be named and appointed by the Commissioners, another by the Syndicate, and the third by the Chief Justice or senior presiding Judge of the Provincial Court of Ultimate Appellate Jurisdiction for Ontario. The proceedings of and before such arbitrators shall be subject to the provisions of the law relating to " Eeferences by Consent out of Court," contained in the Kevised Statutes of Ontario 1897, Chapter 62, respecting Arbitrations and References; and either party to such arbitration may appeal in accordance with the provisions of the said Revised Statutes. The Lieutenant-Governor in Council may in the like manner for the two further periods of twenty years each require a readjustment of said rentals. In which case the same shall be determined as aforesaid, and at the expiration of such two periods of twenty years each, the terms so limited by these presents shall determine and end in accordance with all provisions above contained whereby the Syndicate shall then give up the works, premises, rights and privileges by this agreement granted or created without any claim for compensation, but with liberty to the Syndicate to remove their machinery. And it is hereby further agreed that at any time not less than three years before the period at which such third renewal of twenty years shall terminate, the Lieutenant-Governor in Council, and notice thereof to the Syndicate given, may require the Syndicate 1874 IifVESTiGATioisr OF Public Seevice Commissions to continue its operations for a further period of twenty years, to commence from the termination of such third renewal, at the same rental as shall have been paid during the said third renewal period of twenty years or at a readjustment of the said last mentioned rentals for such further period of twenty years by 'agreement, and in the absence or failure of agreement by the parties hereto, then the rentals for such further term of twenty years shall be ascer- tained by arbitration, in manner and form according to the pro- visions of arbitration hereinbefore contained, and in the event of such option being so exercised the terms and provisions of these presents shall extend and bind the parties hereto until the said period of twenty years shall have elapsed and expired, but the exercise of such option requiring such further renewal by the Lieutenant-'Governor in Council shall not change, alter or effect the above provisions in respect of the termination of the liberties, licenses, powers and authorities, and so declared applicable at the termination of the said last mentioned or fourth renewal. 16. The Commissioners will not themselves engage in making use of the water to generate electric, pneumatic, or other power except for the purposes of the Park, provided that in case the said Commissioners shall have granted or at any time may have granted to any other person or corporation license to use the waters of the said Niagara or Welland Kivers, and by reason of failure of such person or corporation to carry on the works so licensed the said Commissioners find it necessary to forfeit said license and take over said works, this clause shall not prohibit said Commissioners from operating such works for the generation and transmission, sale or lease of electricity or power. 17. And the Syndicate shall indemnify the Commissioners from all claims or demands by any person or persons whomsoever, whether arising by reason of the exercise by the Syndicate of the powers, rights or authorities or any of them conferred by this agreement, or by the reason of anything done by this Syndicate in the exercise thereof affecting any property, rights or privileges heretofore by the Commissioners granted to or conferred upon any person or persons whomsoever or enjoyed, used, and exercised by any such person or persons nnder the Commissioners, it being Final Repoet of Joint Legislative Committee 1875 the intention of this agreement that should the Syndicate in the exercise of the aforesaid powers, rights and authorities so affect any such property, rights or privileges granted by or enjoyed under the Commissioners, the Syndicate shall fully indemnify the Commissioners in respect thereof. And in the event of any claims or demands aforesaid being preferred before or in any tribunal, vsrhether in a court of law or by proceedings of arbitration against the Commissioners or for the Commissioners or in their name, the Syndicate undertake and agree to intervene on behalf of the Commissioners and defend the same or take such action in the premises at the cost and charges of the Syndicate; the Commissioners hereby conferring upon the Syndicate all such rights and powers to act in their name and in their behalf in the premises or to confer such other and further rights and powers as may be required by the Syndicate and necessary. 18. For the transmission of electricity or pneumatic or other power to points beyond the Park in Canada, or the United States, the Syndicate shall have the right to convey the same by overhead high tension ■wires or by cables or other appliances in conduits, beneath the surface of the Park at such depth and in such locations as the Commissioners may, from time to time, determine, in- cluding the right to cross the so-called chain reserve, so far as same is Tvithin the jurisdiction of the Commissioners, at any point or iwints approved of by the Commissioners between Port Erie and JSTiagara-on-the-Lake, but subject to any rights which the Com- missioners may have created or licensed, or which may be created, without prejudice however to the exercise by the Syndicate of any of its rights and powers under these presents, or which may be acquired in respect of transmission of power as by this paragraph prescribed. 19. The Syndicate undertake to begin the works hereby author- ized within two years from the date of this agreement and to have proceeded so far with the said works on or before Ist January, 1907, that they will have completed within the Park, water con- nections (that is to say, head race, forebay, penstocks, and tail race) for the development of 25,000 horsepower, and have actually ready for use, supply and transmission, 10,000 developed electri- 1876 Investigation of Public Seevice Commissions cal or pneumatic horsepower by said last-mentioned day, and if not then completed the Lieutenant-Grovemor in Council may de- clare this agreement, the liberties, licenses, powers and authorities so granted and every one of them to be forfeited and void, and thenceforth after such declaration the same shall cease and deter- mine and be utterly void and of no effect whatever. 20. So long as this agreement is in force the Commissioners undertake and agree that the amount of rentals which may be fixed and charged for the right to use the waters of the J^iagara or Welland Rivers within the Park for the purpose of generating electricity by any other company or person, shall not be at less rentals than is provided and reserved by these presents, and further that any such company shall be subject to the like restric- tions as in paragraph 21 of this agreement. Provided, however, that notwithstanding anything in this paragraph contained, the rentals so to be fixed and charged against any other company or person, may be reduced, below the rentals provided .and reserved by these presents, so far only as such reduction may fairly and reasonably be allowed in respect of the increased cost of the con- struction of the tail race or tunnel within the Park, by reason of its greater length or other ground of expense in its or their con- struction, whether required for supply or waste through the Park to the point of discharge into the Niagara River in excess of the distance between the power house of the 'Canadian Niagara Power Company and the point of discharge into the ISTiagara River, such reduction not to be of an amount sufficient to give any undue ad- vantage as against the Syndicate except by reason of such in- creased cost of tail race or tunnel, or both, as the case may be. 21. The Syndicate, whenever required, shall from the elec- tricity or pneumatic power generated under this agreement, sup- ply the same in Canada to the extent of any quantity not less than one-half the quantity generated at prices not to exceed the prices charged to cities, towns and consumers in the United States, at similar distances from the Falls of JSTiagara, for equal amounts of power and for similar uses, and shall, whenever required by the Lieutenant-Grovemor in Coimcil, make a return of prices charged for such electricity or power, verified under oath by any chief officer of the Syndicate, and if any question in dispute arises, in- FiFAL Report op Joint Legislative Committee 18Y7 volving tbe non-supply of prices of electricity or power for con- sumption in Canada, the High Court of Justice of Ontario shall have jurisdiction to hear and determine the same and enforce the facilities to be given or the prices to be charged. 2'2. All power developed within the limits of the Park under this agreement, shall be in a form capable of transmission and nse outside the Park, and shall not be used within the Park except such uses as may be convenient or necessary within the buildings of the Syndicate for the purposes of its power development, and except such oases as may be hereafter agreed upon for railway, pumping, elevator, or other purposes within the Park. The Syn- dicate may agree with the l^iagara Falls Park and Piver Eailway Company for the supply of electricity, pneumatic or other power to work the said railway, and with the town of l^iagara Falls, Ontario, and the Town of ISTiagara Falls South, Ontario, for the supply of power for their pumping station or stations within the Park, and may also supply electricity for any other persons within the Park. 23. If the Syndicate should at any time or times after the com- pletion of its plant and power house, or the first day of January, 1907, whichever shall first happen, continuously neglect, for the space of one year, effectually to generate electricity or pneumatic power as hereby agreed by the Syndicate, unless hindered by unavoidable accident, the Lieutenant-Governor in Council may then and from thenceforth declare this agreement, the liberties, licenses, powers and authorities thereby granted, and every of them to be forfeited, and thenceforth the same shall cease and determine and be utterly void and of no effect whatever. 24. The rents hereby agreed to be paid are hereby declared to be the first and preferential charge upon the said works, and the Syndicate shall not have power to create any lien, charge or incum- brance upon the said works or any of them, by bond, debenture, mortgage or otherwise, which would interfere with or prevent the Commissioners from procuring payment of the rent hereby re- served or any part thereof ; and no simple contract creditor or other creditor of the Syndicate shall have any claim against the said works or any part thereof in priority of the claim of the Commis- sioners for rent. 1878 Investigation ok Pitblic Service CoMMissiONS 25. The said Syndicate shall not amalgamate with any other corporation or company heretofore or hereafter incorporated by or under the laws of the Dominion of Canada, or by or under authority of the Province of Ontario, or which shall be hereafter licensed by the said Commissioners to take and use the wa,ters of the jSTiagara or Welland Eivers or both, for the purpose of gen- eration and transmission of electricity without the consent of the Lieutenant-Governor in Council to such .amalgamation, nor shall they enter into any arrangement or agreement for that purpose with any such company which may directly or indirectly have that effect, or which may or shall have the effect of keeping up the price or prices of said power, nor shall they enter into any agree- ment with any such company for pooling the receipts of the said Syndicate or of any part thereof with those of any other company, nor which shall provide for or have the effect of establishing a common charge or schedule of charges for the use of said jDower or any part thereof. 26. It is further agreed that if from any cause the supply of water at the point of intake, as by these presents defined, be diminished, the Syndicate shall have no claim or right of action against the Commissioners, but may deepen such point of intake to such extent as to restore the supply of water to the volnme or quantity necessary for the purposes of the Syndicate, and that the granting or licensing of rights to the Syndicate by these presents shall not give the Syndicate any right of action against the Com- missioners, nor give to the Syndicate any right of action against other licensees or grantees of the Commissioners in respect of any diminution not substantially interfering with the supply neces- sary for the Syndicate, nor so long as such necessary supply can be obtained by means of deepening at said point of intake. 27. The Syndicate agree with the Commissioners that within two years from the date of this agreement they will sell, assign, convey and transfer to a company or corporation, formed or to be formed under proper authority, having power to construct and operate the works hereinbefore described, all the rig'hts and fran- chises by this agreement given and conferred to and upon the said FixAL Report of Joixt Legislative Comjiittee 18'79 Syndicate, including the benefit of any -work that shall have been done and any moneys that shall have been expended in connec- tion with the said works prior to the organization of the said com- pany or corporation, subject to all the provisions and conditions in this agreement contained, and by the Syndicate agreed to be observed and performed, and otherwise upon such terms and con- ditions as shall be agreed upon between the said corporation and the Syndicate. And upon the due organization and formation of the company or corporation now existing or to be formed as above provided, and when this agreement, and the rights and franchises thereby conferred, including works done and money expended as aforesaid, shall have been duly transferred to such company or corporation and it shall have assumed the same, the Syndicate shall thereby be relieved from personal responsibility to the Commissioners for the performance of this .agreement. Nothing in this agreement contained shall affect any pending suit or litigation, or any contract, covenant or agreement made between the Syndicate, and any other corporation or individual, at the time of or prior to the said transfer. Provided always, that any claim or right of suit or action exist- ing against the Syndicate, may be urged and prosecuted against the said company or corporation, as fully and effectually as it might be urged and prosecuted against the Syndicate primarily bound or obliged or indebted in the premises, and the said com- pany or corporation may be substituted for the Syndicate in any pending suit or action. 28. And the said parties hereto mutually and respectively covenant, promise and agree with each other to carry into effect, observe, perform and fulfill all the provisions and stipulations in these presents contained and to be carried into effect, observed, performed and fulfilled by the said parties respectively. 29. This agreement shall have no force or effect until approved by the Lieutenant-Governor in Council. In Witness Wheeeof the Corporate Seal of the Commissioners hath been hereunto affixed by their Chairman who has also signed 1880 Investigation op Public Service Commissions these Presents in certification of due execution hereof by the C«nimissioners, and the members of the Syndicate have also here- unto set their hands and seals on the day and year aforesaid. THE COMMISSIONERS. OF The THE QUEEN VICTOEIA Queen Victoria NIAGARA FALLS PARK. (Seal) J. W. Langmuie, . Chairman Niagara Falls Park. Witness : James Wilson, As to signature of J. W. Langmuir. WM. Mackenzie, (Seai) Attoi-nsy^ A. W. MacKenzie. HENRY M. PELLATT, (Seal) FREDERIC NICHOLLS, (Seal) Witness : HtTBEET H. Macrae, To the signature of William MacKenzie hy his attorney, A. W. MacKenzie; Henry Mill Pellatt and Frederic Nicholls. Copy of an Oedee-in-Council Approved by His Honode the LlEUTENANT-GoVEENOE, THE 30tH DaY OE JaNUAEY, A. D. 1903. Upon the recommendation of the Honourable the Premier, His Honour the Lieutenant-iGovemor, by and with the advice of the Executive Council of Ontario, has been pleased to approve, and does hereby approve, of a certain agreement bearing date the 29 th January, 1903, with identified plan thereto attached, made between the Commissioners of the Queen Victoria Niagara Falls Park, of the first part, and William MacKenzie, Henry Mill Pellatt and Frederic Nicholls, of the second part, respecting the construction of works and exercise of powers within the Queen Victoria Niagara Falls Park, in pursuance of the Act of the L^islature of Ontario, 62 Victoria, chapter 11, section 36. Certified, (Signed) J. LONSDALE CAPREOL, Asst. Clerk, Executive Council. Final Kepoet of Joint Legislative Committee 1881 The Elbcteical Development Co. OF Ontaeio, Limited Chaetee of Incoepoeation Canada Peovince of Ontaeio. Edwabd the Seventh, by the Grace of God, of the United King- dom of Great Britain and Ireland and of the British Domin- ions beyond the Seas, King, Defender of the Faith, Emperor of India: To All to Whom These Presents Shall Come, Geeeting : Wheeeas, The Ontario Companies Act provides that with the exceptions therein mentioned, the Lieutenant-Governor of our Province of Ontario in Council may by Letters Patent under the Great Seal create and constitute bodies corporate and politic for any of the purposes or objects to which the legislative authority of the Legislature of Ontario extends; And Whereas, By their petition in that behalf the persons herein mentioned have prayed for a Charter constituting them a body corporate and politic for the due carrying out of the under- taking hereinafter set forth ; And Wheeeas, It has been made to appear to the satisfaction of our Lieutenant-Governor-in-Council that the said persons have complied with the conditions precedent to the grant of the desired Charter, and that the said undertaking is within the scope of the said Act; I^ow Theeefoee Know Ye that by and with the advice of the Executive Council of our Province of Ontario, and under the authority of the hereinbefore in part recited Statute, and of any other power or authority whatsoever in us vested in this behalf, we do, by these our Eoyal Letters Patent, hereby create and con- stitute the persons hereinafter named, that is to say : William Hollywood Templeton, and Chaeles Vincent Bennett, Gentlemen; James Waltee Rose, Solicitor's Clerk; Alexaa'dee MacKenzie, Accountant, and Edwin^ Geoege Lokg. Barrister-at-Law, all of the City of Toronto, in the County of York and Province of Ontario, and any others who have become subscribers to the Memorandum of Agreement of the Company and their successors, respectively, a coepoeation for the purposes 1882 Investigation of Public Seevice Commissions and objects follawing, that to say: (a) To acquire by lease, pur- chase or otherwise, and to maintain, utilize and develop water power and other powers for the production of electricity and of electric, pneumatic, hydraulic or other power or force for any pur- pose for which electricity or power can be used, (b) To construct or acquire by lease, purchase or otherwise, and to maintain and operate works and appliances for the production of electricity and of electric, pneumatic, hydraulic or other power or force, and lines of wires, poles, tunnels, conduits, conductors, motors, devices, works and appliances for the sale, distribution, delivery and transmission, under or above ground, of electricity and electric, pneumatic, hydraulic or other power or force, and therewith to convey, con- duct, furnish or receive such electricity, current, power or force, to or from any Company or Companies, at any place, through, over, along or across any public highways, bridges, viaducts, rail- ways, water-courses or over or under any waters. Provided, however, that the Company shall have first obtained the consent of owners of property or of municipal corporations affected, (c) To acquire by lease, purchase or otherwise, electricity, elec- tric, pneumatic, hydraulic or other current, power or force, and to store, use, supply, furnish, distribute, sell, lease or otherwise dispose of the same, as well as electricity, current, power or force, produced by the Company, (d) To construct or acquire by lease, purchase or otherwise, and to operate in connection with the works, lines and business of the Company, and for the purposes thereof, lines of telegraph or telephone or other works and means of communication, (e) To aid by way of bonus, loan, guarantee or otherwise, any industry or enterprise using or agreeing to use power supplied by the Company, or supplying or .agreeing to sup- ply power to the Company, and to acquire stock in any corpora- tion carrying on or having power to carry on any such industry or enterprise, and the bonds, debentures or other securities or obligations of any such corporation and to act as agent or manager of 'any such industry, enterprise or corporation, (f) To sell, lease or otherwise dispose of, from time to time, any of the assets or property of the Company, and (g) with authority to the Com- pany hereby incorporated, to enter into, perform and carry out any agreement with any Power Company, authorized to do or per- form or exercise any of the powers conferred upon the Company Final Eepokt of Joint Legislative Committee 1883 hereby incorporated for the purchase by and sale, and transfer to the (Company of the whole or part of the rights, powers, franchises, assets, property, business and undertakings of such other Com- pany, and for the assumption and payment by the Company, hereby incorporated, of the whole or parts of the contracts, obli- gations and liabilities of such other Company ; peovided always that such agreement shall not be entered into unless the same shall haA'e been approved of by the votes of the shareholders of the Com- pany hereby incorporated, present or represented by proxy, at a special general meeting of the Company, duly called for consid- ering the same, and holding not less than two-thirds of the capital stock of the Company then outstanding; and further provided that the rights of bondholders or other creditors of such other Com- pany, and of all persons having any claims or demands against such Company, or any lien, charge or security upon any of its property or assets shall not be prejudiced by said agreement or by the carrying out thereof, but shall remain and be enforced as if such agreement had not been made. The corporate name of the Com- pany to be The Electeical Development Company of Ontaeig, Limited. The share capital of the Company to be six million dollars, divided into sixty thousand shares of one hundred dollars each. The head office of the Company to be at the said city of Toronto, and the provisional directors of the Company to be William Hollywood Templeton, Charles Vincent Bennett, James Walter Rose^ Alexander MacKenzie and Edwin George Long, hereinbefore mentioned. In testimony whereof we have caused these our Letters to be made Patent and the Great Seal of our Province of Ontario to be hereunto affixed. Witness, The Honourable Sir Oliver Mowat, Knight Grand Cross of our Most Distinguished Order of Saint Mic:hael and Saint George, Member of our Privy Council for Canada, and Lieutenant-Governor of our Province of Ontario. At our Government House, in our City of Toronto, in our said Province, this 18 day of February, in the year of Our Lord one thousand nine hundred and three, and in the third year of our reign. By command. (Signed) J. R. STRATTON", Provincial Secretary. 1884 Investigation" of Public Seevice Commissions Assignment of Ageeement feom William MacKenzie, Heney M.. Pellatt and Feedeeio Nicholls to The Eleoteical Development Co. of Ontaeio, Limited. This Indenttjee made this twenty-first day of March, 1903, Between William MacKenzie, Heney M. Pellatt and Feedeeic JSTiCHOLLS, all of the City of Toronto, in the County of York, Capitalists, hereinafter called the "Assignors," of the first part; AND The Eleoteical Development Co. of Ontaeio, Limited, hereinafter called the "Assignee," of the second part. Wheeeas, An agreement has been made and entered into, bear- ing date the 29 th day of January, 1903, between the Commis- sioners of the Queen Victoria Niagara Palis Park and the above- named assignors for the taking of water from the Niagara River upon the terms and subject to the condition therein particularly mentioned ; And Wheeeas, In and by the said agreement it was provided that the same should be assigned within two years from the date thereof, to la company or corporation having power to construct the works in the said agreement referred to ; And Wheeeas, The assignee is a company incorporated by Poyal Letters Patent under the Ontario Companies Act, with full powers to construct all the said works and to do all things necessary to be done under the said agreement, and it has been agreed between the said assignors and the said assignee that the said agreement should be assigned to the said assignee; Now Theeeeoee, In consideration of the premises, and for divers good and sufficient considerations, the said assignors do hereby sell, assign, convey and transfer to the assignee, its suc- cessors and assigns the said agreement between the said assignors and the said the Commissioners of the Queen Victoria Niagara Falls Park, bearing date the 28th day of January, 1903, together with all the rights and franchises given and conferred thereby, and all benefits and advantages to be derived therefrom, including the benefit of all -work that has been done and all moneys that have Final Kepoet op Joint Legislative Committee 1885 been expended in conuection with tJie said work under or in pur- suance of the said agreement, but subject to all the terms and con- ditions in the said agreement contained ; And the said assignee hereby accepts the said assignment and covenants and agrees on its part to observe and perform all the terms, provisions and conditions in the said agreement contained, and to indemnify and save harmless the said assignors from all liabilities in respect thereof. In Witness Wheeeof, The parties hereto of the first part have hereunto set their hands and seals, and the party of the second part its corporate seal duly authenticated, the day and year first above written. WILLIAM Mackenzie, (Seal) HENEY M. PELLATT, (Seal) FEEDEEIC ITICHOLLS. (Seal) Signed, Sealed and Delivered in the Presence of HUBEET H. MaCEAE, As to signatures of William MacKenzie, Henry M. Pellatt, and Frederic Nicholls. THE ELECTEICAL DEVELOPMENT CO. OF ONTAEIO, Limited, Feedeeic Nicholls, Vice-President. ( Seal ) . H. that is all three com- panies, making the assets $21,000,000. Q. Making the assets $21,000,000 ? A. Yes, sir. And the lia- bilities likewise $21,000,000; the book surplus of $12,000; that is after the donation of $50,000 that I referred to. Q. You say that was exclusive of the franchise ? A. Include the franchises^ that includes the $8,000,000' you spoke of, yes. Q. That includes the frandhises ? A. Yes, sir. Q. What is the financial condition of this company to-day ? A. According to its report on June 30, 1914, they have a deficit of $186,000, $110,000 of which represents items thrown out of their asset account by Price, Waterhouse' & Company, or the Commis- sion's examiner, and $75,000 represents a deficit since March 1, 1914. Q. So your job as head of the Capitalization Department was to furnish a report to the Commission on the proposed merger or consolidation? A. Only as it directed to do so. Q. Were you directed to do so ? A. I don't recollect that I was. It is my very definite recollection that the Commission's deter- mination was based on the application of this hearing of which I have spoken. Q. Of course you made an investigation, didn't you ? A. I talked with the Commissioners first on our previous knowledge of the property, and also suggested some of the conditions which went into this order; then we could get the company's books in such shape that on any future application we would have a definite foundation to start with. Q. Did you object to this consolidation in any way at the time ? A. No, sir, I thought it was a desirable thing. 1926 Investigation of Public Seevice Commissions Q. You were shaving it prettj close, were you not, with only $12,000 surplus there? A. Yes, it was acknowledged to be a very close proposition, and that was discussed at this hearing con- siderably. And there were some objectors who appeared at the hearing, but during the course of the hearing, the principal one who appeared is a bondman who had purchased some bonds of the Syracuse, Lake Shore & l^orthern, and upon learning about some additional facts, of which he didn't know before, withdrew his op- position and said he thought it was a desirable thing. This evi- dence carried a great deal of weight, he was a former Superinten- dent of Banks of the State of Maine. Q. Looking back now, is it your opinion that was a wise thing to do ? A. Yes, sir. And I say that in spite of the fact that there is now a deficit. If a receivership were inevitable, I think it would be much less serious in its consequences to the service years ■ago than it would at that time, because they were then in process of finishing up a number of things which have now been com- pleted; they have a homogeneous operating property at present, and they are, I expect, also as a result of this 'consolidation, are arranging their operating organization for one general manager, and I understand bringing about other considerable economy. Senator Mills. — That is all, I think. Assemblyman Knight: Q. I understood you in answer to Senator Mills, that it is not the practice of the Commission to require a valuation of properties prior to consenting to the issuance of new bonds, is that so? A. That is correct. Q. Well, that is the practice with reference to consolidation of companies; is it the practice as to the valuation of the several applicants ? A. As the Commission has gradually secured a more adequate force, who can make such examination within a reason- able time, they have been going into the amount of assets and financial conditions of the companies very much more thoroughly than originally; but at the time the first examination was made of these properties, the Commission had a force of one to examine all the 900 companies in the State, and it was an impossibility; they had to base their decisions more on the hearings and ex parte application than they could by actual investigation. Final Eepoet of Joint Legislative Committee 1927 Q. Then you think if they had a sufficient force it would have been an advisable thing to have done ? A. I do, in every case of consolidation it is desirable if possible to find out all about the companies before you permit it. Q. Which, of course, was not done in this case ? A. It was not done in this case. Q. What special objection was there, would there have been, to those companies going into the hands of a receiver • pending the matter ; this consolidation question could have been considered and taken over ? A. Because every company in the State is under certain demands by local municipalities about repaving, exten- sions, new cars and a thousand and one other things are handed to the companies, and if the companies went into the hands of a re- ceiver under the Court here, that work stops instantly, and the people get very execrable service. Q. The Court could have permitted the making of the neces- sary repairs and continuation of the operation, couldn't it? A. Well, the Court will not permit — Q. Customary, isn't it? A. The Court will permit local re- pairs that are absolutely essential to keep the property together, but won't authorize any money for extensions or new cars or any- thing that can be avoided. Q. Well, now, take the time when this application was made, how long would it have taken from that time to have made the valuation of these properties of the several companies, if it had been done immediately, been given attention? A. If the Com- mission had had sufficient force, it would have taken from three to six months. Q. Then in six months after the granting of this order the Com- mission could have been in a position to have known actually, it could have done so in the course of a few months anyway, couldn't it? A. Yes, sir. Q. And had a receiver been appointed, these proceedings could have continued and the property been turned over to the receiver of these consolidated companies ? A. I think that might have been done. Q. Just what am I to understand that you include in this $8,- 000,000 of intangible assets? A. These properties were all I suppose constructed before there was any Public Service Com- 1928 Investigation of Public Service Commissions mission Law, and they were constructed by construction companies who took the contract to build the properties for a limited amount of stock and bonds. We secured access to the books of those con- struction companies, and this, eight million represents the differ- ence between the labor and material cost plus material interest ex- pended, organization and other things, and the total amount charged was the capital account in connection with those securities. Q. Well, in other words, you were taking the statement of the companies as to their total assets, taking from that those assets which you were able to account for, or — A. Put my fingers on. Q. Yes, put your fingers on, and that makes up the $8,000,000 ? A. Yes, sir. Colonel Hayward. — Which was the water, I take it ? Q. Which was intangible. A. It was intangible. Q. Does that $8,000,000 include the actual' amounts paid for franchises, does it include an estimate of the value of tiose fran- chises exclusive of the actual cash disbursements for the fran- chises, does it include any estim-ate of the value of the franchise ? A. We have made no attempt to segregate between any of those separate items. Colonel Hayward (resuming) : Q. Here is Mr. Hasbrook, who is he ? A. He is Chief of the Division of Statistics and Accounts. Q. And Mr. Hasbrook made a report to the Public Service Commission? A. I think he did, yes, sirj at that time I believe he was secretary to the chairman of the Commission. Q. I read from his report of March 25, 1913, the first part of the paragraph referring to the $5,000,000 to be issued by the Rochester, Syracuse & Eastern, and upon that he says : " But, if the new issue is considered altogether as such, th© practice I have mentioned is in effect a capitalization of debt. Debt discount such as is prohibited by the Commission's accounting order. If practicable, the ordser authorizing an issue of securities should be worded so as specifically to forbid this practice." He says: " Under the fifth and last head the purposes of the issue include certain construction work, the book cost of which is stated in the application; the retirement of bills payable to the amount of riNAL Rj:poet op Joint LEGrslAiivE Committee 1929 $87,190; and the retirement of $1,137,000 par value three-year gold notes, authorized by the Commission January 18,, 1912'. TJiere is no further evidence as to the value of the construction work, and there is no evidence as to the consideration originally received for the bills payable." Then he gives in detail " the ibonds asked for are insufficient to meet these purposes as shown below * * * . It will be noted from the foregoing that in relation to by far the greater part of the bonds aslied for, the Com- mission has no means of ascertaining the actual consideration in terms of cash cost -which is represented by the expenditures it is sought to capitalize. In this connection it is suggested that a genenal audit of the accounts and records of the Rochester, Syra- cuse & Eastern, and the Auburn & Northern is very desirable, and that the results of such examination, properly conducted, taken in conaiection with the work of a similar nature already performed by the 'Commission's examiners, on the books of the Syracuse, Lake Shore & Northern, would place the affairs of the consolidated companies in a perfectly clear light for this and for all future applications for capitalization." So that Mr. Hasbrook thought it was important apparently to have this audit of the other two companies before these bonds were issued, didn't he? A. He thought, as I have stated, it was desirable to 'have it. I think it would "have been desirable also. Q. I mean if as he says it was done as he says ? A. Yes. Q. A little while ,a;go you gave the values — I don't want to go back to this, but ior general purposes subsequently — A. I said it would .have been desirable, but when you have to deal with these companies as they were, not as you "would like to have them; if this Commission Law had been in force from 1900 all these securi- ties would not have been issued. Q. Well, but this order provided for the audit by September 30th, didn't it? A. Yes, sir. <5. That was bef-ore the bonds were actually issued, wasn't it ? A. Yes, -that date was fixed at my suggestion as being a date prior to the proposed issue of the bonds — as being a date by which I thaught the company would £nish it. Q. But, at any rate, a date prior to the issue of the bonds ? A. Well, we didn't know what bonds were going to be issued at that time. 1930 Investigation of Public Service Commissions Q. When it did get around, in spite of the efforts of the Com- mission to get it, it was to be made from the books of the two com- panies by September 30th? A. It had been made, but had not been submitted. Q. So that the roads having violated one of the provisions of this order, the Commission went ahead, notwithstanding that, and let them issue these bonds ; is that right ? A. I believe that suit- able reasons were given why this could not be done at that time. Q. Were they given to you ? A. I would have to look up this record to find out. I will be glad to look it up for you and see if I can make that clear. Q. Now here is another one of the reasons in this consolidation, also the subsequent proceedings to the taking over of the consoli- dated companies, the car barn substation at Lakeland, I should say rather the oar bam and substation at Lakeland, the title to w'hich still remained in the Ontario Construction Company, he says: " This matter was mentioned in the hearings on the consolidation, but there was no provision in the consolidation agreement relating to it, and the intention of the owners with regard to the final dis- position of this property is not yet on record." Do you know what the final disposition of that property was? A. It belongs to the Empire United which issued bonds to pay for it. Q. So it finally came to them by issuing bonds? A. Yes, sir. Q. What do you mean when you say an audit had been made prior to September 30th? A. Why, there was some reports here which were later accepted as the "company's contribution, that por- tion lying over there, which I think were dated — they were dated June 1, 1912. Q. About a year and three months before ? A. Yes, sir. Q. That was not the one that you were trying to get them to make, was it? A. When the matter was taken up with the com- pany, they finally wrote and stated that they had an audit which had been made, and that they were hard up for money, that they thought it was not a necessary requirement of the order, a.v.d requested the Commission to send an examiner to Syracuse as soon as possible to check it up; and I went to Syracuse to see what it was, and was handed that, which we used as the basis for this report, which was the basis of the Commission's final action. Final Repoet of Joint Legislative Committee 1931 Q. That was not an audit of the Rochester, Syracuse & Eastern Railroad? A. It was the 'Syracuse, Lake Shore & JSTorthern. That is the Syracuse Railroad Construction Company and Inter- state Financing & Construction Company. Q. In so far as that related to the Rochester, Syracuse & Eastern Railroad? A. Yes. Q. You don't call it an audit of the Syracuse-Rochester, Syracuse & Eastern Railroad, do you ? A. In the account books of all three companies, that is exactly the same thing that was required by the order. Q. You knew of the circumstances of these two audits, did you not, reports? A. Not until I went to Syracuse. Q. Didn't you find them when you audited the Syracuse, Lake Shore & ISTorthem ? A. No, sir. Q. When you went up there, you didn't find out about those? A. We didn't know any audit of this character had been made. We knew that an auditor had been there and checked over a couple of years of the Syracuse, Lake Shore & Northern, but we didn't find these books of the Rochester, Syracuse & Eastern, or the Auburn in this case; we were not sent there for that purpose. Now, about this date the original resolution as to these accounts was adopted, but the actual order was not entered until some time later because the company did not have its mortgage perfected, and I find here in the files a letter dated October 8, 1913, which is after the date when this audit was to be furnished, submitting a copy of the mortgage, and I presume it was the mortgage as finally formed in this order, and was not actually entered until the 15th day of October, fifteen days after the audit was to be furnished. Q. So it hadn't been furnished ? A. It hadn't been furnished. The resolution had no binding power on the company, except as they had accepted it, and therefore the time was taken to begin to run from the actual date of this order, namely, October 15, 1913, on which date there was simultaneously entered two orders, one as to keeping accounts, and one authorizing the bonds, and the mortgage under which the bonds were issued, they were finally approved, I think, the 26th day of November, 1913. Q. And still no audit? A. It wouldn't be expected that an audit would be furnished until after the mortgage had been actu- 1932 Investigation of Public Service Commissions ally approved and all the papers had been closed up, the matter had been closed up, and then the matter -would be gotten out again, as I would interpret it. Q. Then as to subsequen-t transactions, that applies to how you felt about the recommendations of Mr. Hasbrook about that? A. I don't know anything about him. Q, That -was the idea of Mr. Hasbrook to the chairman; you doii't agree with that ? A. I don't know that I even saw it. 'Colonel Hayward. — Well, that is all. Maetin S. Decker, recalled as a witness, testified as follows : Examination by Colonel Hayward : Q. Mr. Decker, has the testimony given by Mr, Hopson Fef reshed your recollection about this transaction ? A. Yes. Q. Do you remember what you thought about the desirability of this matter, without going into it, did you concur with Mr, Hopson or concur with Mr. Hasbrook, do you remember ? A. I concurred I think with Mr. Hopson, Do you mean as -to the order of October 19, 1913 ? Q. Yes. A. Yes. Q, Don't you think it would be a pretty good general rule, Mr. Decker, to have an audit or at least to have more knowledge than you ever had of these three companies before ^allowing a consoli- dation? Were you impressed about this matter as Mr. Hopson seems to have been impressed with it ? A. !N'ow you were ispeaking of the consolidation? Q. Yes. A. I was impressed w^ith the need of the consolida- tion in one way, yes ; I was doubtful about the consolidation at the time of the hearing, but after talking with my associates, I voted for it. ■Q, What made you change your mind? A. I didn't change my mind, I say I wag doubtful about it. Q. What removed the doubt from your mind; were you still doubtful when you voted for it? A. No, sir. Q. What was it gave you the sense of certainty and security like that you hadn't had when the hearings were closed ? A. First the fact that the pxineipal objection had been withdrawn. It is a little difficult to recall all these matters that operated on my Final Repoet of Joint Legislative Committee 193-3 mind at some particular thing ; but I must confess tHat at the time of the hearing I had some doubts about the matter. Q. You don't know whether you ever saw this, what I mig&t fairly call, adverse report, of Hasbrook's, or not, do you ? A. No, I don't think I ever saw that. Q. Now, Mr. Decker, there seems to have been one case, like the poor, which you have with you always, ever since this Com- mission was started. Senator Mills. — Are you through with that particular matter ? Colonel Hayward. — Yes. Senator Mills. — Then I would like to ask the Commissioner one or two questions. Colonel Hayward. — Yes, excuse me. Senator. By Senator Mills : Q. Commissioner, you say you had some doubts at the time you authorized this consolidation ? A. Yes, sir. Q. Was this matter passed on by the whole Commission ? A. Yes, I think so, sir. Q. Was it your custom then to assign different matters to dif- ferent Commissioners and let them report on it ? A. Yes, sir. Q. Who did have this particular consolidation? A. Mr. Stevens. Q. Did Mr. Stevens recommend the consolidation at that time ? A. Yes, sir. Q. Didn't it strike you it was shaving things pretty close to allow these companies to consolidate and issue securities with only a surplus of $12,000 ? A. It was a little close. Q. Looking back you think the consolidation was justified ? A. Why, I think fairly so, yes, Senator. Q. I suppose that others were vitally concerned in this con- solidation, outside of the stockholders, and noteholders, and bond- holders, I mean were not banks vitally interested in one of these companies at least? A. That didn't come to my attention; no, sir. Q. The proposition of having one of these companies go into the hands of a receiver with over $1,300,000 worth of notes, held 1934 Investigation of Public Service Commissions by a number of banks, wasn't taken into consideration. The first notes were outstanding undoubtedly? A. But not as affecting the banks any. Q. In other words, the Commission did not attempt to get at the whole situation or even its effect on the railroad itself or the rail- roads, rather ? A. I think it attempted to look at the whole situa- tion, but it had no correspondence with the banks nor any con- versation with bankers that I know of, it didn't come to my attention. Q. You think on the whole your decision in the matter has been justified by subsequent events? A. Yes, sir; I do. Colonel Hay ward (resuming) : Q. Do you think if you had had the fact that Mr. Hopson found when he subsequently went up there and made the audit, you would have taken the same action you did take? A. Well, that is an awful difficult question to say, concerning his statement of issuing eight or nine million dollars, and some hundreds of thou- sands of intangibles, I can't answer that question. There is a possibility that I might have had a further audit of it in the mat- ter and I might have considered it in the whole; and I might even have considered it a little at a time. Q. All that stock had been previously issued? A. I can't say now. Q. No, I suppose that is a hard question to answer. Well now, what date did you say you came on the Commission, Mr. Decker ? A. July 1, 1907. Q. July 1, 1907 ? A. Yes, sir. Q. Now it seems that complaints against the Westchester Lighting Company were coming in to the Commission, starting in along about October, 1907, that was the first complaint, the elec- tricity rate at White Plains ? A. Yes. Q. In Westchester county. Now, the second complaint was December 6, 1907; the third complaint was jSTovember 10, 1908, the gas rate at Bronxville and Tuckahoe ; the fourth complaint was December 1, 1908, the gas rate at Portchester, December 21, 1908 ; the electricity rate at Portchester, March 15 ; the gas rate at Tarrytown, March 15 ; the electricity rate at Tarrytown, April 1, 1910 ; the gas rate at Irving, April 11, 1910 ; the electricity rate Final Kepoet of Joint Legislative Committee 1935 at Irving ; so that the oldest of these oases, the oldest one is seven and a half years old, and the second one is over seven years old, and the latest complaint is nearly five years old ; is that a correct statement? A. It may be, according to the computation. Q. Well, I suppose if it is a correct computation, you would — A. I don't mean to dispute it ; I am not carrying the dates ; I have no doubt — Q. Well, when was the first time that the Commission, of which you were a member all these years, what was the first date that the Commission tried to make any decision on these cases ? A. The cases were ready for decision on January 1, 1913. Q. About January 1, 1913? A. The last brief having been filed about that time. Q. That was about five years after the complaint was filed? A. That was five years after the complaint was filed, yes. Q. Now when was an order made, first made, if one was made ? A. The order was made Pecember 22, 1914. Q. Last December? A. Yes, sir. Q. What did that order amount to, what was that order ? A. Fixes the electricity rates at twelve cents for the districts in question. Q. And it dismissed the gas complaint? A. It recommended reductions. Q. iN'ow, isn't the language used in your order, didn't you reduce the gas rate to $1.25 in well-settled districts ? A. That was the recommendation,, yes ; but it was not done, it was not decided. Q. It was not decided by the order, the order first recommended it in well-settled districts, and the electricity rate was reduced to twelve cents per kilowatt hour in well-settled districts ? A. l^o. Q. That is what is recommended ?■ A. iN'o, sir ; the electricity rate Tvas ordered reduced in that territory. Q. How much of a reduction was that on electricity ? A. From fifteen cents to — Q. From fifteen cents to thirteen cents ? A. To twelve cents. Q. Wh-at was the rate in tlie thickly-populated districts before, Mr. Decker? A. Fifteen cents, those districts invohang com- plaints. Q. It was reduced bow many cents? A. Three cents. 1936 IXVESTIGATIOX OF PuBLIC SeEVICK CoMMISSIOJTS Q. What was the rate in the more sparsely-settled districts, do you remember? A. Fifteen. Q. Was that reduced ? A. Thfee cents. Q. Down to twelve cents, was it? A. Twelve cents throug'h- out those districts. Q. Was the rate the same throughout most of the territory sup- plied by this company, fifteen cents ? A. 'No, the rate was diifer- ent in the territories outside of the complaints, and in the terri- tories involved in the complaints, the maximum rate was fifteen' cents. Q. What was the first thing that you did when this complaint was filed nearly eight years ago ? A. The first complaint was reformed by the complainants, and new complaints were filed December 6, 1907. Then some time was consumed in the prepa- ration and service of interrogatories upon the respondent at the complainant's request. May I go on ? Q. Yes, go right along. A. Hearings were held after the inter- rogatories had been received, Iffovember 10', 190^; January 18, March 23 and 24, May 9, June 27, July 11 and 12, 1910. These requests came in from the Portchester and" Tarrytown complaints, and at the conclusion of those hearings the Commission found that it had no real evidence before it from which to reach a conclusion as to the value of the property. These hearings, as I say, were under the White Plains, Portchester and Tarrytown complaints. At the conclusion of those hearings the Commission found that it had no real evidence before it upon which it could reach a con- clusion as to the value of the property — Q. What page are you reading from ? A. Page 5. Q. Page 5 ? A. Yes, now at the top of the page — " which respondent devoted to the public use in the localities involved and it notified the respondent that if it desired to rely upon any show- ing as to such value, it must prepare immediately to make such proof. Thereupon respondent undertook to make an inventory and appraisal of the property involved under all of these com- plaints, except as to the Eastchester complaint, No. 553, about which an understanding was reached at one of the hearings that the determination in that case should be governed by the evidence generally taken in the other cases. Subsequently an appraisal of the Eastchester Gas property was put in evidence." Final Repoet of Joint Legislative Committee 1937 Q. When was it that you discovered that the Commission had no real evidence before it upon which it could reach a conclusion as to the value of the property? A. Soon after July 12, 1910. Q. That was about three years after case was begun ? A. That was about three years after the first complaint, and it was about two years, a little more, after the complaints really began coming in. ■ Q. Complaints began coming in in 190Y, didn't they ? A. Yes, sir. Q. So it took you between two and three years to find out that the evidence you were taking during that time, during that period of time didn't enable you to reach a decision in this case; is that a correct stat-ement? A. The case was heard upon proceedings upon the evidence which was put in by the parties. Q. Did the Commission seek to secure any infonnation on its own volition aside from what the complaints were able to lug up here? A. ISTot until after the date I have mentioned, no. Q. Didn't you know at the outset that you would have to have this information ultimately before you could arrive at a fair and definite conclusion in this matter? A. We did not. By Senator Mills : Q. Commissioner, who had charge of this case, these cases ? A. At the outset ? Q. Yes. A. Mr. Stevens. Q. And after Mr. Stevens? A. Afterward, after about May, 1910, I think he turned them over 'to me. By Colonel Hayward (resuming) : Q. So from May, 1910, down to date, you have had charge of that? A. Yes, sir. Q. In May, 1910, you knew that all the testimony you had taken the previous two or three years was inadequate to give you the information on which to predicate a definite opinion? A. Might be unsafe to base an order against the defendants, or the defendant, upon the testimony we had already taken. Q. In May, 1910, what did you do to get this information that you then knew was necessary to have? A. After July 12, 1910, at the conclusion of those hearings, the Commission found it had no real evidence before it upon which it could reach a conclusion 1938 Investigation of Public Service Commissions as to the value of the property which respondent devoted to public use in the localities involved, and it notified the respondent that if it desired to rely upon any showing as to such value, it must prepare immediately to make such proof. Q. So you told the company to come in with its figures on valuations if it had any to give ? A. If it had any, yes. Q. When did the company produce those figures, how many years afterward? A. The first hearing of testimony after that was on March 3Q, 1911. Q. Did they complete their appraisal at that time? A. They did not. Q. They gave you the first consignment of it ? A. T es, sir. Q. After March, 1911 ? A. Yes, sir. Q. Then what happened? A. Then there were hearings had from time to time as the appraisal work progressed, and the taking of testimony was necessarily protracted over a long period because respondent's experts were unable to complete their work. Q. So I suppose back there in 1910, and 1911, during which their experts were getting up this data, you could have found experts to get this material up here for you? A. ISTo, sir; I did not. I think if you will look at the records of the hearing you will find I exercised every diligence to comj)el it to come in, hear- ing after hearing, and give their evidence, and it was discussion after discussion on that basis. Q. ITow, when was your last hearing of this testimony you started in 1910 ? A. The last hearing for the taking of testimony was March 2, 1912. Q. March 2, 1912 ? A. And argument was had on October 22, 1912. Q. Eight months later they argued the case ? A. They did. Q. The evidence was all in ? A. All in. Q. The last hearing of testimony was March 2, 1912, and you waited eight months to have an argument? A. I couldn't have it any earlier. Q. You couldn't ? A. ISTo, I couldn't get them to go into it. Q. Supposing you had set a date for two weeks for them to make their argument ? A. I am quite sure I told some dates to both parties, and they were not acted on, and they finally agreed to let it go over to October 22, 1912. Final Report of Joint Legislative Committee 1939 Q. Then you had the argument in October, 1912, then what happened ? A. The filing of briefs took up the time until Janu- ary 4, 1913. Q. So after having this case for four or five years, after the testimony closed in March, 1912, eight months later, argument was had, and then you gave them sixty days to file briefs, is that right? A. The company had what they desired, because they were both anxious to take some time, as I remember it now; at any rate, that is the way it worked out. Q. These briefs were filed in January, 1913, and you got the opinion out when? A. December 22, 1914. Q. Nearly two years later ? A. Nearly two years later. Q. Now, these complaints kept pouring in during all these years, didn't they, letters of those consumers and complaints, letters kept coming in asking why the decision was delayed; I want to read some of those letters, Mr. Chairman, into this record. There are not very many, and some of them show the diligence with which the complainants, the citizens acted in directing the Commission's attention to these matters. Assemblyman Knight: Q. Does the record show the dates of the different times to which these hearings were adjourned? Colonel Hayward. — The record does, Mr. Knight ; the opinion does not. Q. I don't mean that, I mean the record of proceedings before the 'Commission. Can you find out how many times it was adjourned ? A. No, I haven't it ; there were quite a number of hearings. Q. I mean weren't there hearings or times to which it was ad- journed, and then an adjournment without other proceedings; how many hearings did you hold? A. I can't tell you. I know there was no adjournment without some hearing. Q. I didn't know but the record will show the date of those, the date that it was set for a hearing? A. I don't know, but I know that we had different dates set for a hearing, and there were nearly 4,000' pages of testimony. Colonel Hayward. — Now, I want to run over these, I won't 1940 Investigation of Public Service Commissions eonsume but a little time witt them. Here is a letter from Joseph H. Fink of White Plains, January 8, 1913 : " To the Public Service Commission, New York City. Gentlemen : The inclosed clipping shows that the public service corporations of JSTew Jersey will supply gas to consumers for 90 cents per thousand feet. We the consumers of gas in this section are paying $1.50, and the quality of the gas is very poor at that. The fact that we are a sparsely-settled community in comparison with that served by the N. J. corporation is perhaps a weighty reason for higher cost to the consumers here, but does that operate to the disadvantage of the Westchester Lighting Company in such measure as to compel it to charge its consumers over 50 per cent, more than the New Jersey corporation, in order to enable it to pay a fair return on its capitalization ? If your Honorable Body would take up the sub- ject, you would put the citizens of this community under lasting obligation to you." Now, here is a letter dated White Plains, January 22, 1913, from the Merchants Mercantile Agency, ad- dressed to the Public Service Commission, Second District, Albany, N. Y. " Gentlemen : The Business and Professional Men's Association of White Plains passed a resolution at a recent meeting, directing the secretary to write you for the purpose of finding out the reason for the delay in making a reduction on the lighting rate as charged by the Westchester Lighting Co. in White Plains. We understand that the matter has been pending for a long time, and the people in our community are wondering why there cannot be a reduction made in the rate. Will you please let me hear from you so as to make a report at our next meeting. Yours truly, Eugene P. McKinley, Secretary." Here is another from our old friend McKinley, dated White Plains, January 24, 1913. So they were only paying thirteen cents down there before your decision, Mr. Decker, according to this. I will read this letter. " Dear Sir," addressed to Mr. Kennedy, secretary of the Public Service Commission, Second Department-, Albany, N. Y. " Your favor of the 2'3d inst. at hand, and I thank you for the information regarding the Westchester Lighting Company cases. I sincerely hope that a decision may be made as soon as possible. There are always so many people in a community to criticize the officers in the discharge of their public duty, that many reports have been circulated regarding the decision, and that the same has Final Repoet of Joint Legislative Committee 1941 been held up by certain political leaders, who have an interest in the property of the "Westchester Lighting Company. These are some remarks which have come to my ears from time to time. There is no question in my mind as to the entire sincerity of all of the acts of the Commission. I know of several of them, and know several personally, and as I said before, I hope sincerely that a decision may be rendered to do away with this unjust criticism." Here is another letter from the United Cigar Stores Company under date of February 25, 1913, addressed to the Public Service Commission, Albany, J^. Y. " Gentlemen: We list below the rates that we are paying the Westchester Lighting Company at various locations occupied by this company : Mt. Vernon and ITew Rochelle, 13 cents per k.w.h. for less than 1,000 k.w.h. in any month." iSo they were paying thirteen cents down there^ before your decision, Mr. Decker, according to this ? A. It must be it is not on a kilowatt hour basis? Q. Yes, for less than 1,000 k.w.h. in any one month, he says. A. It was twelve cents per 1,000 k.w.h. Q. How did you change that? A. We reduced the rate gen- erally to twelve cents, because in reducing, that is the wholesale rate from that maximum. Q. Well, this letter is from the Expense Department of the United Cigar Stores Company, 44 West 18th street, New York City, and says : " We bring this matter to your attention for the reason that the rates that company is charging, with one or two exceptions, are greater than the rates of any company in the United States." That was two years ago last month that the United Cigar Stores people directed your attention that with one or two exceptions these rates were greater than anywhere else in the United States. Here is a letter dated New York, March 6, 1913, evidently written to Governor Sulzer, and the Governor passed it on to the Commission. " New York, March 6, 1913. Dear Sir: Please consider this letter as an appeal to you to use your influence towards having the Public Service Commission help us in Tarrytown against the exorbitant charges of the Westchester Lighting Company. We are now paying $1.50 per M for gas, and 15 cents per k.w. for electric lighting. In San Francisco recently I noticed they charged there for house lighting of 2% cents per k.w. 1942 Investigation of Public Seevice Commissions A charge of 10' cents for electric current and $1.00 for gas can be shown to be ample to meet all charges and pay a handsome return on the investment. Very respectfully, E. F. Giberson." Here is one addressed directly to Mr. Decker, written on the sta- tionery of the Association of the Bar of the City of ■New York, April 27, 1913, and signed Joseph S. Wood, Mt. Vernon, New York: "Hon. Martin S. Decker, Public Service Commission, Albany, N. Y.: My Deae Commissionee Deckee. — -Will you kindly let me know about when our good people in Westchester county may expect the decision in the cases against the Westchester Lighting Company ? " Q. You wrote this man, you didn't know when a decision in the Westchester case would be handed down, and you speak of the con- ditions under which the case is carried on. Now, what were those conditions, Mr. Decker? A. In February, 1913, Mr. Bassett was retired from office, and a new Commissioner came on. From January 1st, until May 1st, Chairman Stevens was occupied with the so-called Buffalo cases, and I had largely to help him out with his duties and carry on my own. Mr. Stevens was not reap- pointed, he resigned, and no one was put in his place. At that time there were but three working Commissioners. Now from the period — Q. Well, just a minute. When you told us you got personal charge of this case, did you tell us a while ago it was 1910 ? A. I think so, yes; July, 1910. Q. You were so busy trying to help Mr. Stevens with his work, that you couldn't find time to go on in this, is that right? A. That is true at the time. May I go on ? Q. Yes. A. At that time we had but three working Commis- sioners. Q. For how long? A. For the whole of the year 1913. Q. What do you mean by working Commissioners, what is the difference ? A. I mean to say that Commissioner Douglas was a recess appointee, expecting from time to time to be succeeded. Q. He did not do any work ? A. He didn't do much work, as is well known. Mr. Hodson was a new member in place of Mr, Final Eepokt of Joint Legislative Committee 1943 Olmsted, and Commissioner Sague and I were the only two old Commissioners. Immediately after Mr. Stevens left, we lost two secretaries, Secretary Kennedy, and Assistant Secretary Grant. Q. It was all that time the Commission had been practically knocked in the head ? A. We were. Q. Wouldn't Hodson work? A. Hodson did work, of course, the best he could, but he was a brand new man. Q. How much time was he in Buffalo ? A. Each week, I think. Q. For how long, how m^any days each week ? A. I can't give you that, probably Friday and Saturday and sometimes Monday, according as he had cases up there. Q. And he wouldn't let Mr. Barnes, the regular electrical inspector, go up there to Buffalo to work with him, so he came down here to help the Commission ; is that the idea ? A. I don't think there was any idea in my mind as to that specific matter, no. Q. Well, anyhow, Hodson wasn't doing much down here? A. 1^0, 1 am not saying that ; he was doing what a new Commissioner, brand new to the work, could do. Of course, he was not familiar with all the various details of the work, and couldn't be. Now, that lasted all that year, except as we were able to bring in a new secretary. I think it lasted until February, when Mr. Van Sant- voord was appointed. These cases couldn't be handled unless by persistent application continuously at it. Q. Now what had the secretary to do with this case? A. Nothing, but he had everything to do with the general business of these people, and I was able with Mr. Sague and Mr. Hodson as having the conduct of the general business, the current business of the office, which, as you must know, have seen from an exami- nation of our files, is very great and urgent, the immediate cur- rent business. I couldn't get away to take up this case as I ought to do, and must do, to get it to a close, without personal applica- tion, until somebody was added to the Commission. Q. You don't think then, Mr. Decker, that three Commissioners can do the work right along ? A. Frankly I do not, unless a very ample force of experts who are permitted by law under the direc- tion of the Commission to go out and take testimony. Q. Do you favor that plan in this District? A. It is difficult to say that the dockets wouldn't become more congested, I am not sure. I do not favor the plan, I think we ought to have five Com- 1944 Investigation of Public Seevice Commissions missioners for another reason entirely. I don't think these im- portant matters ought to be acted upon by three men ; many times it is necessary to have action when a man would be absent. I think five men is best for the Commission under all the circum- stances. I think, also, we ought to be authorized to direct the secretary that the chief of the division may go out on these minor matters according to their particular occupation and handle these small matters. Colonel Hayward. — Well, here is our old friend McKinley again writing a letter to J. S. Kennedy, secretary of the Public Service Commission, in which he says under date of June 2, 1913 : " I received a communication from you on March 13th, regarding the action for reduction in the lighting rates in White Plains. In your letter you intimate that you would have the Buffalo cases disposed of in a week and you would then take up the Westchester cases. Will you write me when a decision will be handed down and greatly oblige?" On June 12, 1913, a Commissioner writ- ing to Mr. McKinley, answering his letter of June 2d, says : " I cannot write you when the decision in the Westchester cases will be handed down. I can only say that the work is progressing as fast as possible under very many untoward conditions w'hich I hope will soon be removed." Now, you have told us what those conditions were? A. Yes. Colonel Hayward. — Now here is a letter from the Village Im- provement Association of Hastings-on-the-Hudson, dated June 6, 1913: "Gentlemen: Some time ago the Village Improvement Association was advised of the consideration by your Commission of the gas and electricity rates in Westchester county. Will you be good enough to advise me as secretary of the association, what is the result, if any, of your consideration of this problem. If no decision has been reached, can you inform me what further action is contemplated ? " This letter was addressed to the Public Service Commission, Second District, Albany, IST. Y. Before you leave the stand, I think I will, or some of the members of the Committee will, want to ask you about that matter; but let us get through with this immediate case. Here is the corporation counsel of White Plains, who writes, August 1, 1913 : " I have been requested by the Board of Trustees of the Village of White Plains Final Kepokt of Joint Legislative Committee 1945 to ascertain ihe status of the proceedings before your Commission relative to the lighting rates in Westchester county. We under- stood the case was to be decided and handed down shortly after the Buffalo case. Our people are, therefore, a little anxious. Will you kindly advise me at your earliest convenience relative to this matter ? " Wow, her© is the secretary of the People's Forum of Dobbs Ferry, along in December, 1913, who says: "About three or four years ago your Honorable Commission gave the resi- dents of the Hudson Kiver Division of Westchester county a hear- ing at the Engineers' Building, concerning the rates charged for gas and electricity by the Westchester Lighting Company, which supplies both gas and electricity to that community. You have never rendered a decision in this case. Will you kindly advise when we can expect your decision ? " 'Senator Mills. — What is the reply ? Colonel Hayward. — The secretary says : " I cannot tell you definitely at this time when the decision in the so-called West- chester Lighting Company cases will be handed down. The record is a voluminous one and because of the intricate questions involved a great deal of time is required for their determination. The Commission is short-handed and because of the great amount of other work pressing upon it these particular cases have been neces- sarily delayed. I can only say to you at this time that the cases are not being neglected and that a decision will be rendered at the earliest possible date consistent with proper consideration of the questions presented. When a determination is reached by the Commission, full public announcement will be made." Now, here is a letter from C. B. Mills, Miscellaneous and Curb Securities, Mills Building, 15 Broad street, New York: "Mr. Martin S. Decker, Public Service Commission, Second District, Albany, ISTew York. Dear Sir : I write to ask if what I read in the New York Times is correct in regards to lighting rates of W.estchester county. After the people of Hastings, Dobbs Ferry, Irvington and Tarry- town have waited three years for a reduction, which could have been given over a year ago, do you mean to state that your Board is only going to reduce our gas from one dollar and fifty cents to only one dollar and twenty-five cents, when the State of New Jer- sey's maximum price is ninety cents ? and our electricity, which is 1946 Investigation or Public Service OoMMissioiirs fifteen cents, to only twelve cents, when our neighboring State price is from seven cents to nine cents. Our maximum price of gas is not one dollar, as stated in paper. It is one dollar and fifty cents, and at these prices this company robs us and we can get no redress. Do you mean to tell the people of our towns that is what we are going to have to stand for from this Board '5 I will tell you for one I will not stand for anything like that. Your Board knows as well as I do that this company is controlled by the Ck)nsolidated Gas Company of New York, and they are mak- ing big money. Your Board should not stoop to any underhanded business, and if this is the best you can do, it is about time * * * I have been fighting this gas question not for myself but for my people for three years, so will not let it rest. I think it will be about time for the papers to take such matters up and see where the trouble is. It looks to me you have been misin- formed. Your Board is not doing right. Waiting an early reply. Yours truly, (signed) C. B. Mills, Dobbs Ferry, New York." Now,, the formal order that you made, Mr. Decker, was that so much of the complaints as relates to the rates for gas must be dis- missed, but with recommendation for reduction of the gas rates to $1.25 or even lower for the well-settled parts of the districts; and that respondent shall cease from charging its present maxi- mum rates in these districts for electricity and in future shall charge for electricity in such districts not to exceed twelve cents per kilowatt hour with a minimum rate of not to exceed seventy- five cents per month. The company should notify the Commis- sion on or before January 15, 1915, of its intention respecting compliance with the order, and the order should be made effective as of January 1st next, to apply to bills rendered on that date. Now, what good did you think this recommendation was going to do the people down there, really and truly ? A. I thought — the Commission thought — the gas company ought to reduce those rates ; that $1.50 was too high for gas. Q. If you thought so, why did you not say it ? A. I did. Q. Why did you recommend it? A. That was the best we could do on the evidence. Q. The same thing that brought you to the conclusion that the gas company ought to reduce its rate to at least $1.25 ; did not that also bring you to the conclusion that it was the business of Final Report of Joint Legislative Committee 194Y the Commission of this District to make them reduce those rates ? A. It was if it could. Q. You did not think it could ? A. Not on the evidence. Q. You waited upon this thing each year and then came to the conclusion that you could not make this company reduce its rates ? A. I detailed how the case went along and how the work was handled. Q. What was lacking on your part and when did you first dis- cover the deficiency in the proof ? A. The proof ? Q. Yes. A. "Well, after using — Q. Why could you not have made an order covering exactly the same thing you made the recommendation on? You would not want to recommend this company out of business ? A. This Com- mission could not issue an order of that kind except upon proof which warrants the reduction, and one feature of the Public Serv- ice Commissions Law is that the Commission must pay due regard to the value of the property used in the public service and the necessity for surplus contingencies. Q. Then did you think that a reduction to $1.25 was going to make that condition impossible and injure the company? A. So the opinion advised. Q. Then why did you make the recommendation, if you thought that was going to injure the company? A. I think as a business proposition it is a good thing. The opinion fully sets it out. Q. You did not have sufficient evidence upon which to predi- cate an opinion, then? A. No. Q. When did you find out you did not have this evidence, how long ago — 1910, when you got the case? A. No, sir. Q. How many years after 1910 did it take you to find out you did not have the evidence ? A. I found it out certainly after the opinion was prepared. Q. After what opinion was prepared? A. This opinion (indi- cating), as it was being prepared. Q. And it was that time you found it out? A. No. Q. How much longer than that did you find it out ? A. I came quite fully to the conclusion that nothing could be done as the case stood. The Commission had utilized the services of Professor Bemis, and I had gotten his statement and had talked with him over it. 1948 Investigation of Public Seevicb Commissions Q. Now, you recommended that they reduce their rate to $1.25 in well-settled communities. JSTow, is it not a fact, Mr. Decker, that in Yonkers, in Mount Vernon and New Eochelle, the rate is down to $1 and $1.10 ? A. We thought a rate even lower than $1.25 should be given for the well-settled parts of the districts, and that respondents cease from charging its present maximum rates in these districts for electricity and in future charge for electricity in such districts not to exceed twelve cents per kilowatt hour with a minimum rate of not to exceed seventy-five cents per month. We thought that a proper increase in the otlier sections to correspond with the increased investment would be just. Q. They have already got a rate of $1 in Mount Vernon, $1 in Yonkers, $1.10 in New Eochelle, $1 for power and $1.'25 for fuel in Port Chester ; so that your recommendation, so far as Tarrytown and White Plains was concerned — what do you mean by " well- settled districts ? " How are we going to find out who are going to get the relief under this opinion ? A. Tarrytown proper is well settled ; Port Chester proper is well settled ; White Plains proper is well settled ; but the districts may, and do, run outside into thinly-populated territory. Q. Now, has the company notified the Commission whether it would accept that order or not? A. The company has filed an application for a rehearing. Q. And the complainants have too, have they not? A. And the complainants have too, two of them. Q. 'So that this decision did not seem to suit either side, did it ? A. No, I am afraid it must have been a good decision. Q. You think it must have been a good decision ? A, I said I am afraid it was. Q. Bid the evidence show how much the cost of manufacturing and distributing the gas was for the company's entire operation, including all overhead charges ? A. The operating expenses for 1909 — do you mean just gas ? Q. Yes. The testimony showed they were manufacturing and distributing this gas for about sixty-five cents a thousand cubic feet? A. Operating expenses, outside of taxes, for gas, in 1909, were $892,154. Q. How is that figured out ? Have you figured how much that was a thousand cubic feet? A. No, that is for the whole territory. Final Report of Joint Legislative Committee 1949 Q. Have you got how many thousand cubic feet they manu- factured ? A. 1909, expressed in thousand cubic feet, it was 1,0'79,844. Q. How many, Mr. Decker ? A. One million seventy-nine thousand eight hundred and forty-four. Q. That is what ? A. That is thousand cubic feet. Q. What was the total operating cost? A. 1909, $892,154.40. Taxes are to be added of $66,173.79. You have also got some uncollectible bills in, which raises it up to $965,627.53. Q. Well now, that figures out about sixty-five cents a thousand cubic feet, does it not? A. It must figure out more if you take the total expense, $965,627. Q. Anyway, it is considerably less than $1. Now, you never did find out any real tangible property cost for this property down there, did you, Mr. Decker ? A. The cost ? Q. Yes. A. E"o, sir. Q. Well now, why were you unable to ; did you not have .the figures ? A. We could not get the figures. Q. Will you not ever be ablei to get those figures ? A. I do not know. I think we will have to do some estimating, if we try to do that. I am inclined to think we could do something more about that in case the case should be reopened for a rehearing. Q. You did find out there was twelve and a half millions' worth of bonds in the New York & Westchester Lighting Company that did not represent property, did you not ? A. Yes, sir. Q. And some of the other items you could not find anything about at all ? A. No. This was about that change of ownership transactions. Q. Now, do you mean to say that the Public Service Commis- sion of this District is perfectly helpless when confronted with such a situation as the Westchester Lighting Company case, for eight years, that at the end of eight years they are unable to make an order against this company predicated upon any facts and fig- ures, that will stand up ; is that a true statement ? A. I want to say that, with the difiiculties that surrounded the case, as to its hearings and as to its decision, as to the short membership of the Commission, that just that result did occur. Q. Well, excuse that entirely for a period of one whole year, on account of that shortage, and come down to date. What are 1950 IlSrSTESTIGATION OF PuBLIC SeBVICE COMMISSIONS you going to do ? What can you do ? A. Well, sir, I 'have some rather strong opinions on that subject. Q. I would like to know what your opinions are? A. I think the reproductive cost theory is unjust to the public. I think the rule ought to be that the original costs, if obtainable — and if not altogether obtainable, then estimated — ought to be the true basis for determining rates. Q. You did not think that in 1910 ? A. Yes, sir. Q. Could you get at it ? A. ISTo, sir. Q. You cannot now ? A. 'No, sir. Q. Never will be able to ? A. I do not know about that, but I want you to know that the Commission does not have the say. The law says something else. The Supreme Court says something els© — the Supreme Court of the United States — and we are bound by it, and we have got to get a value according to the deci- sions of the courts. I think it is too bad. I do not think the public is well served by the existing state of law to-day. Q. In these eight years you have been wrestling with this ter- rific situation in Westchester county, have you suggested to the Legislature that the law be changed? A. I not only opposed it when the clause I have spoken of was put in the Public Service Commissions Law in 1910 — the one that requires the Commis- sion to pay due regard to the value of the property used in the public service and to the necessity for surplus contingencies — because with that in the law, it makes it a positive command to the Commission to do that in every case where the respondents insist upon it. It is not in the Inter-State Commerce Commission Law. I opposed it at the time most strenuously. It was put in with the amendment of 1910'. Now, of course, even with that out of our law, we still 'have the rule as laid down by the Supreme Court of the United States, with which you are doubtless familiar. Q. Yes. A. And we must pay regard, and very careful regard, in the preparation of our opinions, to the necessity of not commit- ting reversible error, because our Court of Appeals and our Appel- late Division will undoubtedly, if it is reversible, acting upon the record presented to them ; and the Appellate Division of this juris- diction has quite lately, in the Commutation Rate cases, held that we must take the real proof and we cannot presume upon this thix^ or that thing, but must get it into the case. Final Eepoet of Joint Legislative Committee 1951 Q. Could you not have got the real proof in this Westchester case in the record somewhere ? A. I do not think so. Q. Why? A. I do not think it was obtainable. Q. Is it not obtainable now? A. I cannot pass an opinion upon what may be obtainable now. Thursday these rate cases are to be heard on the application for a rehearing. If there is error in our decision, no one will be more glad than I am to cor- rect it. Q. Oh, you have granted a rehearing of the case ? A. We have set a hearing on the application for a rehearing. The cases are still open on that basis. Assemblyman Knight: Q. When are they to be heard? I see your docket does not show? A. Thursday. Q. This week? A. This week. By Colonel Hayward: Q. Both sides applied for a rehearing ? A. Both sides applied for a rehearing. By Assemblyman Knight: Q. Just one question I would like to ask you. When were these valuations made of these properties? What years were those? A. The valuations were made as of December 31, 1909, though the inventory and appraisal were made afterwards. Q. How long afterwards was that made ? A. During the time I have mentioned, in 1911-12. Q. Well, you have granted a rehearing. Will it not then be necessary, in view of the length of time that has elapsed since the last valuation was made, to have a revaluation of this property? A. I think there should be additions and have it brought down as to the latest date. Q. That is all. By Colonel Hayward: Q. Have you any idea, Mr. Decker, how much this opinion of yours will save the people down there per annum ? A. JSTo, I do not know how much gas or electricity they will use. Q. You have no idea? A. I think if the rates were put in 19 S2 iNVESTlGAflOX OF PuBLlC SeEVICE COMMISSIONS effect there will be an increased consumption down there, but no one can tell. I do not think the company — though I do not want to disqualify myself for this rehearing — I think I can go so far as to say — the opinion says it — I do not think the company has been up-to-date in its business relations with its people down there. I think those rates ought to have been reduced voluntarily, and I think they should have sought to satisfy the people down there. Q. You do not know how much saving would have been effected to the people of Westchester county if this Commission had rendered its decision after three years' consideration instead of after eight years? A. 'No, I cannot tell you that. Colonel Hayward. — Commissioner, that may be all in this par- ticular case, but we would like to ask you some other questions to- morrow as to the duplication of the functions of the two Com- missions. The Witness. — If you can get through with me to-day, I should be glad to have you. Senator Mills. — I do not think it will take very lorg, and it will be impossible for some of us to be present and hear all of your testimony to-morrow. By Colonel Hayward: Q. Do you know any place where the two Commissions dupli- cate functions, Mr. Decker? A. I do not. Q. Or where this Commission, or the other Commission, or the Inter-State Commerce Commission, have a duplication of func- tions? A. There is no real duplication of functions between the two Commissions. Q. You mean between between your Commission and the Inter- State Commerce Commission? A. Yes, sir; I am regarding us as one now. I do not think there is any real duplication. We get the annual reports of certain railroad carriers, which also report to the Inter-State Commerce Commission. While we keep our statis- tical force going, all these other companies, which are undoubtedly within our jurisdiction — Q. You mean exclusively within you jurisdiction ? A. Yes. sir ; I beg your pardon. I mean it that way. We need the infor- mation in the annual reports of the larger railroad systems, like the Final Report of Joka't Legislative Committee 1953 Erie, Pennsylvania and New York Central quite as much for our own work as the Inter-State Commerce Commission does for its work ; so that while we try to harmonize our requirements in order not to make the companies do two kinds of work or keep two kinds of accounts, we do, to that extent, have a duplication of work by the companies and by ourselves, but this is inherent. Q. An unavoidable duplication, you think? A. Yes, sir. Q. Do you think that could be avoided without 'hampering either the Inter-State Commerce Commission or yourselves ? A. Of course, it has got to be made for that Commission ; and it might just as well be made for us. We desire in our annual reports from carriers various things which the Inter-State Commerce Commission, not having charge of capitalization, has not thought necessary to require. Of course, that is additional. We are very careful, however, to make that requirement in such form that it can be put in a proper, or separate place. Now, constructively. under the statute we have charge of safety appliances on steam railroads, and so has the Inter-State Commerce Commission. As a matter of fact, those safety appliances have been prescribed by the Federal body, such as air brakes, automatic couplers, etc., and our functions, though laid in the statute in respect of safety appli- ances of that character, are no longer operative. Now, we do have a real duplication in the inspection of locomotive boilers. I think it is very doubtful whether we do need that authority any more. I am inclined to think that the State might save the expense of maintaining a locomotive boiler inspector for this State by amend- ing the statute in that respect. Nevertheless, occasions arise, quite independent from a general inspection of locomotive boilers, to see that the power of railroads is kept up, and that goes to the service function on the railroads instead of this specific function men- tioned in the locomotive boiler statute. So consequently, we will have to continue our general supervision of the equipment, •although the Legislature may repeal the specific requirement for locomotive boilers. Now, there is no real duplication otherwise, that I remember. I think there is something of the same kind about hours of labor, but there, again, you have the Interstate re- striction of hours of labor working, and we have had nothing of that kind to handle, so far as I can recollect, where the question arises as to the hours of labor for an employee who could not be 62 1954 Investigation of Public Service Commissions construed as operating in Interstate Commerce. Now, there is an idea of an overlapping of functions sometimes prevalent in the fact that one railroad between two points may run within the State, and another railroad between the same points may run with- out the State, passing out of the State and back again. The Supreme Court held, some years ago, that where a railroad begins in one State and ends in another, or the transportation does, going out of the State, that that is Interstate Commerce. Now, it is true that as — Q. You mean that where a road started from a point within the State, went out and came back to the same point within the State, that is Interstate Commerce? A. Yes, sir. Where the road runs wholly within the State, that is State Commerce. 'Now, it is con- ceivable that the Comm.ission of this State may order one rate in, and it is conceivable that the Interstate Commerce Commission, on the interstate railroad, may order another rate in. Practically, it will not happen. Q. Has it ever happened in your recollection ? A. No. By Senator Mills: Q. But it has happened in such cases as the Preeport (Shrieve- port) rate case — it has happened in other States, and the Pree- port rate case arose from that very situation, did it not ? A. Not quite. The Preeport rate case arose from the operation of a rate prescribed by the Texas Commission within Texas. Q. That is just what I was coming to. Have you not got a situation, insofar as rates are concerned, where an Interstate Commerce decision is -practically controlling insofar as an intra- state rate "would effect an interstate rate? A. I agree that it ought to control within proper limits. Q. And is it not a fact that every intrastate rate indirectly affects every interstate rate? A. I do not think so. Senator. Q. It does in a good many cases? A. I only think so where there is some direct effect. Q. You do not think that the indirect effect on the revenues of the railroad is sufficient to bring it within the Preeport rate de- cision? A. No, sir, I did not. Q. So that you still think there is a very definite function for the New York Public Service Commission passing on intrastate Final Repoet of Joint Legislative Committee 1955 rates affecting interstate railroads? A. So far as the railroad is physically interstate, yes. There is no reason why the Erie Kail- road, on points between two points within the State, should not have its rates fixed, just the same as a railroad -which runs wholly witjhin the State. Q. But if that rate should in any way be a discrimination or un- fairly affect an interstate road, that ruling should be subject to be overruled by a ruling of the Interstate Commerce Commission? A. Theoretically, that is so, but I quote, I think, the opinions of Interstate Commerce Commissioners that it is rare when there would be any such action under the theory of the Treeport case. Q. Well, now, when you get an entire revision of interstate rates, does that not almost inevitably affect intrastate rates on interstate railroads ? A. Very largely. Q. And you think it is highly desirable, is it not, that you should have harmony, or co-operation, let us say, between the Interstate Commerce Commission and the local Commission ? A. Undoubtedly it is. Now, when you say " entire revision," I sup- pose you mean a revision of some particular rate schedule. Q. Yes, I had in mind the last revision? A. You mean the advance ? Q. The advance? A. Five per cent, advance? Q. Yes. A. Well, of course, that is an exceptional case arising under the provision of the act to regulate commerce, authorizing the Interstate Commerce Commission to suspend increases in rates. We have the same thing here now, as put in last year, and it has resulted, when a large crowd of carriers like those in East- em Official Classification territory desire to advance their rates, they practically go down to the Commission and ask for leave to do it, though, as a matter of fact, they could put in their rates and wait for the suspension. Now, then, when that has been passed upon by the Interstate Commerce Commission and allowed, it is the thing for the State Commission, as far as it can, to permit a similar general advance within that State; and that is what we have done here. Q. Well, in other words, you accepted the ruling of the Inter- state Commerce Commission insofar as rate advances were con- cerned ? A. Yes, sir, subject always to the bringing of complaint as to particular rates by shippers or consignees interested. 1956 Investigation of Public Skevice Commissions Q. But you did not attempt to make an independent investiga- tion? A. No. Q. Yon accepted tJie Interstate Commerce Commission rule? A. Yes, sir. Q. So that, insofar as rate r^'ulation is concerned, with inter- state railroads, there is very close connection between the work of the Interstate Commerce Commission and the work of the local Commission ? A. Yes, a very close general relation, yes, sir ; and in our National Association we have been for years trying to bring about more and more greater harmony between the Federal and State regulations. Q. Now, we have never had any trouble in this State, but in some of the western States they have had considerable trouble ? A. The trouble has come from legislative prescription of rates, or some Commission that wanted to do a perfectly radical thing. They are becoming less and less, those instances. Q. It is quite a conceivable thing that a New York Commission might sometimes do a perfectly radical thing? A. If it does, I am quite sure the Courts will take care of that Commission. Q. Is it desirable to in any way amend the law, or is it possible to amend the law, so as to bring the Interstate Commerce Cora- mission and the local Commission into cloeer relationship ? A> I cannot say. I have thought about that often. Senator. The field must be kept independent. Q. Now, the suggestion has been made, when we were holding hearings in New York, that there should be three Commissioners who should have charge of Public Service regulations in the First District, three Commissioners handle all matters within the jur- isdiction of the First District, wholly within that district; that there should be three Commissioners who should handle matters wholly within the jurisdiction of the Second District, and that there should be a Chairman, who should have jurisdiction over the v?hole State; and that the two Commissions should sit, with the Chairman, as a Commission having jurisdiction over corpora- tions which did business in the First and Second Districts, more particular interstate railroads or trunk lines; and it was further suggested that the Chairman, who should concern himself prin- cipally with those matters affecting the whole State, would have sufficient time to familiarize himself with matters which were Final Kepoet of Joikt Legislative Committee 195T directly affected by lie Interstate Commerce decisions, and that he might be the Chairman through which a closer relationship should be brought about between the Interstate Commerce Com- mission and the local Commission? A. I think that is very theoretical. Practically, I think that Chairman would have a good easy job; but if the three-headed Commission in each dis- trict is to act independently of the Chairman as to matters within a particular district, this floating Chairman — the general Chair- man — would have very little to do, since there is practically very little clashing between the two Coininissions. Q. You mean to say that trunk lines and telephone lines give you very little work ? A. You mean relative ? Q. Yes. A. They give us lots of work. Q. That would be within his jurisdiction as Chairman of the whole Commission, so would telephones ? A. Then I understand you to mean that where a railroad, for instance, carries traffie from a point in this district to ITew York City, that that would be a part of the general Chairman's work ? Q. Yes. A. That might be handled, but can it not be 'handled' cfuite as well under the present regulation, which gives this Com- mission the jurisdiction over railroad rates and railroad service through into 'New York City ? Q. You do not think as a logical proposition you should have jurisdiction over telephone rates, do you ? A. I never have- thought so. I think in New York City, the ISTew York City Com- mission ought to control the telephone rate situation there; but confine it to New York City. Q. And the up-State Commission control the up-State rates ? A. Yes. Q. Are not the New York City rates and the up-State rates so closely related that they should be handled by one Commission rather than two? A. No. Q. Do you not think that it would be better to have the two Commissions of three members, with a Chairman, making a Com- mission of seven, making telephone rates for the whole State,. rather than giving jurisdiction to two different Commissions with a right to handle those rates? A. I do not want to take any positive position on that, because I have not given that so close- thought as you evidently have. 1958 Investigation^ of Public Sekvice Commissions Q. Will jou think that over and let us have your opinion ? A. Yes, sir. Q. I have only one or two other questions, Colonel, and Mr. Commissioner, which I would like to ask. What particular Com- missioner in your Commission had charge of the telephone rates? A. No particular Commissioner. Q. It was handled by the whole Commission. A. It was handled by the whole Commission. I necessarily had to have a, very unusual share since about the 1st of January, 1913. Q. That has been going on since the 1st of January ? A. Yes, sir, but that is because of the situation of the membership. Q. What would you say to giving jurisdiction over Long Island and Westchester to the First District ? A. I would be very much opposed to it. Q. On what ground? A. On the ground, first, that the reason for a city Commission is to take care of city business ; and next, you would have simply an arbitrary method of apportioning ex- penditures. I fear you might get into serious difficulties in a con- stitutional sense if you did. Q. You do not think that the service is so closely related to the city's interest that it should be included? A. No. By Assemblyman Knight: Q. Of course, under the present statute, your orders fixing the rates take effect upon any new rates from the time your order is granted, do they not? A. Yes. Q. What would you say as to whether or not the statute ought not to be changed so that the order could be retroactive; that is, without talcing effect as of the time of the filing of the petition? A. Are you speaking about railroad rates ? Q. Gas rates or electric rates, electricity rates ? A. In railroad rates, we have the system of reparation as the Interstate Commis- sion has. Q. Had you in mind particularly gas or electricity rates ? A. Well, I do not think it would be a bad thing. I think it might be considered as going in. You mean where a refund is found neces- sary, that, for a reasonable period back, the company should be ordered to refund? FiNAi Report of Joint Legislative Committee 1959 Q. Well, should not the rule be uniform as to railroads and gas and electricity, don't you think? A. I see no objection to it. Q. Is there any reason why they should not be ? A. No. Q. Now, there are three different remedies provided by the statute for the enforcement of your orders, the criminal remedy by the criminal proceedings, and by mandamus and also by an action to recover ? A. Forfeiture ? Q. Forfeiture, yes. Have you attempted to enforce any of your orders by resorting to any of these proceedings ? A. Forfeiture for non-filing of annual reports and other things of that sort, a good many of them. Q. Have you found the remedies provided by the statute effect- ive and sufficient to enforce your orders ? A. Yes. Q. Down in the First District, the testimony given by some of the Commissioners was to the effect that the penalty provisions in the statute were not effective because of the amount of the penalty fixed by the statute, which is not to exceed $5,000'; and if a pen- alty suit is brought to recover a penalty of $5,000 in a case in which the violation might seem to be trivial, that a jury sitting upon the case would give only a nominal penalty, fix a nominal amount as a penalty. Do you find any objection arising from the amount of that penalty? A. ~So, sir. If we can get the annual report filed in time, or the corrections of the annual reports, or any violation of the filing requirements, we would rather have them come right in and submit by the filing of the document and take a small penalty rather than to force them to pay a large pen- alty as a punishment. Sometime or other, some recalcitrant com- pany will probably get a much higher penalty. Q. Have you had an occasion in any other cases to resort to any one of these remedies except as stated here, for failure to file a report? A. No, I do not think so. We have issued numerous orders to show cause, where apparently a company was not doing something required by the statute, and very generally they come down and say they will do it, and we see to it that they do do it. Q. Now, in this plan of organization, which was suggested by Senator Mills, do you understand that would leave three Com- missioners to do the work that is being done by five in this dis- trict? A. Yes, sir. Q. I understood you to state, some time ago, that you thought 1960 Investigatiox of Public Seevice Commissions that the number of the Commission as at present constituted is as small as it ought to be ? A. I think so. There is work here. Q. So you think there ought to be five in this district? A. I am inclined to think so. We have a very large number of corpora- tions, and there ought to be five here, five of the best men, of course, that you can get ; and the terms ought to be longer. Q. How about the salary? A. The salary ought to be as high as it is. Q. Do you know anything of the work of the First District, the volume of the work ? A. No, I do not. Q, Do you know enough about it to pass any judgment on the question as to whether three men could do that work there, in- cluding the subway construction work, as at present ? Have you any idea of it? A. Why, I had supposed that the subway work would take a good deal of the time of two or more Commissioners, and that the regulation work would occupy the others. What might result when the subways are finis'hed is another matter. Q. Then if you added Westchester and Long Island, you would still have additional work for the Commission ? A. You would. Q. That is all. By 'Senator Mills : Q. Commissioner, if you took trunk lines and the telephones and all matters that affecting both the First and the Second Dis- tricts away from this district, do you still think you would need five men to do the work? A. Yes, I do. I do not think you could take that away, because you would still have the intra- district work here to do. Acting Chairman Maier. — Is that all. Colonel ? Colonel Hayward. — Yes. Acting Chairman Maier. — The Chair desires to state that to- morrow morning the Committee will meet in the Supervisors' Eoom in the City Hall. We will adjourn until 10 :30 to-morrow morning. Hearing adjourned to Tuesday, March 9, 1915, 10:30' a. m. Final Eepoet of Joint Legislative Committee 1901 MARCH 9, 1915 Committee met in the Siipervisors' Rooms in the City Hall, oi the 9th day of March, 1915, at 10:30' a. m. pursuant to adjourn- ment taken from Monday, March 8, 1915. Peesent : The full committee being present. Appearance : Colonel Hayward for the Committee. Adjournment duly taken to 2 p. m. AFTERNOON' PROCEEEimGS The Committee met at 2 p. m. pursuant to adjournment. Chairman Thompson. — This Committee wishes to apologize to Judge Hodson for keeping him here so long but other important public business took up the time of the Committee. Judge Hodson. — Not at all, Mr. Chairman, I am perfectly willing to wait. Secretary Mott. — I have here a list of all the hearings, 354 in number, held in the city of New York, as you requested. Shall I file them with the stenographer ? Chairman Thompson. — I think you better hand it to the counsel. Secretary Mott. — It is just a record, don't need to be put in the minutes. Chairman Thompson. — If there is anything that you desire to go on the record, all right. Devoe p. HoDSOJsr, sworn as a witness and examined by Mr. Buchner, testified as follows: Q. Commissioner, will you give the stenographer your full name, please ? I guess they both have it, they have taken a great 1962 Investigation of Public Sektice Commissions manj cases where I have been interested. Devoe P. Hodson. Eesidence, 12 Colonial Circle, Buffalo, I^. Y. Q. When did you become a member of this Commission, Mr. Hodson? A. I was appointed by the Governor February 4, 1913, as I recall. Q. And you succeeded whom? A. I was confirmed I think the 7th of February, and succeeded John B. Olmsted of Buffalo. Q. Tell us how, Commissioner, generally what work was as- signed to you as a member of this 'Commission ? A. All kinds of work; all kinds of cases. Q. What was the extent that you took hold of the Buffalo cases in particular ? A. As I have seen it stated in the newspapers, it was very erroneously stated. I do a great deal of Buffalo work. That is to say, I try a great many Buffalo cases, but there are very many Buffalo matters that other Commissioners attend to, both here and at Buffalo. Q. Was there any division of the work among the Commis- sioners, the same as it was in the First District, one who had charge of the capitalization cases, especially, and so on ? A. Well, I can't say that there is, that there has been any definite arrange- ment or determination in that respect; but by common consent I think ever since the Commission was formed, the Chairman has taken care of capitalization matters, the iriore important ones, here at Albany ; but the work to which your question was directed, that of myself in Buffalo, is more litigated cases, cases that should be heard on the ground, either in Buffalo or in Western or South- western New York, that I have paid special attention to and the other Commissioners have not, as a general proposition. Q. I find from an examination of the annual reports for the year 191& and 1914, a great number of cases dismissed upon de- fault of the complainant. Will you tell us, please, just what that means ? A. Why, it is quite impossible for me to tell you until I know what the case was on which the order — Q. Well, it shows that the case was dismissed upon the default of the complainant. A. Well, it has always been my practice not to dismiss a case, if I could help it, because they could very well and very easily renew it, and it is infinitely better to go on with the case if it is already before us than to dismiss it and have it brought up anew. I don't know what you refer to. Any particu- lar case in your mind ? Final Repoet of Joint Legislative Committee 1963 Q. Take Case No. 4503, that is a typical case. T'hat was a complaint by the Cloverdale Farm Company, asking that the Com- mission direct the Conant-Bryant Power Company to furnis'h elec- tricity. The hearing was set for the 25th day of September, 1914, and I shall read from the minutes of that hearing. " Present : Hon. Devoe P. Hodson, Commissioner presiding. Appearances: Mr. R. W. Bryant, for the 'Conant-Bryant Power Company. Commossioner Hodson; In the matter of the complaint of the Cloverdale Farm Company, asking that electricity be furnished complainant in the town of Wilson, Niagara county. Is the com- plainant here? (Note. — Commissioner Hodson had previously called this case, and there being no appearance on behalf of the complainant, he heard another case out of order, on the calendar, to give the complainant an opportunity to appear.) Mr. Bryant: I appear for the Power Company. Commissioner Hodson : There being no appearance on behalf of the complainant, the complaint is dismissed, unless they should happen to run across you, Mr. Bryant, and bring you back. Mr. Bryant: Thank you. Case closed." A. Well, I can't state that more accurately than I did a moment ago there. Q. Did you or the Commission make any investigation into this complaint ? A. I don't know of any investigation being made. Q. It possibly might have been a meritorious complaint, as far as your Commission knew? A. We assumed it was meritorious or we wouldn't have kept a hearing for it. Q. Nevertheless, the complaint was dismissed upon default of the complainant. A. Well, I assume that the Secretary gave ample notice to the parties, and if they didn't desire to appear, we couldn't go about the country and find every complainant. Q. Was it the policy of the Commission, do I understand it, to dismiss the complaint unless the complainant appeared ? A. Not always. Q. It was so in this case? A. Well, really, I can't say vsrhat was done in that case. Q. Well, that was all that was done. I have read all of the minutes of the hearing. The case was dismissed upon default of complainant. A. Well, a Commissioner can't dismiss a case. He has to bring it to the Commission. Q. Well, an order was entered in that matter, was it, in that case, dismissing it? A. Yes. 1964 Investi&ation of Public Service Commissions Q. So 'ill this, particid'ar case at least, this case from the inves- tigation we had muade^ is typical of a -whole number of other casesj l!he eomplaiat was dismissed merely because tte complainant failed toi appear, no other grounds for dismissal, as far as the Teoord shows ? A. I don't know of ainy other ground existing. Q. And once again you made no investigation, you or the Com- mission, as to whd;her this was a meritorious complaint. A. I inow of nothing else being done except as you have read from the Teeord ; unless the papers s'how some otiber proceeding, I know of 310' other. Q. Would it be fair to assume that there were hundreds of other ■cases of this kind dismissed upon default of the complainant only ? A. I don't believe that there has been five before me of that character. Q; Before you personally ? A. Yes. I don't believe there has been five. If you will permit me to say that a case that I have had' •down for Monday of this week was a case that I revived myself. 1 'have examined witnesses where the complainant failed to ap- pear, where the company moved for a dismissal, and I said Noj "they live some distance from here, and we want to go into it and find out and have a hearing, and so I did on Monday last at Buffalo, and we adjourned it to Saturday of this week to be tried. Q. Well, in this case you mentioned, suppose the complainant lad not wanted to go on ; would that case have been dismissed ? A. I should recommend its dismissal, yes, sir. Q. As I imderstand it, this Public Service Commissions Law was made for the purpose of giving the citizens of this S'tate an 'easy and accessible way of remedying faults in public service cor- porations ? A. I 'am sure I do not know any more easier or ac- cessible way than for the Commissioner personally to cross the State and ask them to come and see him and bring their com- plaints before tbe Commission. I do not know what more the Commission can do. Q. And the Commission never made any independent investi- gation as to wether the complaint was merited? A. I do not "know of any. Have you looked at the folder containi-ng the cor- respondence ? Q. There was no correspondence in this folder. A. I did not Inow but what there might be some letters explaining it. Final Report of Joint Legislative Committee 1965'' Q. Except correspondence here from tlie corporation complained against? A. Yes. Nothing from the complainant? Q. Not that I see. A. You will find there, of course, a notice from the Secretary's ofiice of the hearing to the complainant ? Q. In case 2371 — this was a case, if I misstate these facts, please correct me — which started on May 25, 1911. It was a complaint of the residents of the city of Syracuse, complaining of the transit conditions in Syracuse and adjacent territory prior to May, 1911. On May '25, 1911, an order was issued by the Commission requiring increased service and equipment I shall read paragraph 10 of that order. It seems that the company com- plained against complied with the first nine paragraphs, so -we wilt omit those. " Within five years from June 1, 1911, construct and' have in operation in connection with its lines and service the fol- lowing additional extensions and improvements, adding to its- lines such lines and service at least a full proportion of such ex- tensions and improvements each year: extension of the double^ track on Seneca Turnpike from Salina street to Cortland avenue, extension of the double track to Burnett avenue and private right of way to the village of East Syracuse, completely double^tpack the present Syracuse line from Dansville street, purchase and put in service not less than twenty-five new double-truck cars, con- struct an additional E transformer station, with proper feeder connections. The company shall, between November 1, 1911, and January 1, 1912, submit to the Commission a schedule of the ex- tension improvements hereby ordered, which it proposes to make- during the period up to January 1, 1912, and on each and every June 1, thereafter, until- June 1, 1916, a schedule of extensions; and improvements hereby ordered, which they propose to make during that year. The said schedule may be submitted prior to June 1st in any such year that the company shall so desire. Such further orders in respect of these improvements will be made upon submission of such schedule each year, as may be required." Then, several months later, September 27, 1911, an amendatory order was issued in this case, amending this last paragraph which I have just read to read as follows : " The company will, each year, for five years ensuing, beginning with the month of Decem- ber, 1911, 'and during the month of December of the said year, :file with the Commission a statement showing what it has done- 1966 Investigation of Public Service Commissions during the then calendar year in the way of making the exten- sions and improvements required by this paragraph 10, and show- ing such matters in detail, with the cost thereof." Now, it seems that the company complied with the first nine paragraphs of the original order, but objected to paragraph 10, and from the date of the entry of that order, it was not complied with. Chairman Thompson. — What order is that ? What is the date of that order ? Mr. Buchner. — From the 2Yth of September, 1911, to June 13, 1913, that order was never complied with as to paragraph 10. Do you recollect that that is so ? The Witness. — I never heard of that case. I did not go on the Commission until February, 1913. Chairman Thompson — When ? The Witness. — -February, 1913. Mr. Buchner. — That is a fact. The correspondence shows that. On January 13, 1913, after sixteen months after the amendatory order was filed, Edward H. Wells, one of the subordinates of the Commission, wrote the following memorandum to the Secretary of the Commission. I shall read that. Chairman Thompson. — When were you appointed ? The Witness. — I became Commissioner February 7, 1913. I knoiv nothing of that case whatever. Mr. Buchner. — This case ran over tO 1915. Chairman Thompson. — I assume the Judge did not know any- thing about what the Public Service Commission was doing before he went on it. The Witness. — I used to know a little about it, but not officially. Mr. Buchner: Q. On January 13, 1913, Mr. Wells, in this letter, says: "It is evident from this report " — referring to a report from the railroad company complained against — " that B, and F " — he FiKAL Repoet of Joint Legislative Committee 1967 refers to B, C and F herein the order I have read — " has not in any way been complied with, and no work has been done. This matter is, therefore, called to your attention. Edward H. Wells." A. My attention? Q. To the attention of the Secretary of the Commission. Was that memorandum ever brought to your attention? A. I never heard of that case nor of that requirement before. Q. So that you never knew this particular company was vio- lating one of the orders of your Commission for sixteen months? A. I never knew it. Q. When you went on the Commission, did you inform your- self as to the outstanding orders of your Commission ? A. Hardly. Q. You did not? A. l^o, sir. By Colonel Hayward: Q. You say when you came on the Commission you did not attempt to familiarize yourself with any of the orders the Com- mission had issued previously? A. I familiarized myself with certain orders and certain proceedings in certain cases, but I do not recall hearing of that case before. Q. Did you ever look to see what particular orders your im- mediate predecessor on the Commission had been instrumental in having made? A. I have in certain cases. Colonel Hayward. Q. Did you go through that docket to find what your immediate predecessor had done on the Commission ? A. On all the orders ? Q. Yes. A. No. Q. Did you not think it would be well to do that, so you could take up his work where he left it off? A. I went over the cases tried before me or tried before the Commission, but I did not go through seriatim all the decisions the Commission had made. Q. Or that your immediate predecessor had made? A. Why no, I did not look up the cases that Mr. Olmsted had tried. Q. Did you make any inquiry to find out whether the orders in cases that your predecessor had tried were being enforced or not ? A. Why, if they were brought to my attention, yes. Q. But not otherwise? A. I knew of no reason why I should reach out into the realm of uncertainty and try to find something that was not being done. Q. You did not think that was part of the duty of the Public 1968 Investigatioit of Public Service Commissions Service Commission, to reach out into the realm of uncertainty and try to find out if the orders which they had made were being complied with? A. Not unless brought to my attention. Q. So in every case you thought the complainant should have the laboring oar ? A. ISTo, some subordinate of the Commission, like Mr. Wells. He has very frequently brought to my attentiiai cases which were undecided, undetermined, incomplete, and I would follow them up. Q. How many cases did you find your predecessor had had, that were not completed, when you went on the 'Commission ? A. It is quite impossible for me to say, Colonel Hayward. Q. But you did not look up to see about them, you did not make any effort to find out? A. As they came to me, I had to take them up for decision, and I discovered who had them before. Several of the Commissioners had them. Q. You did not take them up till you took them up for de- cision ? A. I did not take up any cases unless they came to me properly. Q. In this one case which Mr. Buchner read, the complaina;nt did not appear on that day. Did you consider that, by filing the complaint, he had put in operation the machinery of the Public Service Commissions Law, drawn for the benefit of the people, to remedy these abuses by public service corporations, or did you consider that it was still up to the complainant to crowd the Com- mission to get a decision? What was your mental attitude on that? A. My mental attitude is indicated by the action of the Commission. Q. That is, if the complainant did not care to go through with it, after directing your attention to the abuses that were going on, that you were willing to allow it to drop ? A. I am not so sure it is any abuse if the complainant cannot come before the Com- missioTi or make some excuse for not coming. Q. You thought that relieved the Commission from any obliga- tion to go on and make an investigation by their own expert ? A. I do not think they are called upon to send their experts in a case of that kind, where the parties did not give it consideration enough to follow it up or make some explanation for not coming. Q. Suppose some complaint is made, which must necessarily be followed fey expert testimony and by legal talent; do you con- Final Kepoet ob' Jonsrx Legislative Committee 1969 sider tiat it is tiie business of the complainant to secure counsel and the expert testimony necessary to establish th-e case after hav- ing made the complaint? A. It is entirely dependent on the nature of the case, Colonel. Q. In Tvhat ease would you say it was up to the complainant, and in what case not ? A. I should think that under 70 of the Public SeTvioe Commissions Law, where there is a complaint as to the service and rates -of an electric company, or gas company, if they were not giving good service in a village, and where the village officials, or twenty-five citizens, should make the complaint, I believe it would be up to the Commission to follow that com- plaint up and make an investigation. Q. What was your conclusion to that last question, Mr. Hodson, in a case of rates? A. Rates and service generally, in a com- munity. Q. A gas or electric company ? A. Yes, sir. ■Q. You say that after the formal complaint is filed, did you. or did you not, consider that the complainant had to go through with liis case ? A. I said that would depend upon the nature of the case, I think. Q. In that kind of a case ? A. The case I mentioned ? Q. Yes. A. I think it would have to assist. I think he would have to assist, yes, because we have not a great many examiners and have not much money to employ them. Then, they go all over the State of 'New York ; and it is very difficult to get hold of them sometimes. , Q. Tell the Commission where you get your money? A. By appropriation. Q. How much did you ask for ? A. For what we want. Q. Do you get wliat you want? A. Not always. Q. How much has it been cut down on ? A. Why, this Com- mission has been very modest in its demands in the past. Colonel. Q. How often did the Legislature refuse to give you what you asked for? A. For various funds, it has refused ever since I have been here, for grade crossings, for instance. Q. I eliminate the grade crossings from this discussion as not under the law. A. We would like to have them eliminated. Q. Do not consider that a part of yonr request for appropria- 1970 Ia-vesti»ation ok Public Seevice Commissions tion. A. Whj, I may say to you that the very details of an ap- propriation, I am not entirely familiar with. Q. You want to say, do you, that the State of New York haa given you inadequate funds to carry on the legitimate work of the Commission in this district since you have been on that? A. I do not just want to say that, no. Q. What do you want to say ? A. What I do intend to say is that we have very few examiners. The departments were so es- tablished by the Commission and had been so continued. I am not complaining, but neveriheless, it is a fact that with few ex- aminers, we cannot very well go all over the State. Take, for in- stance, the electric railroad inspector. He cannot be everywhere, and he is all alone ; with the exception of one assistant. It is with the utmost difficulty I could get him to come to Buffalo in a few cases where it was absolutely essential. Q. He says it is with the utmost difficulty to get a chance to go to Buffalo ? A. Wby, I think you are mistaken. I have read his evidence and I have not seen any such statement as that. Q. He said that you people preferred to take care of those cases yourself ? A. I have not seen any such statement as that. I did see a statement but I have taken care of those matters up there, and I certainly have tried to ; and have in very many cases — oh, half a dozen cases — with Ms assistance, and very good assistance; and it is seldom that I took care of a controverted question up there that I did not consult with him down here. Colonel Hayward. — Have you got that, Mr. Buchner ? The Witness. — Do you want to see Mr. Barnes' evidence, Colonel ? Colonel Hayward. — ISTo, I do not want Mr. Barnes' evidence. I have what I want here. By Colonel Hayward: Q. Did you ever have any rules that you followed? A. Yes, sir. Q. Of procedure? A. Yes, sir. Q. Have you got a copy of the rules ? Mr. Mott. — I think they are all in that package, Colonel. (In- dicating.) Final Repokt or Joint Legislative Committee 1971 By Colonel Hayward: Q: Well, now, you say that, when the proper officials, twenty- five citizens in a city of a second class, make a complaint — A. Or a village. Q. As to gas or electricity, that — did you say it was your practice that, if the complainant made a default, you did not go ahead ? A. I did not say so. Q. What did you say? A. I said it was my judgment you should go ahead. Q. Has that been your practice ? A. 'No, sir, I do not recall of any such complaints. Q. You do not know of any such complaint? A. No, I do not recall of anything now. There may have been such. Q. Suppose such a complaint comes in and the complainants do not care to go any further and do not care to hire experts or counsel, what would you be in favor of the Commission doing? A. It is pretty hard to say, Colonel Hayward. It is a hypothetical case. I think it would be very largely what impression I gained by the whole matter, what impression the whole case made on my mind, if there was fairness and integrity on the part of the com- pany and reasonableness on the part of the complainant. Q. If you thought there was not reasonableness on the part of the complainant — if that was your impression, — and the com- plainant did not appear, you would recommend that it be dis- missed ? A. I would recommend to the Comission that it be dis- missed. If I thought that the corporation was not doing the right thing, I would not be in favor of dismissing it. Q. Suppose the company itself made a complaint and then failed to go before the Commission, what would be your idea in that case? A. If the company made a complaint? Q. Yes. A. For what ? Q. Desired to raise a rate or something of that kind. A. I would dismiss it very quickly if they did not continue their ap- plication; that is, I would recommend the dismissal of the com- plaint. Q. Well, now, what would you say if I told you that the law made it your mandatory duty not to dismiss the complaint in either of those cases, would you say I was mistaken ? A. It would 1972 Investigation or Public Service Commissions not be the first time I was mistaken, if such a matter was called to my attention. Q. Well, you know, as a matter of fact, the law does require the Commission to make an investigation in event a complaint is filed either by the petition of 100 citizens in cities of the first class or twenty-five in cities of the second class, or a village ? A. Yes, sir. Q. The language is that the Commission shall inves-tigate as to the cause of the complaint? A. I did so state that, but if tJie complaint was not followed up, I am sure I do not know what the Commission should do to keep it alive. Q. What do you understand 'by the word " investigate " ? A. Why, to ascertain the value of a property, ascertain the fair re- turn, ascertain the amount of income and determine value, as to whether they are getting more in gross income than reasonable rates would produce. Q. Then the law says that the Public Service Commission should investigate such a complaint. Do you think you should let it drop, when a complainant does not care to hire experts and carry it through ? A. I thought I gave my reason a moment ago, that, after I was satisfied that the complaint was unfair, or un- reasonable, as many of them are — • Q. Yes, many of them ara A. Or if I was satisfied that the company was fair and honest, and was trying to do the right thing, as many of them are, I would dismiss it. Q. You would not make any investigation? A. That is not what I said. As soon as the complaint comes in, it is our duty to investigate; but we should not continue an expensive investiga- tion when those other facts are discovered by the Commission. It is immediately the duty of the Commission to dismiss it, it. seems to me. Q. Why do you think that this law, with particular reference to this particular class of cases, mad« it necessary for either 100 consumers, or twenty-five consumers, as the case may be, or the Mayor, or the company itself, to file this petition ? Was it not from the very reason that, wh^n they did file such a petition, it was the duty of the Commission to go through with it, and that, that was the reason it was put in the law, that it must be a formal petition instead of a complaint of a single person ? A. Well, all. Final Report of Joint Legislative Committee 1973 there is of it is that we would be doing nothing else except follow- ing the lead of complainants who, perhaps, would have no real reason to complain. Q. Then you think the law is wrong on that? A. Oh, no, sir; I do not say that. I am trying to discuss the fact that sometimes a body of complainants are unreasonable. Q. Well now, you understand, of course, that in this particular section it is entirely differ^it from an ordinary complaint. It says that a formal petition must be signed by a certain number of people^ the number being prescribed, or by the Mayor, or by the corporation itself. Now, that is clear, is it not? A. Yes. Q. JSTow, the law says that that needs a formal petition, and that when such a petition is filed, the Commission shall investigate; !Row, I want to know how you treat that kind of a case as com- pared to how you treat a case where an individual complainant comes in, complaining of service, for instance, or a street rail- road, something of that kind? A. I do not remember of any sudi case coming before the Commission, where the investigation was not had and continued to the close. Q. That is probably because the complainants hired their own experts and their own lawyers ? A. I call to mind a gas case and electric light case in the city of Buffalo, a power case, where they were prosecuted to a final ordea*. It was very expensive for both sides, the gas company and the electric company and the com- plainants in the city of Buffalo. Q. I want to get your idea of who has got the laboring oar in th-e case of a fonnal complaint, or formal petition, such as I have been talking about, under section Yl, whether it is up to the com- plainant, or whether it is up to the State of New York through this Commission ? A. I think it is up to the State of New York. Q. Then we have gotten together? A. Let me give you an illustration. It is not long ago that I had a long discussion with a lawyer, who has been to see me two or three times about an investigation of the rates of service of an electric company in Central New York, and I have taken just exactly that position. I believed that that was our duty, but when I came to show him what few examiners we had and how long it would probably bej he. did not file his complaint, although I have announced to him 1974 Investigation of Public Seevice Commissions what you and I both have stated as to what you supposed to be the law. Q. How much do you know about the Westchester Lighting case? A. Nothing whatever until it was finally argued. Q. Did you sit when it was finally argued ? A. Yes, sir. Q. Did you concur in the proposition to give them — how many days was it, sixty days or six months, to file briefs — do you remember, Mr. Hodson ? A. I do not. I sat twice and listened to it. Q. The last hearing was held and then they had sixty days, did they not, to argue it ? A. I have forgotten about it. Q. Then they had six months to file a brief, after that? A. I do not recall the periods of time. Adjournments were had. It was by consent, perhaps. Q. If that is so, do you think that was a reasonable time ? A. Why, I do not think that case should have taken so much time as it did. Q. When did you first hear about that case? A. I do not recall, quite a while ago. Q. You did not find out about it when you first came on the Commission, did you? A. I may have heard of it then. I do not know. Q. If you did, you did not do anything about it ? A. No, sir. I had other cases to take care of, and that was assigned to another Commissioner. Q. And that case went eight years, we found out yesterday? A. Yes, sir ; I understood so. I have got some eases on my calen- dar up in Buifalo almost as old. Q. You have? A. Yes, sir. Q. What are the numbers of them ? I would like to look into them ? A. I will give them to you. (Witness refers to papers. ) I do not know as they are quite as old, oases in which the chair- man is interested — interested in one of them — 515, October 13, 1908, the complaint was received; 621, December 4, 1908, the complaint was received ; and then still another one, but of fairly recent date. That was a complaint on the part of the people of Lockport and along the Olcott Railroad, asking the Commission to require an interchange of tracks between the Erie Railroad and the ISTew York Central Railroad, the Erie Railroad being operated Final Report ov Joint Legislative Committee 1975 by the International Railway Company. A long time after I came on the Commission, I was requested to take this matter up by your chairman. I did. I held a hearing in Lockport and I held a hearing in Buffalo, and it was through my intervention that negotiations are now pending between the railroad companies to establish joint freight rates to take the place of the interchange of tracks. I am expecting almost any day to have the matter adjusted. Q. Where were the hearings in this Westchester case held ? A. I am very sure one was over in the Assembly Chamber and one in the front room of our Chambers Building at 19 Washington street. Q. They held some of them in New York, didn't they ? A. I don't know, sir. I didn't attend any of those. Q. Well, you came on the Commission in February, 1913? A. Yes, sir. Q. This case Mr. Buchner was reading, this Syracuse Street Railroad case, service case, I find from reading the orders and some correspondence that that occurred before you went on the Commission. Now, January 3d — February 1, 1913, that was just before you came on the Commission ? A. Yes, about a month before. Q. Mr. Wells writes a memorandum for the secretary, calling his attention to his former memorandum in this case, and sug- gests that an inspector be designated to " look over the ground." Now, that was a service order in effect a year, requiring service Ofn the part of that road? A. I don't know. He can tell. Colonel, Mr. Wells is with us yet. Q. Well, do you believe he would write that memorandum in there — ? A. Well, I don't think he would. Q. I don't know. I only want to get all the light we can about this particular matter. A. I will be very glad to if I can. Q. Now, January 3, 1914, you had been on the Commission nearly a year, hadn't you ? A. Yes, sir. Q. Had this matter ever come to your attention in that time? A. Never, I never heard of the case until counsel just called my attention to it. Q. Never heard of it at all ? A. No, sir. Q. January 3, 1914, the secretary of the Commission writes 1976 Investigation of Public Service Commissions to Mr. Tilton, gen^eral manager of the railroad, calling Ms atten- tion to tkat portion of tbe order wkich req,uired the company to add to its lines and service at least a full proportion of the exten- sions and improvemcints eadi year, and teHs liim that statenaen-ts, of the railroad shall show details in compliance with thia provisiojx, Was that ever brought to the atteaition of the Commissiooa by the secretary, or by Mr. Wells, or by aaybody else to your knowledge ? A. I don't know, sir. Q. But pending another hearing in that case, did you attend meetings of the Commission here, the up-State Commission ? A. Very often. Q. That has never come up before you, has it? A. I doin't recall the case ever being before the Comanissioim, at present. Q. ISTow, January 7th, Wells 'again writes a memora»dum for Mr. Disney and Mr. Barnes, stating that " It appears from the report of 1913 just received from Tilton, the general manager of the railroad, that nothing was done durimg 1913, nor was anything apparently contemplated in 1914, relating to the provisions C or F of paragraph 10, and that nothing is said about further com- pliance with E during 1914." You didn't know anything about that after that, of course ? A. I don't recall. Q. September 10, 1914, the secretary of the Commission writes to the genea'al manager of the railroad a-nd said: " It ap- pears that nothing was done during 19 13', nor anything contem- plated during the present year relating to provisions of C and F." ISTow, there followed an interchange of correspondence between the railroad and the Commission. What do you think about a system, as to its efficiency, which permitted an important, which would permit an important, a Yetj important order of this Comr mission to be outstanding against the street railroad in. a city like Syracuse for a year, for year after year, 1912, 1913, and 1914, and the railroad in a defiant position, and say that they woald not comply with this order, do you, a member of an important Com- mission, allowing that condition to go on for a whole year and nothing done, do you think that is a good and efficient system that could permit that condition to go on on the Commission? A. Well, maybe the secretary had had it well in hand and was keep- ing up the correspondence. Final Eepoet of Joint Legislative Committee 1977 Q. "What do you mean when you say he had it -weli in hand ? A. Seeking to obtain a compliance with the order. Q. How many years would you think a secretary ought to seek by correspondence to require compliance with a formal order of the Public Service Commission, before the Commission through its attorney could push in court under some of the three provisions of the law for enforcing this order ? A. Why, that is a hard question to answer; each case stands on its own facts. I don't like to say that anybody was recalcitrant. I don't like to see any corporation refuse to obey an order of the Commission. Q. 'Suppose your Commission made a formal order in the Syra- cuse & Rochester case, and the road didn't comply with it for six months — ? A. In what respect, Colonel, did they not comply in this case? Q. They didn't comply .with the provision which Mr. Buchner read to you. A. What was it, I have forgotten ? Q. Well, it is paragraph 10', "within five years from June 1, 1911, construct and have in operation in connection with its line and service the following additional extensions and improvements, adding to its said lines and service at least a full proportion of said extensions and improvements each year." Then five years after June 1, 1911, they were to add the following required new additions: Extensions of the double track on Seneca Turnpike from Salina street to Cortland avenue. Extensions of the double track to Burnett avenue and private right of way to the village of East Syracuse. Complete double tracking of the present East Syracuse line from Townsend street to Lodi street. Purchase and put in service not less than twenty-five new large double-truck cars. Construct on " E " additional transformer stations with proper feeder connections ? A. Was that an order or recom- mendation ? Q. That was an order. A. Well, I think it ought to have been complied with. Q. How long do you think it would have been after that order was entered — of eouTse, it is natural to suppose that the rail- road wouldn't want to make any more expenditure than it was required to, isn't it? You know they always do, that those very roads are prone to take that attitude? A. It would seem to me that if that order laid dormant in that fashion and was n^lected. 1978 Investigation of Public Service Commissions that there was no great demand for it in Syracuse, or the Conimis- sion would have heard from the people there. I don't know any- thing about this case. Q. Suppose that order was made on June 1, 1911. ISTow, if the road did nothing for six months, what do you think an effi- cient Public Service Commission would have done with that rail; road, anything ? A. I should think that if in January, 1914 — Q. No, answer the question, in six months. Do you think, supposing the railroad failed to comply with this order in six months, would you think that it was time for the Commission to do something? A. I should say it might be, yes., Q. Now, suppose the road failed to do anything for a year, would you say it was time for the Commission to do something? A. Why, if Mr. Barnes received that communication from Mr. Wells, I think he should have made an investigation to see if it was not being complied with, and report to the Commission. Q. But nobody claimed it vfas being complied with; the Com- mission knew all the time nothing was done, from the reports that nothing whatever was done; the railroad wrote to the Com- mission, the road itself writes to the Commission as will not com- ply V7ith this order? A. Let me say to you. Colonel, that if I was to be instrumental after trying a case, to recommend an order to the Commission and the order should be adopted, I think I would follow it up as a Commissioner. Q. And you make a distinction between the order that is made after you were on the Commission, and the order not complied with, if the order was made before you came on the Commission ? A. Oh. no, sir. Q. Do you think you owed a greater duty to the public in rela- tion to orders made after you came on the Commission than you did to orders made before you came on the Commission ? A. No, sir ; not if they came to my attention. Q. What do you think your duty was with reference to finding out about some of these matters ? A. I am sure I can't find out about those cases until they are brought properly to my attention. Q. What would you consider properly brought to your atten- tion? A. Someone in Syracuse making a complaint or commu- nicating with the Commission when I was there, or to me as a Commissioner. I didn't get any communication that came to the Commission during that time or to our secretary. Fijs^al Repoet of Joint Legislative Committee 1979 Q. Well, the secretary brings coinmunications to the sessions of the Commissioners ? A. Very, very often ; other things he carries on by correspondence himself. Q. But here was a City Improvement Association and various citizens writing to you or to the Commission, and you say you don't know anything about this, and you have been on the Com- mission nearly two years ? A. I didn't say so. Q. You say you never heard about this case ? A. I didn't say I never heard of it, that I didn't recall it now. I don't recall I ever heard about this case. We have and have had a great many hearings in Syracuse, and a great many hearings there with refer- ence to the street car system ; some, not many. Q. Well, what would you say, or would you say that a private business was being efficiently managed if one of the directors of the business, one of the head men, one of the owners, one of the proprietors of the business remained in ignorance for two years of a matter of this kind, or a matter comparable ■with this ? A. Well, I don't know how to answer your question other than 1 have. Colonel. I have tried to be fair, and I will say if I had known anything about such an order, it was brought to my attention as a Commissioner, or if I had been instrumental in obtaining it, I would have followed it up and see it was enforced. Q. Would you say that anybody was neglectful in not com- pelling this company — ? A. I should prefer not to say anybody was neglectful, I don't know. I do repeat to you that if Mr. Wells, whom we have mentioned, very often calls to my attention cases in Western New York, old and new cases, where there is something remaining to be done. I think that is his whole duty. Q. Well, now, here this case seems to have been floundering around the Commission without anybody having charge of it? A. I am very sorry, if I had had charge of that, I would have had it made, I guarantee. Q. It goes along clear down to January 12, 1915, when the City Clerk of Syracuse writes to the Commission about the mat- ter, and says: " The People of the city will be glad to know if Mr. Bames is going to make an investigation," and look over this situation of this order that has been violated for four years, and they kept on in that way, and the people of the city were kept in ignorance, and now the City Clerk of Syracuse writes down a letter and says " That he will find a prevalent public opinion of 1980 Investigation of Public Service Commissions the street railway company, in addition to failing to comply with the 'Commission's order in 1911, has decreased of late the num- ber of cars actually in operation in the face of a steadily growing population, and thereby produced overcrowding of cars and long waits. That it is claimed that the increase of population to be expected in the next decade would render necessary the increase of transportation facilities for the city. This includes the addi- tion of a proper number of modern cars. That nearly one-half of that decade has now passed since the order of the Commission was filed, and the urgencies of the situation is impressed upon the Commission." Now, what I -want to know is what could have been done more than was done, the City Clerk writes this official communication to the Commission and can't get any action, and others write about it, do you think that is an efficient system that permits it? A. I think you better inquire of those who receive the communication. I know nothing of it. Q. Well, I make that part of my question, the fact that you knew nothing about it? A. Well, the secretary and Mr. Barnes perhaps were attending to it, I will answer your question, I don't know anything about the case. Q. What would you have done covering this condition? A. I told you a moment ago that if I should find that order of the Com- mission was being disobeyed, and there was a failure of endeavor to make them comply reasonably with it, I should find out what the provisions of the order were, and if it was an order that I have obtained, I would take steps to have it complied with, if it could be reasonably done. Q. Did you or any other member of the Commission ever go out and look through the correspondence, that your subordinates were having with these people, did you ever do that? A. No, sir ; excepting the case I had in hand. Q. I mean to say where you went out and took up a single correspondence about a case that you had been handling, did you ever do that ? A. No, sir. Q, Did any Commissioner ever do that? A. I don't know of it unless a case was brought to my attention. Q. I say that it was brought to your attention, and this con- dition of affairs might have existed without your ever finding it out from your own voluntary action ? A. No, we have an efficient Final Report of Joint Legislative Committee 1981 corps of assistants, pretty well regulated organization, our organi- zation is. Q. I don't question that at all, but so long as they didn't bring these matters to you, you didn't think it was your duty to find out what was going on ? A. I didn't know that there was anything going on if it wasn't brought to my attention. Q. You didn't consider it part of your duties, in other words, to supervise this work? A. When the matter is brought to my attention. Q. Why don't you supervise it? A. I don't know until it is brought to my attention. Q, Your definition of supervision is to supervise what it brought to your attention ? A. Why certainly. Q. By your subordinates ? A. Certainly, if complaints and petitions — Q. You don't take original action, on their own hook, to find out how things are being done by your subordinates? A. Oh, if I had plenty of time I might, but we never do, there are so many cases that my time is thoroughly occupied with current matters. Acting Chairman Kincaid: Q. Commissioner, did I understand you that you held a great many hearings in Syracuse in the last year and a half ? A. Yes, sir. Q. Hearings that involved the proposition of street railroad service? A. Only two or three of them, I think. Green street — was it (xreen street and some other street — you know some- thing of those streets. Q. I don't exactly understand how you could have handled this one intelligently without knowing about this other very im- portant order ? A. Well, I don't know what to say to that state- ment. I did handle those matters, I think intelligently. Q. Didn't it occur to you that it might be the duty of a Com- missioner, or the Commission, in talking over a proposition of that kind to look back on the files and see what outstanding orders were entered, before you went on there with another investigation ? A. I cannot conceive of any such duty incumbent upon a Com- sioner to look all through the files for years to find out what has been done with rrference to a certain corporation, simply because he has got a case against that corporation. 1982 Investigation of Public Seevice Commissions Q. Here is an order in this case under circumstances tliat left something to be done every year for a period of five years? A. Yes, sir. Q. During that five years you go on and hold several hearings, and all that time you knew nothing about this order, that was in force at the time ? A. I never heard of it, as I remember. Acting Chairman Kincaid. — That is all. Colonel Hayward (resuming) : Q. The case you heard was the question of carrying the tracks to East Syracuse, and double tracking, and the abandonment of tracks going down the hill; that was involved in this further order ? A. That was supposed to be segregated with reference to that, I think. I would like to ask, the Colonel said he had infor- mation about double tracking to East Syracuse line, isn't that in this order? Q. Yes, that is what it is, that is exactly what it is. A. Well, that was ordered. Colonel Hayward. — Yes. The Witness. — And we also denied the application for dis- continuance of tracks down hill. I remember that very distinctly. Q. So you sat up there on this very matter and didn't know that the Commission had an order covering that very question? A. I don't recall, and I say again I never heard of this before. Q. What would you say of a Judge that didn't know about his own orders or the orders of his predecessors on the bench, motions being overruled or motions having been denied, etc., did you think he was fairly performing his duty; fair to litigants? A. If he took care of the case that was presented to him, yes. Q. Do you think that he could take care of a case that was pre- sented to him "without informing himself as to what had been previously done in that same case? A. I think he performed the duties that was required of him. Q. But you don't think it was up to you to ascertain what had been done by the Commission before you took this matter up in that case ? A. I think I did have several matters, I don't remem- ber that I ever saw this order before. It was a matter the first Final Report of Joint Legislative Cojumittee 1983 time I sat in the case was with Oommissioner Sague, and subse- quently I think I heard it alone; I am not certain, but it was pure and simple a question as I recall it we issued, I think we made two orders, one was for double tracking to East Syracuse, and the other was whether or not certain tracks should be discontinued, or they would come down the hill. Can you tell me the name of the avenue at the bottom of the hill ? Acting Chairman Kincaid. — I cannot, Commissioner. Colonel Hayward (resuming) : Q. Who was the complainant in it ? A. The case that I heard there was an alderman, Alderman Gavin or Davin, and he objected to the discontinuance of those tracks, because the people had built up in the meantime stores and residences in that section, and then I remember there was a property owner came in before us, and testified that she ■would not consent as an adjacent property owner to the line going through the street. Q. Did you expect the railroad was going to obey an order entered three or four years before when they had been violating it, or four or five ? A. Here they evidently did not. Q. And still you didn't know anything about it? A. Well, I want to say to you. Colonel Hayward, I never heard of such a provision of any order with any case before me. I don't know how to make it plainer. Q. What do you think this law means when it says that the Commission shall have general supervision over all common car- riers, railroads, street railroads, railroad corporations, etc., within its jurisdiction, as hereinbefore defined, "And shall have power to and shall examine the same and keep informed as to their gen- eral condition," etc., and how managed, " not only with respect to the adequacy, security and accommodation aiforded by their serv- ice, also with respect to their compliance with all the provisions of law, orders of the Commission, and charter requirements." You were up there at Syracuse making an investigation of this particular road, and the law says that you shall have supervision and shall keep yourself informed as to the orders of the Com- mission touching that road. Now, how in the world did you ex- pect to obey this law and keep yourself informed as to whether 1984 Investigation of Public Seea'ice Commissions or not the road was obeying the order, if you never saw the order or knew that there was an order out? A. Well, a Commissian is informed through its subordinates sometimes. Q. And you say the subordinates were aware of the fact? Well, the record shows they were. There was a communication from Barnes to the secretary, and the secretary has kept up cor- respondence since ? A. Keally it hasn't been brought to my atten- tion or to the attention of the Commission, I think. Q. Then you think our coming to Albany won't be entirely in vain if we have brought something to your attention that you didn't know before? A. I hope not. Q. What do you think the effect is on the public service cor- porations of the State to have the Commission constantly making orders directing specific performances of one kind or ajiother as to service or equipment or something of that kind, and then doing nothing to enforce those orders ? A. I wasn't aware that the Commission is constantly making orders which 'are disobeyed. Q. Well, I ask you the hypothetical question, what you think the effect would be for the Commission ? A. Very bad. Q. Do you think it would be much better if they never made an order at all than to make one and then forget it ? A. I am not so sure about that; but I tell you, Colonel Hayward, the making of orders is one thing and enforcing is another; we can make an order that the cars run, and extensions be made, but we cannot turn the wheels nor lay the tracks. Q. You can't if you don't try. A. You can't if you do try. Q. How many times did you try to enforce any orders since you have been on the Commission in which the corporation failed to obey the orders, or have used any one of the three remedies provided by the Public Service Commissions Law ? A. I do not recall that there is one I can state except once; while I have known of counsel being instructed to inform the parties of their delinquencies and then counsel would arrange a settlement or or adjustment of some sort. I don't know of one first prosecution. Q. Did you ever hear of a penalty action being brought by this Commission ? A. No, sir. Q. Ever bring one since you have been on the 'Commission? A. JSTo, sir. Pinal Kepoet of JfoiNx Legislative Committee 19SS Q. iNever been part of your order violated, I suppose? A. Not to my knowledge until lately. Q. Here was one was violated for five years, wasn't there ? A. Well, I don't know. Q. Well, on my statement of facts tlien it was ? A. Assuming all that you have said is true, I should think that they had been recalcitrant. Q. Well, I take it from the record that it wasn't complied with? A. If you call it to my attention, counselor, I promise you to bring it to the attention of the Commission. I don't know how much more I can do. Q. Do you ever remember the misdemeanor section of this statute being invoked by the Commission against a company or its officers? A. KTo, sir; I don't recall it. Q. Did you ever consider that section ? A. I don't know that I considered it, all the effect of it on such a transaction. Q. Do you remember of a mandamus suit being brought? A. I really dom't recall any; there may have been one or two, I don't recall them. Q. Just what then of your experience on this Commission do you base your statement that it is an entirely different thing to make an order and enforce it? A. Why, exactly, exactly, I don't know of a better concrete illustration than in this city. Q. Let's hear about that. A. You are familiar with it from Mr. Decker's testimony, the limited Traction Company order, has been made by the Public Service Commission, and several of the provisions of the order have not been complied with; they have appealed, as they have a right to appeal ; they have a right to con- tinue their appeal further, so that the making of the order doesn't give relief to the people or the complainants, nor the satisfaction of the order. Q. Well, now, what do you think they put these three pro- visions in this law for? Suppose you were making a new law, you would keep these three provisions here, would you not ? A. Why, I don't know, but I think I would make them more specific. I am in favor of this. Colonel Hayward, myself, very strongly of the opinion that the law should be observed and respected in every sense, not only the civil law, but the criminal law. 63 1986 Investigation or Public Service Commissions Q. Amd you know of no reason, when this Oommis&ion ' is clothed with authority to order the public service corporation to do things for the benefit of the public, they ought not to be enforced. You are familiar with the misdemeanor section of the statute, are you ? A. Not very ; no, sir. Q. What is this misdemeanor section? A. I don't know any- thing about it, I never have had any criminal business in my life. I had nothing to do with the criminal practice at all in general practice. Q. Do you know what the provision of the law is covering this point we have been talking about, the enforcement of the order of the Commission? A. Specifically, no. I can turn to them and very soon learn what it is. Q. You have a Criminal Code? A. Turn to the provision of the Public Service Commissions Law. Q. What is that provision ? A. I can't — Q. Is there a provision there? A. I can't tell you, sir; I don't know where it is. Q. I say, is there a provision in there ? A. I said I can't tell you. Q. You don't know ; is that what you mean ? A. Why, I know that there are provisions against complying with the orders of the Commission ; whether that was a misdemeanor or referred to a mandamus or forfeiture, or what, I don't know. I cam find it probably if it is — Q. Have you ever found it, have you ever looked it up ? A. I presume so ; I have seen it, for I have read the law through several times. Q. You don't remember it? A. I don't believe I do just now; no, sir. Q. 'Can you tell us, Mr. Commissioner, all of the remedies pro- vided for in the Public Service Commissions Law for the enforce- ment of its orders ? A. There is a criminal remedy. Q. What is the criminal remedy? A. It is a misdemeanor, I don't recall. Q. What is a misdemeanor ? A. Anything less than felony. Q. What is made a misdemeanor ? A. I don't recall now. Willful violation, neglect under .the law is made a misdemeanor itself. Final EErouT of Joikt Legislative Committee 198Y Q. What is one of the other remedies ? A. Mandamus. Q. What else? A. Suing for a penalty. Q. That is, how much do you have to sue for ? A. Well, you can sue for what you please, you can't get over $5,000. Q. So you can sue for any amount you want to ? A. I didn't say so. Q. But you said you could sue for what you pleased ? A. For not more than $5,000 I said. Q. Do you think you can sue for any amount less than $5,000 'i A. I should say Hot less than, t5 answer that question. Q. Do you think that is the exclusive amount; do you think you "have to sue for $5,000' under this provision for penalties ? A. I' don't recall all of those provisions. If such a question was to come up, I would immediately investigate and examine the question. Q. Do you know a case No. 1613, Mr. Hodson, wLich was a case whete complaint was filed in 1910, that was the complaint of the village of Salamanca against the Erie Eailroad Company as to maint^ance and repairs of overhead crossing? A. Yes, I remember that very well. Q. The first hearing was held June 10th, the second hearing in January, 1911; June 10, 1910', the first hearing, the second one January, 1911, and the third hearing in December 1911 ; that was about a year apait that thes6 hearings were ? A. Yes, sir. Q. Then nothing was done until the year 1914, although there were lirgent requests from the village of Salamanca that the mat- ter be determined. Three of the city attorneys of the city of Salamanca went in and out of office during the pendency of this proceeding. Now, May 29, 1914, a hearing was called in this matter before Commissioner Hodson, and that seenis to be the last 'hearing that was held. Do you remember any since that time? A. I don't remember any since that; I don't remember of that definitely. Q. You don't remember having a hearing in this case? A. Yes, I said I did ; I remember two or three hearings. Q. You bad two or three? A. Two, I think. Q. We only found one in the record, and that was adjourned indefinitely. A- Yes, I can tell you about that case, if you would like it. 1988 iNVESTIGATIOIf OF PtTBLIO SeEVICE COMMISSIONS Q. Well now, you knew that there was no appropriation to cover this work, did you not ? A. Yes, sir. Q. What was the use of going up there 'and holding hearings ? A. I didn't go up there especially for that; I had from two to eight eases there every Friday on my calendar. But there was a dispute between the city officials and the Erie Eailroad Com- pany as to whether or not it was an original cost, so as to come under the grade crossing expense, or whether or not it was main- tenance ; if it was maintenance, the Erie road would have to take care of it; if it was a structural defect, then Chairman Stevens determined, or intimated, on the first hearing what I 'believe to be the law then it was an original expense and should be borne in part by both parties, and must be paid by the State out of grade crossing funds, and not having any available, they couldn't go on with the case. Q. That had all been gone into on the previous hearing, hadn't it, and decided ? A. I agreed as Commissioner Stevens had inti- mated to the parties. If the parties raised the question with me. As I say, the new City Attorney wanted to have it taken up again. Q. Did you sit with Mr. Stevens? Did you decide the same as Mr. Stevens ? A. I had not decided ; but we discussed it, and were quite agreed that that was the law. Q. You did agree ? A. I think the Corporation Counsel reluc- tantly agreed to this position of the law, I believe that is the fact ; a question as to the roof. Q. I understand what the complaint was for, and that was nearly a year ago, wasn't it; our record shows May, 1914? A. I have forgotten when it was ; it has been put with the other grade crossing cases, awaiting an appropriation. Q. Were you in there yesterday when we were examining Mr. Decker about this consolidation of the three roads up in Syracuse ? A. No, sir. Q. You are familiar with that, are you not, you were on the Commission when that was done ? A. Yes, I had heard of it from tie other Commissioners; didn't sit in the case. Q. It seems in Case ISTo. 363, complaint was received June 10, 1908, by this Commission down here, complaint on commutation rates on the Eochester, Syracuse & Eastern Railroad. Do you recollect about that case ? A. I don't recall it. Final Kepobt of Joint Legislative Committee 1989 Q. You know what the action was about ? A. 'No, sir. Q. May 19, 1909, the Commission found the rates of the rail- road unjust and unreasonable and an order was entered for a reduction. Did you ever hear of that order ? I wondered if that is the case where the Commission recently made an order vacating it? A. Yes, sir. Q. Well, then, you heard about it? A. When the vacation order was made. Q. You voted to abrogate the order, did you not? A. I think so. Q. Then you had heard about the case? A. ISTot until it was decided. Q. But you knew enough about it then to vote to abrogate this order ? A. If that is the case, yes. I have an indistinct recollec- tion that is the case; there has been considerable correspondence between the Commission and the road ; I have forgotten the details. Q. Here is an order in 1909, in May, and never was complied with; in fact, the railroad wrote the Commission that it couldn't comply with the order ^ — that was the order in 1909 — couldn't comply with the order since for a distance of about a mile after the company's cars reached Rochester, they run over the tracks of the local lines in the city of Rochester, etc., speaks of the local arrangement that doesn't permit the giving of transfers to pas- sengers of the Rochester, Syracuse & Eastern. 'Now the railroad writes back as follows — that was June 8, 190'9 : " In view of the situation will the Commission kindly either rescind the order or withhold it going into effect until the situation as set forth herein can have its further consideration." Nothing was done by the Commission one way or the other. October 5, 1909, they sus- pended the order for six months, you suspended the order " owing to pressure of other matters." Now, nothing was done until 1913, in June, and this consolidation of the three roads took place Feb- ruary 18, 1913, and it seems in June, 1913, a little while after that, Wells, one of the Commission's clerks, wrote a memorandum for Mr. Disney, assistant secretary, stating that the order of May 9, 1909, still stands on the record as in force. Now nothing was done for another year, when the road was advised that the question as to compliance with the orders is not yet disposed of, and it is important that property disposition be made of this case. 1990 Investigation of Public Seevice Commissions You will perliaps be able to make such statement as will aid us in the proper disposition, and I hope you will do so without delay." Then the successor of that road, oi that old company, answered the Commission promptly referring to a talk with the Commissioner in Syracuse relative to .a new tariff on this division. Then June 23d, Commissioner Decker wrote stating tha,t "the new tariff which you were to submit for approval had not been received." In July, he again wrote to the railroad : " I will thank you for definite advice as to when tariff authority may be expected to be filed." Then the railroad replied that .they would ^pre- ciate a talk with the Commissioner on this matter. The Commis- sioner made an appointment in Rochester for Friday, lie lYih of July. July 18, 1914, the railroad wrote to the Comp.issi-<}ner stating that they were sorry they missed him at Eochester the i.aj before. October 21, 1914, a petition was received fropi the rail- road asking that the Commission suspend or vacate the order of May, 1909, this old order. That w.as October 21st. The com- plainants, the original complainants here, were here evidently, for after that Mr. iSaunders, attorney for the complainants, writes that he doesn't understand why any heajings should be neoess.ary when the order was made way back in 1909, and he says : " We have been unable to understand why the Commission never enforced its orders." Commissioner Decker wrote to Saunders that he had had some correspondence with the company and it made the claim it was impracticable to comply with the order, and that the hearing set for iN'ovember 13 had been postponed to November 20th. On the 20th of November for the filing of briefs, the old order having been in force for five years, and never enforced, and never complied with, was abrogated, all the Com- missioners voting. When did you first hear or first get in touch with that case? A. I do not believe I heard of it until it was brought to the Commission. Did you not say it was suspended in 1909 ? Q. Yes, Mr. Decker — it was suspended temporarily until a further examination could be made; that was in 1909 — but that that examination would have to be postponed owing to the pres- sure of other matters, and then no investigation was ever held. I was wondering if you ever knew anything about tbat case? A. Nothing whatever. Final Repoet of Joint Legislative Committee 1991 Q. And tihen you voted to abrogate the order? A. Yes, after a discussion with the Commission. Q. If you had known anything about it, do you think you would have tried to have it enforced ? A. I think on your statement of fact, I would be heartily in favor of abrogating it or setting it aside. Q. Or enforcing it, one of the two ? A. One of the two, and I think on your statement of facts, it should be abrogated. Q. Now, there are two cases. Do you think the 'Commission's action in those two cases has been such as would be calculated to inspire confidence and Tespect on the part of the railroads and the people of Syracuse? A. Well, that is a pretty hard question to answer. It is a pretty hard thing to satisfy all people, or some people, or most people. Q. Do you think either side was satisfied with the action of this Commission, after those five years, in not dismissing the orders or enforcing them? A. I understood you to say that shortly after the order was made, it was suspended, and remained suspended until abrogated? Q. It was suspended a year and a half after. A. Oh, I thought it was shortly after. Q. Anyhow, it was suspended temporarily, until he could look into it, which he could not do then owing to the pressure of other matters. That was away back in October, 1909, and I suppose the pressure of other matters kept up and were such that they could not look into that matter until 1913 ? A. I know nothing about it. Q. And when you first came on, you did not take any pains to find out ? A. Oh, yes, I did ; yes, I did ; and I have been working ever since. Q. You have? A. Yes, sir. Q. ISTow, here is what the chairman said, way back in 1909, when this order was suspended. He said : " The railroad com- pany was thereby advised that the order was suspended until fur- ther examination could be made, and since then, it has been wholly impossible for me to give any attention to this case owing to the pressure of other matters." A. That is Chairman Stevens ? Q. Yes. " I expect to take hold of it shortly and see what the f a«ts are and endeavor to straighten it out if any mistake was made 1992 Investigation of Public Seevice Commissions in that case." That was in 1909, and the Commission got around to act on it, instead of " shortly," at the end of six years. A. There may have been some good reasons. I do not know. I never knew anything .about the case. Q. The investigation by the Legislature did not have anything to do with the resurrection of some of these old ghosts up there, which were disposed of last month and this, did it ? A. I do not know of any. Q. I was just wondering. A. I do not know of any. Q. While hearings were going on, Mr. Hodson, with reference to rates, or service ; or something of the kind, was it your practice to consult with the officers of the corporations about those matters ? A. Why, really, I do not not know what you mean by that ques- tion. I talked with parties at the hearings. Q. I mean after hearings were begun, did you talk with them privately? A. Not privately, no; but properly. Q. Just who? Who would be there? A. I would talk with any party connected with a case at any time. The hearings were utterly informal. There is no reason why, if you are an attorney for the complainant, and Mr. Knight is the respondent's attorney, there is no reason why I should not see either one of you with reference to the case at any time; but where evidence is to be taken, then, of course, it is at a formal hearing. Q. Do you think it is all right to talk with the attorney for the relator, for instance, where the complaint is against a respondent, where the complaint is against a corporation, about the facts and merits of the case? A. No, not to discuss how the decision should be. Q. No, but about the facts and merits of the case? A. Not if we have to take evidence. Q. What would you talk to them about? A. Why, if they desired to know about a hearing, or what witnesses to call, or whether an adjournment could be had. Q. You never talked to them about the facts or merits of the case? A. I do not recall I ever did such a thing. I do recall cases where I have refused to. Q. Now, about how much time do you spend in Albany, Mr. Hodson? A. Just half a week, usually. Final Eepoet of Joint Legislative Committee 1993 Q. And where do you spend the other half? A. T leave, Thursday afternoon or evening, for Buffalo ; hold hearings in Buf- falo Friday usually, Saturday usually ; come back on the midnight train Sunday and commence business here Monday morning weekly. Q. Now, Mr. Decker told us in connection with some of these cases we asked him about, he described the Commission as being composed of working members and non-working members. I asked him what he meant by that, and he said you were up in Buffalo and did not have time to help him as much as he ought to have been helped on these matters he had here — at least that was his inference. Do you think what you were doing up in Buffalo was relatively of the same importance as the work that was done here? A. I do not know how you can differentiate in that way. I never went to Buffalo for any other purpose than for the work of the Commission. Q. You live in Buffalo, do you not ? A. Yes, sir. Q. Your home is there ? A. Yes, sir; but I do not just like the intimation that I have gone to Buffalo just because I lived there, for that is not so. Q. Well, everybody likes to go home? A. Well, that may be so, Colonel Hay ward; but that is not just a fair inference. Assemblyman Knight, it so happens that he knows something about my calendar there every Friday, and your chairman knows about my calendar there every Friday, and a great many people know about my calendar there every Friday. I should prefer not to have that calendar there every Friday, but there is an immense deal of business in Buffalo and Western New York constantly, terminal, corporational and tractional business, and somebody has to take care of it, and if the Commission do not go there and take care of it, you have got to drag hundreds of people and scores of cases across the State, one of those two -things has got to be done. Q. Well now, you heard service oases up there, complaints involving service on street railway lines? A. Yes, sir; a good many of them, some formal and many informal. Q. You thought you were competent to pass on those questions ? A. Yes, sir. Q. Had you had any previous experience in railroad business? 199'i Investigation of Public Seevice Commissions A. Why, railroad business ? I do not know just -what you mean by that. I have had years of judicial experience in deciding cases. Q. I .asked you about your railroad experience? A. I never had run a street car, nor I never had the supervision of an electric plant, but I knew something of street car service and overloaded oars and underloaded cars, and capacity, and whether or not at rush hours there were cars enough. Q. And you have given your attention up there to those mat- ters? A. Sometimes, I had to. Q. Now, do you think Mr. Barnes is a competent inspector? A. Very. An excellent man, and I have availed myself of his advice and assistance on numerous occasions. Q. Did he used to take care of Buffalo before you went on the Commission? A. I do not know. I do know that he spent a deal of time there and made a very comprehensive report long before I went on the Commission, with reference to the then exist- ing tractional system of Buffalo. Q. Have you used that report ? A. Have I used it ? Q. Yes. A. Why, I have considered it and examined it and discussed it, and I dare say that some of the recommendations were bases for action. Q. Do you know in a general way whether the traction com- panies up there have complied with the recommendations contained in that report? A. In a general way, yes, and more. The trac- tional system there is totally different from what is was when Mr, Barnes was there — not totally different, but largely changed. Extensions have been made — a great many of them, whereby different routings are had, different connections of lines were made, that is to say, the joining of lines ; different transfer facili- ties. A great many changes have occurred there since Mr. Barnes was there. Q. How much of the work you have been doing up t&ere on that sort of work do you think Mr. Barnes would have been com- petent to have done? A. All of it. Q. All of it ? A. Yes, sir. I mean as to the ascertainment of the correctness of the complaints and the determination of the correctness of the complaints. I want to say to you that I think FniTAL RePOET of JoINT LEGISLATIVE CoMMITTEE 1995 he is a very excelleBt man for the place, a very exeelleni; man; and I rely upon Ms judgment. Q. Mi-w Barnes could not do down here the work that was fiegl:ected by lack of Commissioners to do it, that Mr. Decker told us about yesterday; for instance, the Westchester Lighting case, where he said the Commission had been so short-handed that they could not get anything done? A. I do not know what you say. Qj Mr. Decker said yesterday, in explanation of these remark- ably loHg delays, where the complainants, in some cases, had died, but the people wrote in and said their estates might still be inter- ested in it, and the "Westchester Lighting case, that the reason' the Commission had not been able to get action short of from five to eight years was because nobody but the 'Commissioners could d«eide those cases, and there were not any Commissioners to decide it, and he told about there being only three on the Commission, and he told aboiit your being in Buffalo most of the time and not beifig able to help him, and he could not get anybody to help hitn. Now, do you not think it would have been better to let Mr* Barnes do this work in Buffalo, which you say he could have done — you say he could have done all of it — and you stay down in Albany and help Commissioner Decker with the work he could not do h^e? A. I never went to Buffalo on my week-end trips for aay informal conferences, but they were supplemental to my formal h^iings, and would occupy all the time I had after the holding of the hearings, clear up into Saturday, sometimes more. Q. That is not an answer to my question. Was there any of your ■work that took your time in Buffalo that Mr. Bamfes could have done and left you free to be down here to help Ml*. Decker ? A, I think I answeted you a few moments. ago, that my work there was quite as important as my work in Albany. Q. Was it work he could have done? A. After the hearings, he could have done it ; but there was Saturday afternoon or even- ing, or Friday afternoon. I do not know just when it was, but there was seldom a week-end that I was there that some sort of conferences were not had every week-end. Q. ToU haew about this Canadian-American Power Company, did you not? A* Yes, sir. Q. Tou knew about the order of thg Commission? A. The Commission has never made an order. 1996 Investigation of Public Sekvice Commissions Q. Wiat do you call it ? A. The Commission has formulated an opinion and stated its views, which indicate the basiis of the Commission's opinion as to their doing business ; that is all. Cer- tain things must be done by the petitioning company before an order of the Commission can be made. Q. What are those things ? A. There are a good many of them. I cannot remember them all. I think Commissioner Decker's opinion recites them all. They must build a distribu- tion plant; they must purchase the Niagara Falls property, as I recall it; I have forgotten all the conditions. Q. Well now, when they showed that document that was issued by the Canadians to Mr. Decker, and I asked Mr. Decker if he thought it was a franchise, he said " ISTo," and I said it was called a franchise by the power that granted it, and he said no, that was not so? A. Oh, no. Q. Then I showed him on here where it said " Franchise " in the biggest letters on the page. Do you think that was a franchise? A. No, Colonel Hayward. There is both a contract and franchise there. The government of Canada issued its permit for the exportation of this power. Q. For how long a time ? A. A year at a time. Q. One year at a time ? A. Yes, sir. Then, besides that, the basis of the power company's business is a thirty-year contract that they have with the Development Company, or with the Power Company. Q. And the company with which it had the thirty-year contract had nothing but a franchise and a license for a year at a time, had it? A. Oh, yes. Q. Now, we will, learn something about this. I am glad we got into this matter with you. What did they have? A. What did who have? Q. The company from which the Canadian-American Power Company got this power ? A. The Canadian- American Company is the parent company, that makes the contract for the exportation of the power. Q. That was the company the capitalization was allowed for? A. I really cannot tell you the name of the foreign company that generates the power. It may be the same name, the Canadian- Final Repoet or Joint Legislative Committee 1997 American Power Company. I am not certain. But this peti- tioner 'has a contract for thirty years. That is the basis of the business. Then, in order to do that business, they have a permit from the government of Canada to export their power. That is my understanding. Q. The electrical development license obtained from the Cana- dian Park Commissioners, which was granted under the authority from provincial government, for the exportation of current not exceeding 50 per cent, of its capacity — A. If you refer to the contracts this petitioner has with the generating company, I do not agree with you. The permit, you refer to? Q. I refer to the rights, the paper giving the rights to the Cana- dian Park Commissioners, the Electrical Development Company? A. The annual permit. Q. No, the franchise. It says " Franchise." A. Well, if it is a franchise, it is a franchise, and I believe that that permit is a franchise; but that is. an annual permit. Q. Perhaps they are both franchises ? A. Well, let us assume that they are ; but aside from all that, this company had a thirty- year contract with the Generating Company. Q. What does the Generating Power Company have back of that contract ? A. They have their plant generating their power, with 46,000 horsepower for sale. Q. Where would they be if the Canadian government termi- nated their license at the end of the year ? A. Where would Buf- falo be if the license for the Niagara Falls power was terminated, which brings power to Buffalo to light the city and run the cars and run the factories ? Q. I am thinking about the people who bought this stock and bonds. Why did you want to issue stock to the extent of nearly $1,000,000, covered only by the right to get power, which right might be terminated in a year ? Was it necessary to give those peo- ple that stock to get that power ? A. What I was saying was, this company brings its power over and sells it to this petitioner. This petitioner buys its power at the busbars. Now, the Ontario com- pany goes down through the chairman's home, down through Niagara county, down to Eochester and Syracuse and Weeds- port and Auburn, and sells its power. Suppose the Canadian 1998 Investigation of Public Seevioe Commissions government should shut them off? What would become of the subsidiary companies along the line? We take it for granted that they would not do such a ruthless thing, and yet since lie experience of the Belgians, I am not so sure about it. Q. The Canadian government wrote our government in Wash- ington, that they might do that very thing? A. That lihey had the right to do it. They did not say they would do it. Q. And our State Department called it to the attention of this Public Service Commission? A. Yes, sir. Our attention had previously been called to it, and I want to say to you that that case is now pending. I went on the theory that no government would do such a ruthless thing under all the circumstances of the power development along the Niagara frontier; but if I could be convinced that the Canadian government, on a rehearing of this case, which is now open before us — if I could be convinced that the 'Canadian government would do such a thing, I would be the first one to move to stop this capitalization. Q. So that, when you authorized the capitalization, you based your position on what you thought the Canadian government would or would not do rather than on the clear, plain terms of the docu- ment involved in the case ? A. No, sir. There was a thirtyryear contract to do business. That has a going value, a good wilL Q. How much ? A. I do not know. Q. Was it not your business to find out ? A. They produced a proof which showed an amortization scheme which would produce profits on the business of that company, the whole capital stock. Q. Provided — ? A. Provided the government of Canada did not cut it off. Q. Provided the government of Canada did not do what the con- tract specified it had a perfect right to do, and which contract was before you ? A. Yes, sir. Q. And afterwards the Canadian government wrote to lie de- partment at Washington and said they had a right to do it if neces- sity arose ? A. They did not write to us nor the State Department, as I know. Colonel Hayward, that they intended to do it or planned to do it. They simply called it to our attention. Q. And it had been called to your attention previously ? A. At the Buffalo hearing. Final Eepoet of Joint Legislative Coaimittee 1999 Q. And the Canadian government, that send that license out, marked with ink along those clauses of the franchise ? A. There were no ink marks. Q. It was on their copy from the Public Service Commission, which we have marked as an exhibit. A. We might have marked it. Q. It might have been well to have marked it in your mind. A. I marked it in my mind, and I say to you again, if I am satisfied on the rehearing that a mistake has been made, I will be the first one to move to vacate any action that has been taken and refuse the capitalization. Q. What new facts will be before you ? A. To satisfy us that the Canadian government would do such a thing. Q. That is the only fact that will be before you that was not before you before ? A. I am sure on a rehearing these facts will be presented, and a fair hearing will be given. Q. Do you think it would be bad faith on the part of the Can- adian government to terminate the contract at the end of some one year ? A. Yes, sir, unless they needed the power there, which they have proved that they do not need, because they permit 75,000 horsepower to come into Buffalo, giving the Niagara Falls Canadian plant 50 per cent, of the whole output of the entire plant to be exported to the United States, which is sold. Q. And do you think that, when this law forbids the capitaliza- tion of a franchise, that if there is an intervening company, that is, if one company has the franchise and makes a contract under that franchise with another company — a second company — then capitalization of the contract of the second company is not a violation of the law ? A. I do not believe it is. Q. You do not believe it is ? A. iSTo. Q. So that, under this provision of the law that says you should not capitalize a franchise — A. And we have not. Q. You have not because you did not capitalize the company that held the franchise, but capitalized the company that had a con- tract .with that company based solely on that franchise ? A. You are entirely mistaken. Q. Will you explain where I am mistaken? A. I think they are concomitant papers. I do not think they are dependent upon 2000 Investigation of Public Service Commissions one another. I do not think the contract is any part of the fran- chise. Q. Then why were the franchises brought in here and presented to this Commission as a basis for the contract ? A. Well, I do not know why they were brought in. Q. But it was, was it not ? A. Yes, sir. By Chairman Thompson: Q. If I get a franchise, I cannot capitalize that 1 A. No. Q. But if I make a contract with Assemblyman Kincaid, that he can use it, can he capitalize that contract ? A. Certainly not. That is not this case, as I understand it. This petitioner has a contract with the power company to bring that power into the United States, to produce 46,000 horsepower. Q. Would you say that contract was capitalized ? A. Why, that is a mooted question. The Commission of the First District dis- agrees with the courts of this State, and the courts disagree with them. Q. The Commission of the First District, their notion is that the contract was not capitalized? A. They also refused a good will or going concern value as a basis for capitalization, which the courts refused. Q. The question is whether the course they take here, on the capitalization of that contract, the contract that the people of Canada had with the power company — A. You say the First District told you ? Q. No, the Second District. No one told me that, except we were talking with Commissioner Decker the other day on the sub- ject about it, and we found there was a contract made with some people in Toronto, and that contract was to be turned over to the Canadian-American Power Company for $800,000, which this Commission approved. Was that a capitalization of that contract ? A. Yes, sir. Q. Do you think that is proper? A. Yes, sir, the business, good will, going concern — call it anything you please. By Colonel Hayward: Q. How long would it have been a going concern if the Can- adian government had shut down on it? A. Not a minute. Final Repoet of Joint Legislative Committee 2001 Q. So in the last analysis, the value, if there was a value, was this franchise ? A. 'No, the good faith of the government. Q. Do you think it would be bad faith for the Canadian gov- ernment to stop selling this power at the end of a year when that very provision is contained in their franchise? A. Not if they did not need it in Canada, Colonel. Is that part of your question ? Q. Put anything to it you want, but the Canadian government had the right, and retained the right, to refuse to renew it at the end of any one year. A. If it needs it in Canada, If it did not need it in Canada, I think it would be bad faith on the part of the government or anyone else to keep it from the use of power users or business. Assemblyman Knight. — Does that clause appear in that, unless it needs it? Colonel Hayward. — I do not know whether it does or not, but that section is marked on the copies that were here. Assemblyman Knight. — I just wanted to know whether that had been brought out. Colonel Hayward. — I think it is. The Witness. — Eeally, I cannot tell you whether it is or not. Have you got that Canadian statute, Mr. Mott ? By Chairman Thompson: Q. While they are looking over the papers, I will ask you a question or two. Judge, — people frequently write me, and some- times they have questions they want to ask of some particular Public Service Commissioner. I guess the only question to ask you has been answered. The question is has the Commission al- lowed the capitalization of that Canadian transaction? That is the only question I have for you. I have several questions for Commissioner Van Santvoord. The Witness. — Can you tell me who was the questioner ? Q. He did not sign it. I will tell you a little later, after I have asked the questions of Commissioner Van Santvoord. Another thing: There was another order made in Albany, December 7, 1911, in reference to the service conditions on the lines of the 2002 Investigation or Public Sbevice Commissions United Traction 'Company in and about the city of Albany. Do you know, Judge, whose order that was ? A. I do not know what order you refer to. Q. I mean an order of December 11, 1914, in reference to case No. 2897, in reference to the matter of service and transportation on line of the United Traction Company in and about the city of Albany; that order directed the respondents to furnish 13.26 miles of track forthwith, comply with detail suggestions on page 263 forthwith during leisure hours, to permit the people of the city of Albany to get to church, the same thing regarding transfers to various places, arrangements for transfers on the basis of rapid transit; equip all its ears in the city of Albany with conspicuous route and destination signs and illuminate them, and provide cross- steps on the open ears twenty-one inches or lower ; new transformer station, etc. That is what the order did? A. What is the ques- tion? Q. Who originated this order ? A. I never had any active ]Dar- ticipation in that case. I think I sat in it once over in the As- sembly Chambers. Q. You do not know anything about it? A. Yes, I do know something about it, and when the recommendations of Mr. Barnes came in, it was discussed. Some of them were followed and some were not, and finally, I think, the recommendations were served upon the company, and I knew about that. Then, afterwards, they gave notice to the Commission as to what they would comply with, what they deemed unreasonable, etc. I knew about that. Then I knew about the final order. Q. This is the final order I have read. A. And the certiorari. That is all I know about it. Q. This is the final order ? A. Chaii"man Van Santvoord pre- sented the case. Q. One other thing I was asked to ask you about, and that re- fers to a railroad station in western New York, up in Wyoming county. What is the name of that station where there is one on the Lehigh and one on the Erie, the same name ? Assemblyman Knight. — Wyoming ? The Lehigh does not run into Wyoming county. Final Repoet of Joint Legislative Committee 2003 By Chairman Thompson: Q. Darien. What about that proposition. Has it ever become formal ? A. It is coming formal. I had a consultation with the people a -week ago Saturday. Q. How long has that case been up before the Commission ? A. Oh, about — I don't know, a year or so. They brought it before me informally and I had a long discussion with them. I asked the railroad companies and the express companies to change the name so as to avoid confusion, and they declined to do it. The town authorities and I had a long consultation the other day, and they are going to present their papers to the town authorities and the residents and shippers to invoke the authority, or the aid, of the Commission to straighten things out. It is very peculiar. In the town of Darien, they have Darien Center. The Erie Railroad has a station called Darien, and about three or four miles from that point the Lackawanna has a station which I think they call Darien Center, which is three or four miles from Darien Center. Q. The way the story was put to me was that you held this pro- ceeding something like a year, and that you attempted to take it up by means of the ordinary negotiations with the railroad com- pany and see if you could not get one station for one and one for another ? A. Yes, sir, as a matter of conciliation. Q. And it happens that, whenever a fellow in South Darien wants something, it goes to North Darien, and when a fellow in North Darien orders something, it goes to the other station? A. Yes, sir. Q. And you took it up and endeavored to straighten it out with the railroad companies without any success? A. Yes, sir, and now they are going to bring it formally before the Commission. Q. And the proceeding was closed, and then the story goes that Senator Greiner, of Erie county, started to send some flowers to his father, or mother, or girl, and sent them to one station and they went to the other, and the Senator got in a critical state, and he called the attention of the Public Service Commission to the matter and asked that it be taken up again? A. I heard about those flowers. I had a conference with a lot of people. Q. What those good people want to know is whether the Public 2004 Investigation of Public Service Commissions Service 'Commission will make an order on that? A. Not until they present their formal papers, which they are preparing now. Q. After that they will probably get the formal order ? A. We will try to do something for them if there is any authority in the law. Q. Of course, I think it is proper that Senator Greiner's flowers should be delivered on time. By Colonel Hayward : Q. I hand you what we marked as Exhibit A, of March 5, 1915, C. A. P. Company. That is the license you are referring to ? A. Yes, sir, but the statute was the thing I was talking about. This is the license from the — what is it they call it ? — the Ontario government. Then, besides that, there is the Dominion statute. Q. You just find in that license where they say anything about only stopping this if they need the power themselves ? A. I think it is in the statute. I am not certain. Q. I thought you said it was in the license ? A. I do not think so. Q. Will you look and see if it is in the license ? A. I will take your word for it. Q. I would like to have it in the record. This says : " This, license being only for one year, licensees must not enter into any contract which they will not be able to carry out if this license is not renewed, or if the Electricity & Fluid Exportation Act or the regulations made thereunder are changed." Does that answer your question ? A. Where is that, Mr. Mott ? Mr. Mott. — The communication from the Canadian govern- ment to this government contained the statement which Judge Hodson has made. By Colonel Hayward: Q. This communication from the Canadian government to this Commission was not before the Commission at the time this license (vas authorized? A. ISTo, but you asked me about it. It says: "And it was recognized that, while it was consistent with that view to permit exportation so long as the demand of Canada for power would not be sufficient to absorb the whole production, yet it could be permitted only in such manner and on such terms as Final Eepoet of Joint Legislative Committee 2005 did not conflict with the ultimate necessity of securing and pre- serving this natural resource for the use of the people of Canada if and when needed by them." 'Now, Colonel Hayward, I want to say to you just as plainly as it is possible to say it that we may have made a mistake in this capitalization matter, and if, on further consideration, we find it so, I again say to you that we shall be most anxious to rectify that mistake if there is any pos- sibility of the Canadian government stopping this exportation. By Assemblyman Knight : Q. How do you expect on a rehearing of this applioation you will be able to have any assurance that you have not already got ? A. That has been in my mind, that we will either have some sort of statement from the Canadian government, that they will not en- force that statute, or that they will. Q. Would you consider this statement made to the United States government, that you have read, would you consider that would be sufficient? A. No, sir. That simply calls attention to the fact that the statute is in existence; not that they are going to enforce it Q. What assurance could you get hereafter, that you have not already, that they will continue the contract for any considerable length of time? A. That leads me to be just as frank as your question requires. In this Canadian Power Company, this peti- tioner, as I understand it. Sir William MacKenzie is interested, an influential and powerful man in the Dominion of Canada ; and I have been informed that he is taking steps to ascertain what the attitude of the government is going to be, and I presume that we will be informed on the subject. I hope so, anyway. Q. Is that the form of contract that was made with the other companies taking power from the Canadian side ? A. Yes, sir. They have the same permit exactly, the same permit. Q. Is it not in pursuance of any statute of Canada ? A. All under the same permits and statutes, that this company is acting. Q. I mean by my question does the statute there specifically con- vey that these contracts should be made for no longer than a year ? A. I say that my understanding is that all of these companies have the same permits, the same provisions, and are liable to the same conditions as this company. I do not know but I may be 2006 Investigation of Public Seevice Commissions misinformed. Senator, you ought to know about that. You have a subsidiary company in Middleport. Chairman Thompson. — What is that? The Witness. — As to whether or not the Ontario Company brings its power into the United States under the same kind of a permit as has been introduced in evidence here. Chairman Thompson. — That is true, but they came in before the Public Service Commissions Law was enacted. They came in in 1907. They have the same kind of a contract. By Colonel Hayward: Q. I was speaking about the capital stock, what it was based on ? A. I say again that it was based on a thirty-year contract for 46,000 horsepower. Q. Now, when this matter was before the Commission, Mr. Jackson, of the Department of Efficiency and Economy — Charles H. Jackson, who signs himself " Chief Examiner," wrote to the Commission : " I present again the application of the Canadian- American Power Company for permission to issue part of the capital stock to acquire electric contracts from the Baltimore Utilities Company, because, first, in the matter of an application by the Cataract Power & Conduit Company, of Buffalo, ISew York, your Commission has decided that a similar contract could not be capitalized for any amount." He says that the reasoning in that opinion is clear and conclusive and declares the principle, etc. I want to read in that particular case former Chairman Stevens' opinion on that very proposition, on page 8, case 154: — this was while you were on the Commission; after you came on the Com- mission : " Complaint of Louis Euhrmann, as Mayor of Buffalo, against the Cataract Power & Conduit Company." They wanted to capitalize for $2,000,000 the value of their contract with the Niagara Falls Power Company, and touching on that particular proposition, the Chairman says: "We may, therefore, dismiss without further consideration, the claim of the company that this contract with the Niagara Falls Power Company has a value of $2,000,000, upon which it is entitled, as a matter of right to a re- turn of not less than 6 per cent, per annum." So that it is fair to Final Report of Joint Legislative Committee 2007 say, is it not, that the opinion of the Commission in these two cases were diametrically opposite? A. Yes, sir, and so good a lawyer as Daniel J. Kenefick has now an appeal in the Appellate Division from that decision. Q. The last one I read ? A. Yes, sir, claiming that that de- cision was wrong. Q. But they are now trying to consolidate the two companies? A. Yes, sir, and the consolidation is approved by the Mayor of the city of Buffalo; the complainant in that very case. I think the consolidation comprehends the payment of $2,000,000' by one company to the other, and the Mayor of the city of Buffalo, the complainant in that very case, approves of that. Chairman Thompson. — The proposition was to get the two com- panies together, so as to have one organization? The Witness. — Yes, sir. By Colonel Hayward : Q. So when you made this Canadian-American Power Com- pany order, you had to repudiate the previous opinion? A. I wish you would not put in that way. Chairman Stevens is a good lawyer and was a good Commissioner, but at the time he decided this case the First District had not decided the Kings County Lighting case, where they held that $800,000 paid in by that company was not proper as a going eoneern or good will — I do not know just what they called it — and the Appellate Division and Court of Appeals unanimously reversed the First District. Q. I do not agree with the interpretation of that case, but there was nothing in that case containing an inhibition against a con- tract for more than one year ? A. No. Q. This is clearly limited to that ? A. So far as the permit from the government is concerned, yes. Colonel Hayward. — That is all. Chairman Thompson. — If there is any statement any Public Service Commissioner desires to make, he shall be given an op- portunity to do so. 2008 Investigation of Public Service Commissions The Witness. — I do not think I have any statement to make. The examining counsel has been eminently fair in his questions, and I have been given every opportunity to answer. Chairman Thompson. — That " eminently fair " is a good phrase and I wondered if the Committee should not be included. The Witness. — I do not like the Committee smoking good cigars and the witness not having any. Chairman Thompson. — I will say to you that the Committee will be glad to smoke all the cigars that the witness on the stand will provide. I want to ask you one question, for my own in- formation : You have been about the Public Service Commission in the last few weeks here. Cau you give us any information as to when they are going to decide this telephone matter ? The Witness. — We have been working on it a great deal for the last month or two. By Chairman Thompson: Q. Do you think it is likely to be decided in a day or two ? A. I think we are very close together. Q. In relation to the interchange matter in Lockport — A. I did not say you had caused any delay, but I did say the case had been delayed. Q. That case was submitted in 1909 to the Public Service Com- mission, Second District, on printed briefs. So far as I am able to determine, there has been no decision by the Public Service Commission of the Second District up to the present time and no activity on the part of any Commissioner except the activity of Judge Hodson, since he has been Commissioner, and he has been very active ? A. I made this statement in your absence : That at the last conference we had, it was agreed between the parties that there should be installed freight rates to take the place of those asked for interchange, which was agreed upon by everybody. Chairman Thompson. — We will now adjourn until to-morrow morning at 10 o'clock, and if the attorneys are not present at 10 :30, we will go ahead without them. Adjourned to Wednesday, March 10, 1915, 10 :30 a. ii. Final Kepoet of Joint Legislative Coaimittee 2009 MARCH 10, 1915 Committee met at the City Hall in the city of Albany, IST. Y., on Wednesday, March 10, 1915 at 10:30 a. m., pursuant to the adjournment taken from Tuesday, March 9, 1915. Present : A quorum of 'the Committee being present. Appearance : Colonel Hayward for the Committee. Devoe p. Hodsow, recalled as a witness and examined by Colonel Hayward, testified as follows: Q. Mr. Hodson, what do you remember about the proceeding in the matter of the application of the International Eailway Com- pany for leave to issue bonds. Do you remember the details of that transaction? A. There have been very many of those pro- ceedings ; there have been several of those proceedings. Q. This one was the lYth day of October, 1913, in which the Commission authorized this railroad to issue bonds to the total par value of $635,000 ; or the proceeds for certain purposes, those bonds to be secured by a mortgage, the mortgage being much greater than that? A. An overlying mortgage already in exist- ence. Q. Sixty million dollars of that mortgage ? A. Yes. Q. With the Bankers Trust Company as Trustee. ISTow I find that the Commission authorized the issuance of these $635,000 worth of bonds for, among other purposes, $85,000 of those bonds were for expenditures to retire car trust certificates issued under an agreement dated June 16, 1906, maturing June 15, 1914, December 30, 1914, $60,000 worth of them, and for expenditures to retire car trust certificates issued under the agreement dated August 1, 19€7, maturing March 1 and September 1, 1914, mak- ing $25,000 more; that made a total of $85,000; these bonds se- cured by this mortgage to take up these car trust certificates. Is that as you recall it ? A. I have no recollection. Q. Well, then, I will just bring it over and let you refresh your recollection. A. I wouldn't know anything about it if you should bring it to me, except what I read in the order. 2010 Investigation of Public Service Commissions Q. You can read the order and tell us. A. In what respect do you mean ? Q. Eead the order and see if the Commission authorized the bonds to be issued secured by mortgage, of ■which $85,000 was to retire car trust certificates. A. Why, here is the order, and if it does, it does, Colonel Hayward ; there seems to be the order of the Commission dated the l7th of November, 1913, at which meeting Chairman Martin S. Decker, Commissioners Sague, Douglas and Hodson were present. The order provides for issuing certain bonds for refunding purposes — why, the purposes recited in the order. Q. Well, then, would you say that that statement was correct? A. I assume it is. Q. I don't ask you to assume it is, I ask you — ? A. Then I suggest that you read the order, Mr. Hayward. Q. I did read such parts of it as I wanted? A. I will take your word for it, Mr. Hayward. Q. All right, thank you very much, sir — on file with the Sec- retary. We will get along very much better, Mr. Hodson, if we try to be fair with each other. A. Mr. Hayward, I don't think I- am unfair about it. Q. ISTo, but you are very evasive, Mr. Hodson, and very un- necessarily so. A. Well, I think from the heading in the news- papers — I don't think I am trying to be evasive. Q. I don't ask you anything about newspaper headings ; I don't care anything about that. I am trying to get along with as much ■ expedition as possible here, and although I do not know how valu- able your time is, I know the time of this Committee is valuable and we want to get along. A. Why not, Mr. Hayward, put in the record and order of the Commission, put in the record the order of the Commission. Q. I have read such parts as I desire, and I have read them into the record. Acting Chairman Kincaid. — ISTow, Commissioner, I will have to ask that you answer Colonel Hayward's questions, and as I understood the question it was if that mortgage was to take care of $85,0000 worth of car trust certificates ? Can you answer .that question ? A. I will read the order and see, if you require me to read the order. Final Report of Joint Legislative Committee 2011 Q. I would like a definite answer to that question. A. Here is the order of the Public Service Commission, Second District, dated as I say, on ithe I7th of JSTovember, 1913 ; it recites that the petition of the petitioner dated the 13th of November, 1913, was filed and having been inquired into and examined by the Chief of the Division of Capitalization of the Commission, under the rules provided for uniform system of accounts for street railroad cor- porations for an increase in the fixed capital to cover its proposed expenditures, it appears from the petition the company desires authority to issue bonds of the par value equal to the proposed expenditures to be made during such period, now, therefore, ordered : 1. That the International Railway Company be and it hereby is, pursuant to the provisions of section 55 of the Public Service Commissions Law authorized to issue — Colonel Hayward. — Mr. Chairman, I make the suggestion, I don't know how valuable Mr. Hodson's time is, but I think I know how valuable the time of this Committee is, and I repeat that Mr. Hodson is evasive, and not in any manner trying to be fair in answering my questions, and I insist, Mr. Chairman, that he do so, without reading into the record this order. Acting Chairman Kincaid. — Put the question again. Colonel Hayward: Q. My question is if you can tell, if he knows first, whether or not the Commission authorized on the date stated that issue of bonds, $85,000 of which was to retire car trust certificates for that same amount as the car trust certificates are outlined on those dates that are named that I mentioned in my first question to the Commissioner ? A. I know of no such fact except as I have re- freshed my recollection from the order which I now read and find. Q. Suppose you refresh your recollection from the order and then answer my question. A. I find in the order, under sub- division C of section 3 of the order that $85,000 was issued to re- tire car trust certificates under an agreement dated August 21, 1907, maturing March 1, 1914, $12,000; September 1, 1914, $13,000 ; a total of $25,000 ; and under subdivision B, for ex- penditures for light purposes, $60,000, a total of $85,000'. Q. Thank you, sir. I thank you very much for your answer. At the time these bonds to take up car trust certificates were au- 2012 Ikvzstigatio>' of Public Service Commissions thorized by the Commission, do you know -wlietlier or not the Com- mission had before it any information as to the condition of those cars ? A. I know nothing of the case except as I gleamed it from the order now. Q. Do you remember whether or not there were any hearings held ? A. I do not. Q. Do you have any recollection of this case whatever other than what you gained from this order this morning? A. I have no recollection of ever hearing of the case before. Q. This case was a BufEa.lo case? A. Yes, sir, but I had nothing whatever to do with it. Q. You had nothing whatever to do with it ? A. I had nothing whatever to do with it until it came to the passage of the order. It was investigated, I presume, by Chairman Decker. The order was formulated by Chairman Decker and recommended by the Capitalization Department, I presume. I knew nothing about it. Q. You were on the Commission at the time? A. Yes, sir. Q. You had some knowledge of this International Railway at the time ? A. Oh, yes, sir. Q. Such as an ordinarily intelligent citizen of Buffalo, inter- ested in public affairs would have naturally ? A. I think so. Q. And did you know anything about what cars these were, covered by these car trust certificates ? A. I have no information. I have no information now. I presume Mr. Connette or Mr. Xorton, of the International Railway Company, or Mr. Hopson, or perhaps Mr. Taafe, the present head of the Capitalization De- partment, can tell you all about it. Q. And you confirmed the order? I see you voted for this order ? A. I presume I did. I do not recall it. Q. And did it on the recommendation of Mr. Connette and Mr. Hopson ? A. N"ot necessarily Mr. Connette. The sworn petition was in the case and Mr. Hopson o. k.'d figures, so the order recites. Q. I wish you would tell us what, in general, is your under- standing of the theory on which car trust certificates are issued for terms of ten or fifteen years ? A. On what theory ? Q. Yes, on what theory of capitalization, on what theory of re- tirement? A. Why, according to their terms, I would assume, like any other indebtedness. Final Eepobt of Joint Iegislativb Committee 2013 Q. Is it not true that car trust certificates are issued on the theory that they will be retired and all cleaned up during the life of the equipment they cover ? A. I really do not know what the rule in such matters may be. Q. Do you know what the custom in such matters may be? A, I do not. Q. You have never had any experience like that, have you, be- fore or since coming on the 'Commission? A. 'No. Q. You have never made any investigation to find out? A. I have not. I left those matters to our subordinates in the Capital- ization Department. Q. Well, would you say that it appears from this that these car trust certificates were maturing at about the time the Com- mission authorized them to be taken up by the new bonds? A. Did you read the dates, Mr. Hayward ? I do not know anything more about it. Q. Well, the dates for the $60,000 maturity were June 15, 1914, and December 15, 1914; and for the $25,000 car trust cer- tificates, the dates of maturity were March 1, 1914, and Septem- ber 1, 1914; and this was the last of ISTovember, 1913, that this order was entered. A. Well, I assume — Q. That was three or four months before the first of these car trust certificates would mature? A. I assume that the company has to go out in the market and raise the money anticipating the payments that they have to make. Q. iN'ow, do you remember when this mortgage and these bonds that were issued are due? A. No, sir. By Assemblyman Kincaid: Q. Commissioner, while they are looking that up, just for my information, what is a car trust certificate? A. I should say it is a certificate of indebtedness for moneys borrowed for the pur- chase of cars. I do not know of any other definition to give for it. Q. Then, as a matter of fact, they should have not run longer than the life of a car ? A. I dare say they do not. I do not think there is any indebtedness of any street railroad that is running longer than the life of the cars. Q. What is the average life of the rolling stock of a railroad, say cars especially? A. That depends altogether, Mr. Chairman, 2014 Investigation of Public Seevice Commissions as to the use. It is quite impossible to say. Some of tbem go into the obsolescent pile long before they are depreciated by abso- lute -wear. Sometimes they go out of date. Sometimes arrange- ments are made, or improvements are made, so as to have entrances at one end or the other end. Q. I wondered whether there was not some fixed rule, some aver- age, which you could strike and not 'let car certificates run any longer than that? A. I am sure that is a financial question I have never thought of, and an accounting question I have never given any attention to. Assembly Kincaid. — Proceed, Colonel. By Colonel Hay ward : Q. Mr. Hodson, I find that these bonds provided for in your order were 5 per cent, fifty-year gold mortgage bonds, dated the 1st day of November, 1912, and that would bring the maturity of these bonds into 1962, would it not? A. Fifty years, yes. Q. And within those bonds you incorporated these car trust cer- tificates just before the car trust certificates were maturing. Now, did you or any of the other Commissioners, so far as you know, think that was sound financing, to allow this company to take up car trust certificates just maturing, the original certificates having been based on the life of the equipment they covered, and allow them to put them in with these bonds maturing in 1962? Does that seem sound to you ? A. Why, if it is an honest application of the company, yes. I voted for it and stand by the order. Q. So that any honest application of the company, in your opinion, you would allow the company to issue bonds and secure those bonds by a mortgage on the entire property, would you ? A. Unless there was some provision in the mortgage to the contrary, yes; any honest application. Q. So that when car trust certificates have been issued cover- ing paTticiilarly certain equipment about to mature and not retire and not paid, you think it is all right to transfer the securities of all the property of the company to cover the particular property included in those • equipment certificates, do you ? A. I would answer it in this way : That a car trust certificate is substantially a promissory note. It is, nevertheless, a debt of the company. Final Repoet of Joint Legislative Committee 2015 Now, if it owes the debt, there is no reason why, it seems to me, that the Public Service Commission should not permit the com- pany to secure that debt, if it cannot pay it. ♦ Q. It is a promissory note, to be sure; but it is a particular promissory note, in this case, that is secured by those particular cars, is it not, Mr. Hodson? A. I do not know, sir. Q. You do not know that that is what is in a car trust certifi- cate, that that is what a car trust certificate is? A. I do not know that those cars were used at any particular time. They may be in use to-day. I do not know. Q. Do you think they will be in use in 1962? A. No, I think not. Q. So that when those bonds become due, the property on which those securities were issued will be gone? A. Oh, yes. Q. We found some cars down on the B. E. T., Mr. Hodson, that had been in use for thirty years ? A. I guess there are some here on the hill in Albany, that have been in use that length of time. We have tried to drive them out of service but have been unsuccessful so far. Q. So that on the highest possible figures, they would only last fifteen years from 1914, would they not? A. I do not know that. That depends on the service. Q. That is a fair assumption, is it not? A. Eeally, I cannot tell you. Operating officials would know more about that than I. With proper care, they might last twice that length of time. Q. Well now, do you know as a matter of fact whether or not these old cars up there have been taken out of service ? A. I really cannot tell you what those certificates related to. Q. You cannot tell? A. No, sir. I presume the petition shows the facts correctly, if the Capitalization Department check it up properly. I do not know. Q. Would you, or would you not, say that, in your opinion, that was sound financing ? A. Well, I am not a financier. Q. No, but you are a Pxiblic Service Commissioner, Mr. Hod- son, and part of the duty, under this law of the Commission, is to see that nothing but sound financing of these corporations is allowed and that no securities are foisted on the public, with the approval of this Commission, unless it is a sound proposition, and I want to know whether you think it is a sound proposition or not ? 2016 Investigation Of Public Service Commissions A. I tave said before that, if this was an honest debt — and apparently they proved to the CominissiGn that it was — that I believed that the order authorizing the bonds to pay the debt was a proper one. Q. Without any other security than this, transferring this security from the car trust certificates on these old cars into the bond ? A. I believe the company has the right to secure an honest indebtedness on any property it has, and that the approvall of the Commission is proper for that purpose. It would be far better if their earnings would justify the payment of the debts, of the current debts ; but if they do not, the debts have got to be paid in some way. Q. They have got to be paid up with long-term bonds. Now, what is going to happen when the day of reckoning comes ? A. It is quite impossible to say, if the bombardment of railroads con- tinues as it has been for some time, what is going to become of them. Q. Do you believe in regulation by the Public Service Com- mission ? A. Yes, sir ; and I believe, also, in protection of public service corporations. Q. I guess we all do. A. Well, I don't know. There are a lot of people who are at the bottom of these charges, you do not believe that? Q. What charges do you mean ? A. Why, things that have been said with reference to the service up in Buffalo, as to the International Eailway Company. I am not unmindful of what has been going on ; communications to newspapers and wild state- ments as to demands on corporations, requesting corporations to do this or that; without considering the needs or the means or facilities to meet the requirements of the complainants. Q. Suppose this company could not pay these car trust certifi- cates along in the spring of 1914 in what seemed to have been the regular and orderly way under the terms of the certificates; do you think that it would have been unfair to the railroad to have had a showing then on that fact rather than to have put them into long-term bonds, a long-term bond issue ? A. Well, that is a mat- ter of administrative function on the part of the officers of the company, I assume, supervised by the Commission, Final Repoet of Joixt Legislative Committee 2017 Q. Well now, to what extent do you think the Commission ought to supervise the performance of those functions ? A. "Well, let us assume that there was no overlying mortgage of sixty mil- lions of dollars, justifying the issue of more bonds. Assume they had a closed mortgage and there was no way, out of their earn- ings, to pay their current bills, such as car certificates and the like, necessarily a receivership ensues, and if a receivership ensues, great loss comes to the public because of poor service; great loss comes to investors, thousands of men, women and children who have their savings in the shape of securities of indebtedness of corporations. Those things have to be conserved, and I believe it is a proper conservation to take care of the future by the issu- ance of bonds, don't you. Colonel Hayward ? Q. I think if that railroad was not in position to pay its car trust certificates and could not renew them by car trust certifi- cates based on the life of the cars, which is the real theory of car trust certificates, they had better face the music then, and the then holders of the certificates have suffered, than to put off the evil day until some time in the future. A. Do you not think that the use of those cars for the days they did live, for the benefit of the general traveling public and the service should be considered, also, in the abstract? Is not that some consideration, that the cars have been used year by year ?. Q. Yes, it is; and they should have retired those car trust cer- tificates during the life of the cars. Do you mean to say, Mr. Hodson, that it is honest finance to issue bonds not secured by tangible property? Answer that question first. A. Tangible property ? There is lots of property that is intangible. Q. What intangible property do you think bonds ought to be issued against? A. No, not bonds; but stock. Q. That is the question I asked you ; what intangible property should be issued for bonds ? A. You are entirely correct in your assumption. There cannot be a mortgage on anything except something in existence, of course ; but we come right gack to that question as to whether or not they should be issued during the life of cars for which they were issued. Q. And if they were not retired during the life of the cars, would you say the minute the life of those oars cease, it was proper 64 2018 Investigation of Public Service Commissions to issue those, not secured by any property? A. Yes, but in the meantime the oars had worked for the company. Q. But they were retired? A. Maybe they used the money for something else. It all comes back in the last analysis to the question: Is the company honest in its application and is it an honest debt? Q. You are willing to allow any corporation which is honest, and which has good intentions, to sell, with the approval of the Commission, securities based on that honesty, are you, and not on property? A. No, sir. Q. Well then, what has the honesty of the company got to do with it ? A. Oh, very much. Q. Just what, so far as the security to the investors is con- cerned, on a bond secured by a mortgage? A. It is a debt that company owes and has got to pay. Now, how can it pay its debts ? There is no way to pay it, so they say, except to issue bonds and they can sell the bonds. Q. If it is the honesty that the investor is to depend on, why take a mortgage at all ? A. If you can sell the bond, if you can go out into the world and get people to buy the certificates, all right ; but you cannot do it always. Q. Therefore, the reason you cannot do it is because the in- vestor expects security for the bonds he buys, does he not? A. As a rule, generally he does. Q. And that is the reason you cannot sell bonds based on the honesty of the company? A. Not always. There are a good many bonds issued where the integrity of the company is well known, which stands them in hand considerably ; you know that ? Q. But generally a mortgage goes with it too? A. Oh, yes, sir; but it has been a more difficult thing to sell bonds the past year or two, even at eighty-five. Q. Tell me what good you think the security for these eighty- five thousand dollars will be in 1962' to the then holders of them? A. Why, I cannot tell you what the International Eailway Com- pany will be in fifty years from now. Q. Certainly, this property that was made the basis for this issue will not be good for anything in 1962 ? A. You mean those oars? Final Report of Joijst Legislative Committee 2019 Q. Yes. A. W'hy, the basis of this bond issue is not the cars alone. Q. ■No, but the basis for this part of the bond issue must neces- sarily be the cars ? A. I think those cars will be in the scrap heap then. Q. I think so to. Do you remember, Mr. Hodson, you were on the Commission — I do not know whether you remember it or not ; it was a short time after you came on the Commission — the matter of the application of the New York, Westchester & Boston Eailroad Company, part of the New Haven road, for authority to issue bonds? A. No, sir; I do not recall it at all. Q. You have no recollection of it ? A. I do not recall it at all now. Q. You voted on it, Mr. Hodson ? A. I presume I did, if the order shows it. Q. You had knowledge of the New Haven Railroad at that time, I presume ? A. Yes, sir. Q. And you probably had heard of its subsidiary, the subsidiary of the New Haven, the New York, Westchester & Boston? A. Yes, I had heard of that. Q. And there was a lot in the papers about the financial con- dition of this road and the subsidiary, at that time ? A. Yes, sir ; considerable. Q. There were investigations going on, and had gone on, by different authorities; Mr. Mellen, the president of that road, had been on the grill for some time, had he not, according to the daily newspapers ? A. Yes, a great deal had been said about the New Haven. Q. And this order you concurred in on this date authorized the New York, Westchester & Boston to issue six million and forty- four thousand dollars' worth of bonds ? A. Refunding ? Q. First mortgage bonds — and you say you do not remember anything about that transaction ? A. I do not. Is that a refund- ing proposition. Colonel? Q. Well, I will tell you what this was for, six million and forty-four thousand dollars, the proceeds thereof, to the amount of five million six hundred and sixty-three thousand dollars was to be issued for the following purposes and no other, for the pur- 2020 Investigation of Public Service Commissions chase of right of way for, and the construction and equipment of, the railroad and appurtenances of that portion of the route of the petitioner, extending from the present ending of petitioner's main line at Larchmont Junction in the city of New Eochelle, West- chester county, New York, to its proposed terminus in the village of Portchester, at a point about midway between Westchester avenue and King street, in said village, as shown in map filed with papers marked Exhibit A, and further described in affidavit of William A. 'Cokeley and William R. Bull, attached to the peti- tion as follows : To be acquired from the New York, ■New Haven & Hartford Railroad Company the sum of four hundred and twenty-two thousand and eighty-four dollars; to acquire from properties other than the New York, New Haven & Hartford Railroad Company one hundred and fifty thousand dollars, to be paid to the New York, New Haven & Hartford Railroad Com- pany, being the appraised value of improvements on the property to be conveyed by it to the New York, Westchester & Boston Rail- road Company, which improvements and structures were not to be altered, but were to remain and be used by the New York, Westchester & Boston in their present condition, for the sum of one hundred and fifty-one thousand seven hundred and sixteen dollars, which is itemized, but the items of which I will not read. Now, there was seven hundred and twenty-three thoiisand dollars of the amount. Now, for construction of the railroad from the present ending of petitioner's main line at Larchmont Junction, in the city of New Rochelle, to its terminus, in the village of Portchester, three million three hundred and fifty thousand dol- lars; for taxes during construction, fifteen thousand dollars; for interest during construction, two hundred and eighty-five thou- sand dollars; to complete the construction of the White Plains branch, five million five hundred and forty-six thousand dollars; and for the purpose of taking up, paying off and canceling, seven hundred and forty-four thousand one hundred and twenty-five dollars of its outstanding notes payable, made to the New York, New Haven & Hartford 'Railroad Company in payment of in- terest, during the period of construction, on bonds issued for con- struction of the main line of the petitioner, being the same amount which is referred to, etc., the sum of seven hundred and forty-four Final Keport of Joint Legislative Committee 2021 thousand dollars; a total of five million six hundred and sixty- three thousand eight hundred dollars, of which one million dol- larsi was interest. A. When was that, Colonel ? Q. This order was issued in April, 1913. That was right after you came on the Commission, was it not? A. Yes, sir. Q. You do not remember the transaction at all ? A. ISTo, sir ; but I assume that Chairman Stevens, who then handled the capi- talization matters, had charge of that case, either he or Commis- sioner Sague, or Commissioner Decker. Q. Is it possible, Mr. Hodson, that you could so familiarize yourself with a matter of this 'importance and magnitude as to vote intelligently on it at a meeting of the Commission, and then. in less than two years, have forgotten all about it ? A. I have not forgotten all about it. Q. Did you not tell me you had forgotten about it? A. I did not recall the case, just as I do not recall 500 other cases. Q. Have you had 500 cases like this, of similar magnitude? A. I think not, but a whole lot of cases I cannot recall ; but I think Chairman Stevens, who is in ISTew York City, can give you infor- mation on the subject, if you desire it; or perhaps former Chair- man Decker can do it, or Mr. Hopson, of the Capitalization Department. Q. Xow, I find here the report of your own engineer, Pelz- — he was the engineer at that time ? A. I remember that name. I do not just remember who he was. Colonel Hayward. — Mr. Mott, was he your engineer? Mr. Mott. — He was very frequently assigned to things of that kind. Colonel Hayward. — He is a competent engineer ? Mr. Mott. — Yes. Colonel Hayward. — This is a long report, Mr. Chairman, and I do not care to read it all into the record. I simply want to read the communication that he wrote, or state the conclusion that Engineer Pelz reached, estimating the cost of the construction of the Portchester extension at $2,979,016. 'Nmv, in the same report of the same engineer, the railroad estimate — the estimate 2022 Investigation of Public Service Commissions of the railroad — was $3, 501,716, a difference of over half a mil- lion dollars in the estimates of the engineer of the Commission and the engineer of the road. Now, do you know which of those estimates the Commission accepted and acted on? A. I assume the estimate of the engineer of the Commission. Q. No, they did not, strange as it may seem. They took the estimate of the engineer of the road and included this half million of dollars in this issue of bonds they authorized ? A. 'They became satisfied that was right. Q. Mr. Pelz was wrong and the railroad engineer was right? A. That sometimes happens. Q. Now, do you know — have you kept track of the issue of these bonds since then? A. No, sir. Q. You do not know anything about it? A. No, sir. The Commission has, I assume. Q. You have no personal knowledge of it? A. No, sir. Q. And did you at that time, and do you now know, that this company has been losing money every year it has been operating ? A. Why, the reports filed, I suppose, would show those facts. I have not examined those reports. Q. You have not looked at those reports ? A. No, sir. Q. Iki you know, as a matter of fact, whether all those bonds have been issued or not ? A. I do not. Q. Well, I might tell you that $2,000,000 of them have been issued and that the others are in condition, owing to this order of the Commission, that they may be issued at any time. Now, Mr. Hodson, do you think that your action in this case — your authorization of this bond issue and your failure to subsequently pay any attention to it or anything of the kind — complies with the mandatory provision of this law that the Public Service Com- missioners should have supervision of these public service cor- porations and should keep themselves advised and should look at all times to see whether the orders of the Commission and the laws are being enforced ? A. The law provides that the Public Service Commission shall keep informed, and there is no doubt but that the different bureaus are informed as to the situation. And you say that the record shows that only $2,000,000 have been issued ? Final Repoet of Joint Legislative Committee 2023 Q. Yes, that is right A. Well now, the different bureaus must know these facts. I can't keep track of all those bonds. Q. Do you think it would have been better if you gave some attention to the orders, to what had been done in some of the orders ? A. Just what do you mean by that, Mr. Hayward ? Q. I mean advise yourself on what you were voting on? A. I did advise myself on what I was voting on in every case. Q. You didn't know what you were voting on when you voted on this case, did you ? A. There never was a case passed on at a session of the Commission that wasn't discussed by the Com- mission ; the active Commissioner having the case in charge would present the facts and reasons for the order, and I dare say that Chairman Stevens presented cogent reasons why that order should be granted, and I, taking his word for it, as the active Commis- sioner in the case, I voted with him. Q. And voted with him ? A. If I did, if the order shows that. Q. Mr. Hodson, what certificates are issued and what deter- minations are made by your Commission, under the Railroad Law? A. Certificates of convenience and necessity and for the operation of a franchise. Q. What else ? A. That is the only certificates we have issued that I recall. Q. Did you issue such certificates in Buffalo ? A. No, sir ; I don't recall any other certificates. Do you mean for a new railroad. Q. I do not mean what you have issued, but having authority to issue, what are the certificates in that particular case? A. I don't remember any particular case. The authority given under the law itself will show about that ; certificates that we issued are certificates of convenience and necessity for the establishment of a new railroad. Q. What other certificates ? A. Certificate for the operation of a franchise. Q. What else? A. I don't recall any others at present. Q. What is a certificate of convenience and necessity? A. A certificate stating that the public requires the operation of the road as asked for by the applicant to satisfy the convenience and neces- sity of the traveling public and shippers. 2024 Investigatiox of Public Service Commissions Q. What is that? A. Especially a new common carrier, to establish a new common carrier. Q. And make competition? A. Why, for the competition would exist with it, yes. Q. Well, what has the question of the adequacy of the service already being given by the line to do with it? A. A great deal to do with it. Q. Well, what? A. Why, in a sense it is the duty of the Public Service Commission to protect vested interests, entirely its duty, assuredly its duty, I should have said, as well as to meet the requirements of the public for additional service and con- \'enience. There have been cases where there were objections made to a new road, and the Commission has refused the new road, because the territory was already — the terminals were already well served by the existing companies. Q. What right has an applicant in case the Commission refuses such certificate ? A. The right to appeal. Q. Where to? A. To the Appellate Division of the District where the road proposed to be — the District. Q. The District where the road reaches, where it proposes to go ? A. Yes. Q. Xow, let me ask you this: Can you tell us the jurisdiction that the Commission has over steam railroads and street railroads running partly within the First and partly within the Second Dis- trict ? A. I think so. Do vou want me to do so ? Q. All right, do so, yes. A. The Public Service Commission of the First District has exclusive jurisdiction as to all public utilities within the city of Xew York, comprising the four coun- ties making up the greater city; also has jurisdiction of street railroads running out of the First District into the Second Dis- trict; that is not a joint jurisdiction, it is rather an overlapping jurisdiction with the Second District Commission. The Second District Commission has jurisdiction over the utility, public utili- ties in the Second District, and also jurisdiction over steam rail- roads entering the First District, or the Greater City of Xew York. Q. I think that is a very good statement of it, Mr. Hodson. I think that is the best statement we have had after examining those Final Repokt of Joint I.egi^i.ativk Committke 2025 Public Service Commissioners on that question. A. I thank you, sir, Q. And I congratulate you, sir. A. I thank you, sir. I would like to amplify, Colonel, I would like to amplify that question of a certificate of convenience and necessity, unless you are entirely through with the subject. Q. No, go ahead. A. Quite a time before I came on the Com- mission a matter was before the former Commission as to the establishment of a steam railroad between Buffalo and Troy, run- ning through the State not very far from the New York Central for the entire distance. That application was denied on the ground that substantially the New York Central served not only the intervening territory, but the terminals as well ; and that went into all the courts, and I believe the Commission had two different hearings and on that question, although a divided Commission, decided that the application should be denied. I have — the same kind of a case existed down in Buffalo, but that was a totally dif- ferent character of railroad, which was a connecting terminal between Black Rock in Buffalo connecting from the northerly limits of the city and connecting with Blasdel, I think, trunk line, and the other line at Black Rock connecting with the Canadian trunk line. That application was denied by the previous Com- mission, and it went to the Court of Appeals and came back for another hearing before the Commission after I became a Commis- sioner and the certificate was granted to the applicant, that is, for an extension of the service on the ground it would benefit shippers and commerce generally and benefit terminal roads for trunk lines connecting with the terminal ; but that case is in the courts on appeal. By Assemblyman Knight: Q. That was the Buffalo & Eastern case ; wasn't that reversed ; wasn't the determination of the Commission reversed in the Appellate Division ? A. No, sir ; I think not. I think the Com- mission granted a rehearing. I know there were two hearings. Q. And that went to the Appellate Division, and the Appellate Division sent it back ? A. Not that terminal road in Buffalo. I think, Mr. Knight, you have those two cases confused. Q. Well, I mean what you first referred to as the Buffalo & Eastern. A. That is the Buffalo, Rochester & Eastern, it may 2026 Investigation of Public Service Commissions have been; I don't recall. There were two hearings before the Commission, and in both cases, both hearings, they decided against the applicant. Colonel Hayward (resuming) : Q. Mr. Hodson, when a railroad, a street railroad company wants to change its motive power, wliat consents are necessary? A. The consent of the Public Service Commissioners. Q. What else? A. What else? Q. Yes; the local authorities? A. Well, that depends upon their franchise. If their franchise is for a horse railroad, they can't run electricity without the consent of the local authorities, on the theory of home rule, and they shouldn't ; home rule should be establisihed in every sense of the word; as much as possible, Colonel Hayward. I ask you, please, to revert now to the Syra- cuse case that you asked me about. Q. Yes. A. Will you be kind enough to turn to the file papers, Mr. Secretary, and see if you don't find a letter from Judge Irvine extending the time, or dealing with the question of their application for an extension of time. I had made a promise to you, and the attention of the Commission to this matter as soon as I left here yesterday, and we found Mr. Barnes has been over and examined tihe matter and has reported to us that there is no reason why it shouldn't have time more than they have made application for, and pursuant to the letter of Judge Irvine, or rather signed by the secretary. Q. We had more than one of those Syracuse matters that we discussed yesterday. A. Well, that is the one that we discussed where I was charged particularly with not understanding the order ; I think your young gentleman here found it. Q. Which case do you refer to? A. Well, really I don't know the name except it is a Syracuse railroad, where you stated for some years the company had failed to obey an order of the Com- mission as to subdivision 10. Q. Yes, that is the one, you didn't know at that time about the order ? A. I did say so, yes, sir ; but that is a detail I find of the matter. Q. That is this matter. A. That is the matter counsel before you — excuse me for forgetting his name — asked me Final Repoe* of Joint Legislative Committke 202? about, concerning which I was accused of not following up the order of the Commission and seeing it was obeyed. Now I say to you that the Commission has been in constant correspondence, and this letter of Judge Irvine, and that has resulted in this petition before the Commission asking for an extension of time until 1916. By Assemblyman Kincaid: Q. That was the one providing for a certain amount of work to be done over years, five years ? A. Yes, ten subdivisions in the order. !Now you have the petition, Mr. Mott., here, and I would 'like to read into the record of that case the letter of Judge Irvine. Colonel Hay ward (resuming) : Q. I couldn't find any letter of Judge Irvine. This is it. Here is a letter of October 14, 1914, a carbon " Yours truly, blank. Secretary." A. Here is the secretary, Avho will verify the letter. Colonel. We do not present papers that are not genuine. I think you will find it. Q. I think you will find that letter is not from Mr. Irvine. It is a letter from the secretary. You mean he had the secretary write this, or the Commissioner wrote the letter himself? A. Judge Irvine dictated the letter in the name of the secretary.. You will see his initials on the letter. Q. Well, it is the secretary's letter that Mr. Irvine dictated? A. Yes, sir ; that is Judge Irvine's initials on the letter. Q. That is latter part of October, 1914? A. Yes, sir. Q. Do you remember when this order went into effect ? A. Oh, years ago, just as you stated. What is the date of the order, Mr. Mott, back in the year 1911 ? Q. September 27, 1911. A. I think so. ■Secretary Mott.^ — May is the original time, 1911. Q. Amended to September, 1911 ? A. I think so. Q. Three years and six months later Judge Irvine dictates a letter to the secretary, which he signs ? A. No, he dictates it to the railroad in the name of the secretary. Q. And the secretary signs the letter in which he says: "In the light of your communication of September 15, 1914, and the report of Mr. C. E. Barnes, Electric Kailroad Inspector, the Com- 2028 Investigation of Public Seevice Commissions mission authorizes me to inform you that if traffic conditions do not improve in the meantime, the Commission will entertain, prior to June 1, 1915, an application for an extension of time within which you should comply with subdivisions C, E and F of section 10 of the order of May 25, 1911." A. ISTow, pursuant to that letter, and not waiting until June 15th, they filed a petition which the secretary has there, and which I desire to have read into the record, which shows the case was pending and being considered by the Commission. Q. So that after three years of violation by this company of the order of your Commission, you took the matter up with the railroad company and told them that if the traffic conditions didn't improve, that sometime prior to June 1st you would entertain an application if made by them for an extension of time? A. I don't know anything about their violating the order. I doubt their violating it. I know the matter has been under discussion and communication and investigation by Mr. Barnes all this time. Q. If they were not violating the order, or if they complied with the order, why did you suggest to them that they have an extension of time within which to comply with the order ? A. That is a formality of the matter, to change it, that is the only reason I can give you. Secretary Mott. — You see the order was not to be complied with until June, 1916. Colonel Hayward. — The order was to be complied with, and it was to begin; one-fifth of this work was to be done each year for five years. Secretary Mott. — To do something each year. Colonel Hayward — And they didn't do anything on it. If you want to testify, take the witness stand. Secretary Mott. — Well, I beg pardon. Of course I am not a witness. Colonel Hayward. — It is in this record, Mr. Chairman, that the officers of this Commission reported to the Commission that they had not complied with these particular sections of the order, Final Eepoet of Joikt Legislative Committee 2029 which are the only ones I referred to. I have no doubt some of the provisions of the order were complied with, but they had not complied with C, E and F of section 10, and those were the sec- tions particularly referred to in this letter. The Witness. — Of Judge Irvine, yes. Colonel Hayward (resuming) : Q. So that they 'had not complied for three years and over with this order, had they, as finally made 't A. In some respects ; yes, sir. Q. In some respects, these particular sections? A. Yes. Q. What respect? A. Well, various respects; communications were issued and they have had the communication here. Q. I wasn't able to find it, maybe you can ? A. It was not you, Colonel Hayward, who examined me on that question at all, so I assume you are not familiar with it, but we have Mr. Wells' memorandum there as to the proceedings in this case, and if you desire to have it read, I will be very glad to read it and put it in the record? Q. !N'ow, here is a letter from Mr. Wells, which you just referred to, in which he says : " The mpdified order of September 27, 1911, requiring them to put in within five years from June 1, 1911, construct and put in operation," etc., certain additional extensions and improvements, adding to its lines and service at least a full proportion of such extensions and improvements' each year ; that was plain ? A. Yes. Q. That means at least one-fifth, you and I agree about that. Mr. Wells says that there is nothing to show that C and F have been in any way complied with, and no work has been done. !N^ow that was taken up through Mr. Barnes and the secretary, and then they continued to write in saying that they are short of funds, and they cannot make those extensions and buy those extra cars, and they get a letter from Judge Irvine saying that the company may have until June 19 to comply with the modification of that? A. To comply with the modification, and they have done it, and it is now pending before the 'Commission. •Colonel Hayward. — That is all, unless someone desires to ask you a question. 2030 Investigation of Public Seevice Commissions By ABsemblyman Knight: Q. There is just one notation I have here, on your hearings in the city of Buffalo, do you have a docket of your hearings there ? A. A docket; yes, sir. Q. You spoke of having formal hearings every Friday, or you said you had nearly every Friday? A. I think always every Friday or almost every Friday. There is a great many traxjtional, corporational and terminal matters in Buffalo and Western New- York, and the custom was established by Chairman Stevens, my predecessor, and Mr. Olmsted, who went together and held these hearings every Friday, as you well know, and since that time I have held them substantially alone, although other Commissioners have been there in cases. N^ow, don't misunderstand me. I tried to make it plain yesterday, I do not do all the Buffalo business; there is a quantity of Buffalo business the other Commissioners do ; but the active trial cases I do take care of, or try to. Now, the number of the cases and the names of those I have up here, if you desire them, and the cases that have been considered there. Q. You have them here ? A. Yes, for the past year. On Fri- day of this week I have two cases, and I recall one in regard to natural gas, changes in the installation in Buffalo, and another the tariff, the freight charges, with reference to freight charges on the Jamestown & Chautauqua Lake Railroad. On Saturday, natural gas case in Chautauqua county where complaints came in on account of discriminatory charges. There is all kind of cases that I try up there every week, and after they are tried, they have to be considered, and after they are considered,, they have to be decided. So it is, Mr. Knight, with every Commissioner. It is not the meeting 'alone, but all the members, every one of them, leaves Albany. On Friday the five Commissioners scatter over this State in every direction. Judge Irvine goes to Central New York, Utica, Auburn, Elmira, Eome, Binghamton, Syracuse, Eochester, where I used to go a great deal. I go to Western New York and sometimes to other places. Commissioner Emmet goes to New York first, and Commissioner Decker also, and Commis- sioner Van Santvoord also, we have the telephone case in New York, and we have the Long Island Utility Company's hearings are held in New York City; but in Buffalo, I have hearings in Final Eepokt of Joint Legislative Committei! 2031 the Commissioners' ofBce there for Western New York ; and yet, as you very well know, I have often gone all over Western and Southwestern jSTew York in oases, and actually held hearings, and held proceedings right out on the ground, right ^vhere the people were, where cases were to be tried. I wanted to make this state- ment to show you that I am not the only Commissioner that go from Albany week-ends ; we all do. Q. Can you tell me how many informal hearings you have had in the last year ? A. Why, Mr. Knight — Q. Or can you tell me how many hearings you had in Buffalo in a year ? A. I don't know. Q. You said you had a docket there? A. I think the annual report stated it; I am not certain. Secretai'y Mott. — My recollection is there were for last year something like — ■ ■^b The Witness. — One hundred and forty and something. Secretary Mott. — Yes, about 140. The Witness. — Averaging about three a Friday. Q. You 'have formal hearings? A. Formal hearings, besides numberless informal conferences, complaints and discussions. By Chairman Thompson: Q. I suppose. Commissioner, in these capitalization cases it is necessary for the Commission to be guided to a very la^ge extent by your Capitalization Department? A. Very largely; yes, sir. And yet there are times, occasionally we disagree over the discus- sion and administrative functions, because I know we sometimes disagree with the examiners; but as a rule they must be relied upon, because they are accountants trained in that particular work. Assemblyman Kincaid: Q. As a matter of fact, where these orders show that the entire Commission voted for a certain order, I suppose it would be entirely possible that aside from the 'Commissioner who had had charge of the matter up to that time, the other Commissioners never heard of it until they have to passi on the case itself ? A. Are ■2QS2 IxVESTIGATlOX OF PuBLIC SeKVICE CoJIMISS10^i^ absolutely guided by what lie said as to liis calendar of tie session. And to-day and always I voted with the different Commissioners in cases of which I never heard, except perhaps I have seen the title on some other calendar, and know nothing of the case nor the evi- dence taken in the case. Q. I suppose there should be. Commissioner, should be a line of demarcation between the regulatory conti'ol over a corporation and the actual management of it? A. Yes. Q. Do you feel that that line has ever been crossed by our up- State Commission? A. We have tried not to cross it; we have the utmost confidence in boards of directors who have their func- 'tional powers, I assume, and our duties are merely regulatory until they are doing- something wrong. Q. I thought it might be said that with some cases you might have gone a little bit too far ( A. Possibly, it is not strange. Q. That is to enforce it ? A. It is not strange. In investi- gating actions in the trial court, a large percentage of them are reversed by the Appellate Division ; investigate the actions of the Appellate Division and a large percentage of them are not reversed by the Court of Appeals, and if we had another court perhaps a large percentage of the Court of Appeals decisions would be reversed. We have invariably, we did the best we could, with the help that we have to try to do right and not invade the realm of actual functional duties of directors of corporations ; if they run them right, we appro\'e of them ; if they don't, we stop them, if we cap. Colonel Hayward (resuming) : Q. Of course, if you don't know they are run wrong, you can't stop them, is that so? A. Xo. that is not so, Colonel. Xow, yon asked me yesterday whether I had any suggestions to make. I had none at that time. I have had in my mind for some time suggestions and I have talked with you. Mr. Chairman, once or twice, with reference to improvements — Q. Do you mean in the law? A. Yes, with reference to changes in the law. Will you permit me to suggest them ? Acting Chairman Kincaid. — Certainly. Yes, be very glad to have them. A. On the subject of telephones and telegraphs, of course everybody knows that the up-State Commission has the Final Eepoet of Joint Legislative Committee 2033 jurisdk'tion of telephones and telegraphs State-wide, the State over, including the City of New York. I believe that is totally wrong in principle. I do not believe that an up-State Commission should have any more to do with telephones and telegTaphs in Xew York City, whose needs are particularly local and whose needs would be better ascertained and detennined by people on the ground of their own municipality than by a Commission up-State; and I recommend that the law be changed so that the First Dis- trict Commission shall have exclusive jurisdiction of all public utilities within the First District of the State of Xew York. This could be very well done and amplified to the benefit of every- body and we could then — the up-State Commission, we or our successors — could then take care of the service up-State and regu- late it, whereas now the city of Xew York or the country are, either one or the other, charged with inequality or extra expense, one against the other, and it is not right. I believe the two sys- tems should be segregated by a line of the two Districts. Then we could very well have the companies establish their own zones and districts for service up-State, to be regulated and supervised by the Commission up-State. Q. Mr. Hodson, may I interrupt just a minute? I am not sure, but I think the telephone. company, you probably know from the extensive investigation that you have been making in the tele- phone company, has a zone now ? A. For their tolls. Q. I mean a zone outside of Xew York City? A. For their tolls. Q. Which is somewhat larger than the city itself? A. Yes, sir; that is with reference to the toll charges. Q. A thirty or fifty-mile zone, or something like that ? A. Yes. Q. Would you think that the jurisdiction of the First District Commission ought to coincide with that zone or just with the size of the district ? A. JSTo, sir ; I think that is so arbitrary that it is imjust to the one district and the users of one district as against the users of the other district. Xow, let me amplify. Up in the country, in the various counties, people in Niagara county and Livingston county or Wyoming county are charged — Q. Or Onondaga county. A. Mileage charges ; — no, I will leave out the cities; I am getting the rural districts. They axe 2034 Investigation of Public Service Commissions charged first the contract price for the 'phone, then they are charged mileage expenses or charges so called. Why in one case that I am now hearing they .pay $24 for the machine, for the privi- lege of doing business, and then they pay $6 for eveiy quarter of a mile within that zone, mileage charge. And they justify it, where that mile of telephone line there that they are paying $2'4 for only costs $30 or $40 to build, and yet they are paying $24 a year mileage charge- — ^why? Because way over in some other rural county they have to build through the fields and through the woods; and those inequalities have to be charged as an average throughout the State. So they say. l^ow, the Commission could very well supervise that and arrange for zones and districts. That is that subject. Q. Then if they took the New York City district into a juris- diction by itself, that being as I understand it, the most profitable part of the telephone business down there, wouldn't it be taking away the support from some of your up-State districts that that present profitable unit gives to the whole system, Mr. Hodson? A. No, sir ; the question of equality of service and rates could be very well arranged on the toll system. Q. On the toll system ? A. Yes, sir. Q. Then you would not have the unit of the city separated, and then have the rest of the State another unit ? A. I would. Q. You would have the rest of the State divided into several units? A. Oh, no. Q. Is that your theory? A. Oh, no; I would have the up- State in one district. Q. Yes, I mean in one district, but would you have that sub- divided into units? A. I would have it so that Niagara county would pay just what its proper return was upon the investment in Niagara county or within such a district or zone as the company should fix, approved by the Commission, charged in that county, and not make them pay the inequalities that exist for Allegany county or Tompkins county or any other county. Q. Of course, that would necessitate a very radical amendment of the present law, wouldn't it ? A. Not necessarily. I think it would all come under the supervision of the Public Service Com- mission and their regulation, but I simply throw the suggestion out to you as the following — FiJVAL Repokt ok Joint LKaisLAxivn Committee 2035 Q. It is a very interesting suggestion. A. As a suggestion fol- lowing my advice to have the law amended so that this Commis- sion shall have nothing whatever to do with telephones and tele- graphs in ISTew York City. By Assemblyman Knight: Q. Would not that result in an increased charge to subscribers up-State? A. That would be entirely within the jurisdiction of the Commission in fixing its districts and zones. Q. I know, but it has been suggested and as you understand, the profitable end of the business is in the city of New York. How are you going — A. The subject ramifies don't you know, and lots of things suggest themselves to us, but in our rate case in New York we have absolutely segregated New York City as against the claim of the telephone company, but the whole State should be taken into consideration in the making of the rates. We have refused to accede to their position and we have held that the city of New York is a district by itself upon -which to base the rate-mak- ing proposition which is now before us. Q. How about the steam roads; would you suggest the advisa- bility of taking — A. I think that is all in good shape now. Q. And leave that as it is? A. Yes, sir; I am speaking now with reference to telephones and telegraphs. Q. Yes, but you stated that you were in favor of having the First District take over all of the public utilities within that Dis- trict ? A. Oh, they have it now. I speak with reference to tele- phones and telegraphs. I think the overlapping jurisdiction with the lines of railroad running into New York being now in the Second District Commission is all right, and that the street railroads running out of New York into Long Island being in the First District is all right. Now, we come to another subject — Q. Just excuse me. Commissioner, while you are on the sub- ject of telephones. What has been done up to this time by the Commission of the Second District regarding the telephone situ- ation up the State ? A. Oh, lots of things ; I cannot recall every- thing that has been done. We have fixed rates; we arranged rates; we arranged service, putting new schedules, all sorts of things. Q. Well, what I am getting at is this: You have the care of 2036 Investigation of Public Service Commissions practically every complaint that bas arisen in that respect ? A. I presume that there are cases coming in now. I do not know. I have got one from Xiagara county involving just this mileage charge, which is a very serious proposition. Xow, we come to another subject, which is of exceeding great importance to, me as I look on it, and that is the removal of passenger and freight trains by railroad companies. By Colonel Hayward: Q. What is that, I did not hear that? A. The railroad com- panies now have the right to take out of service in the first instance, passenger trains or freight trains. Then if a complaint is made that the service is inadequate and that the trains should be restored, don't you see, it is incumbent upon the complainants to establish the fact that those trains are necessary, the burden of proof that for the convenience of the people using the trains either for terminals or for intervening territory, the trains are necessary. My sug'gestion is that the section of the Public Service Commis- sions Law with reference to our duties as to trains and ordering new trains, and all that, be amended so that no freight train or passenger train which has been in service on any steam railroad for a period of time, say one year or two years, shall be removed from such service for the time schedules without the consent of the Public Service Commission. It is simply changing — Q. You would give the railroad the laboring oar instead of the complainant? A. Yes, sir; and yet Colonel Hayward, the same question remains. They could prove that it was unnecessary, but they ought not to be permitted to interfere with the service with- out the approval of the Commission. Q. If they could not take the train off subject to subsequent reviews on application of a complainant, do you think they would be as likely to put new trains on and increase their service? A. Well, if they did not the Commission could make them. Adequate service is the question. Q. You think it Avou'ld Avork out better to shift the burden of proof as it were? A. I do believe it, because, let us assume. Colonel Hayward, you were the executive of the railroad and you determined that the first of April you were going to take off three passenger trains between here and Buffalo. Now, between now Final Rkport of Joixt Legislative Commixtee 20137 and the first of April you -would come to the Commission and ask permission to do it and you would have ample time to prove to the Commission, or suppose it was June 1st or May 1st, you would have ample time to prove to the Commission the justness of your claim, whereas you would upset the whole traffic of the road if you did take them off and then a long time ensues perhaps before they are replaced, if they are replaced. That is a mere sug- gestion. Ey Assemblyman Knight: Q. Wouldn't you provide for some notice to the public for the application ? A. Certainly. ^STow, -we come to the water com- panies, a clear strength because — Colonel Hay ward. — M'ay I interrupt just for a minute, Mr. Chairman ? I have an engagement over at the Capitol at 12 o'clock. Would you excuse me ? jSTow, I would like to hear these suggestions. The Witness. — There are only two more. Just listen to these please, Colonel. The water companies — I understand there are bills before the Legislature to put the water companies under the supervision of the Commission. I heartily approve of it. I know of no reason why gas and electricity, necessaries of life and comfort, should be under the regulation of the Commission, and water not. I think that should be approved. Xow, comes the bills that have been introduced by reason of an accident out in Niagara county which Mr. Barnes is now investigating at my request, where three or four people were killed at a trolley crossing. A bill has been introduced that grade crossings on all steam roads and trolley lines shall be provided with gates and flagmen. Why such a course would be utterly ruinous to some lines, destructive of their prosperity and utterly unnecessary in m'any cases. My sugges- tion is that, that an amendment be added to section 53 of the Rail- road Law which now provides that the local authorities of any village, city or town can come to the Commission and ask for gates or flagmen, have that amended so that anybody can come to the Commission. Xow, it devolves upon the local authorities, and if a majority of them, as I have found in one or two cases, happen 2038 Investigation of Public Seevioe Commissions to be -working for the railroad company, the local authorities do not make the application. By Colonel Hayward: Q. You do not think they are as responsive to the sentiment of the public, sufficiently? A. No, I think that the law should be amended, this section 53 of the Eailroad Law, so that any per- son could make a complaint for a gate or crossing, or that the Commission could, of its own initiative, establish a gate or cross- ing where it found it to be necessary. Don't you see — 10,000 grade crossings in this State where this bill would apply if it be- came a law. Q. Mr. Hodson, the Commission up here, what we call the up- State Commission, has planned out some legislation, hasn't it? A. Why, we have made some suggestions. Q. Presented it to the Legislature in some form ? A. Yes. Q. What do they cover particularly? A. There is one or two with reference to the suspension of rates is one, and we have sug- gested to Judge Hale this very proposition. I think that is an exceedingly important thing. Q. Now, in these suggestions that you have made, this up-State Commission has made, on rates and so forth, have you consulted at all with the Public Service Commission of the First District to see what its ideas are? A. I really don't know what the other Commissioners have done. I haven't. Q. You do not know of any consultation being had or any attempt at united action on these fractions of legislation by tbe two Commissions, do you? A. No, I do not know what any of the other Commissioners have done. Q. I understood that when we were down in New York that some of the Commissioners down there were a little differized that the up-State Commission had undertaken the legislative progress involving matters that they also had jurisdiction of, without con- sulting with them ? A. Well, I do not believe that our Commis- sion would be discourteous in such a matter. We would be very glad to consult with them, but they have been a little busy lately. Q. Well, they say they are very busy all the time. A. Well, they are a pretty busy body, I think. Final Kepokt of Joint tEGisLATiVE CoMMitTEE 2039 Mr. Mott. — Mr. Ctairman, there are just one or two figures I would like to put in the record. Assemblyman Kincaid. — I would like to ask one more question, Commissioner. Colonel Hayward.— May I be excused now ? Assemblyman Kincaid. — Yes, go ahead. By Assembly Kincaid : Q. I would like to ask you, Commissioner Hodson, if at any time any conflicts have arisen between the Interstate Commerce Commission and the Public Service Commission of the State due to conflicting authority? A. Not exactly conflicting authority, but the exercise of administrative functions. I may cite to you the case of the joint freight rates question which was up last year. The Interstate Commerce Commission, if you remember, decided the cap line cases. The case went to the United States Supreme Court. While it was finding in the United States Supreme Court, another proceeding came before the Interstate Commerce Commission which related to the 5 per cent, increase in rates, and asked the Interstate Commerce Commission to approve of it. While that case was pending, that application was pending, they formulated an opinion, not an order, but formulated an opinion saying that they believed that these short line railroads known as plant facilities, should not participate in joint freight rates; if any increase should be granted, that they should not receive the benefits in any division with the trunk lines. The same matter came before us and a hearing was held in this very room. We decided that these so-called plant facilities, like the South Buffalo Railroad, the Genesee Salt Railroad and several others, were rail- roads of integrity and were entitled to just as much consideration in the division of joint freight rates, these five miles or ten miles in length, as though they were 500 miles in length ; that the in- tegrity of the corporation should not be questioned, because they were railroad corporations under the laws of this State, were supervised by this Commission and made reports and paid fran- chise taxes to the State. So you may see that our decision was in direct conflict with the opinion of the Interstate Commerce Com- 2040 Investigation of Public Sekvice Commissions mission. Shortly after our decision, the United States Supreme Court made a decision in the short line cases reversing the Inter- state Commerce Commission, and immediately the Interstate Commerce Commission, or shortly thereafter, made an order in conformity to the order that we had made, giving recognition to the integrity of the short line railroads. Q. Well, do you feel that there is some duplication of functions then between the Interstate Commerce Commission and the Pub- lic Service Commission that could be obviated in any way ? A. I do not see how the State of ISTew York can obviate it. I do not see how the State of JSTew York can do anything which will curb the legislative powers of Congress; I don't see. Q. That would be rather hard. A. For instance we provide for a boiler inspection, a locomotive inspection, not only a boiler in- spection but everything connected with the motive power of a rail- road. The Interstate Commerce Commission j^rovides for an in- spection of the boiler. Xow. I would not suggest that that be changed; for you cannot inspect boilers too much. Let them all inspect them, in the interests of safety. Q. How about the reports that corporations are required to furnish, both to the Interstate Commerce Commission and to the Public Service Commission, do you think there is any duplication there that could be avoided? A. Why, there is a duplication but I am not so sure that we ought to change the law with reference to their m'aking reports to us, and surely the Interstate Commerce Commission needs their reports. I do not believe that a scheme could be devised whereby the reports could be made to one body and to be utilized by both bodies ; do you ? Q. You do not think that would be possible? A. Do you think it could ? How could it be done ? Q. I am not on the witness stand. I am asking your opinion. A. Oh well, but you are an intelligent man. We are trying to get at the right things here. How could it be done? If they should file them here, there might be a requirement of law that Tve could immediately send them on to the Interstate Commerce Commis- sion, or we might have a 'law in this State providing that if thef should file them with the Interstate Commerce Commission that we should immediately procure copies. Well, that would make an Final Report of Joint Legislative Committee 2041 expense to the State, don't you see, 'and inasmuch as they make substantially the same report, their amanuensis may make just as many copies at the same time I should think. Q. That was the point I was getting at. Would not the same identical report do both bodies? A. If it could be lodged some- where where both bodies could use it, perhaps that is so. Q. I do not mean that, Commissioner. You do not get my point. Why wouldn't it be possible for the corporation to make several copies of the same report and send you people one and send the Interstate Commerce Commission one? A. You think that they should substantially do 'that ? Q. I understand not; I don't know anything about it. A. Why, I should think they could under the requirements. Q. I understand the reports are different in form and that en- tails a large 'amount of additional work. A. Why, I think perhaps on fii'Bt blush I would say that if we could conform in every way to the Interstate Commerce Commission requirements it would be a wise thing and save that other work to the corporations. Q. Well, that is all, Commissioner; thank you. A. You are \'ery welcome. Mr. Chairman, I have epitomized the recommenda- tions as to changes in the law and I have read it in the record and you may have that copy. N'othing else, Mr. Chairm'an, for you ? Chairman Thompson. — Unless you have some statement you want to make. Has this gone on the record ? The Witness. — I have made a statement there. It has been read in the record but I would like to have you keep it as sugges- tions for amendments to the law. Mr. Mott. — Mr. Chaimian, the only thing I wanted to say was to give you the exact number of contested hearings held in Buffalo in the year 1913. It was 171, and in 1914, 145. Chairman Thompson. — That is hekrings or cases ? Mr. Mott. — Those are contested hearings and cases ; that is formal matters, without reference to informal proceedings. The Witness. — I want to make it perfectly plain, inasmuch as this statement has gone in a'gain, just as I stated a few minutes ago, I did not hold all of these hearings. Chairman Van 'Sant- 2042 Investigation of Public Service Commissions voord and former Chairman Decker and Judge Irvine have been there at different times in a few cases, but the bulk of them were mine. Chainnan Thompson. — Two o'clock this afternoon. Adjourned until 2 p. m. KECESS After recess, 2 p. m., March lO, 191-5. Seymour Van Santvoord^ called as witness and sworn, testified as follows: Direct examination by Colonel Hayward : Q. Mr. Van Santvoord, when did you come on the Commission ? A. The latter part of February last year, almost at the end of the month. Q. I beg your pardon. A. Almost at the end of the month. Q. 1914? A. Yes. Q. February, 1914? A. Yes, I have been on just a little oyer a year. Q. When were you made Chairman, at the same time? A. No, I think a fortnight or so later. I do not remember the date. Q. Where is your residence, Mr. Van Santvoord ? A. Troy. Q. And are you a lawyer, I mean in the sense we all claim to be ? A. Well, I have been, Mr. Hayward, and I sometimes think I am not; but I am admitted to practice and have practiced for a number of years. Q. Were you at that time engaged in the practice of law ? A. Yes, sir, I was at that time. Q. What other official positions had you held at any time? A. Well, I had been for many years president of a manufacturing corporation, which practically took all of my time. Q. I was speaking about official position, Mr. Van Santvoord. A. Then, I think — you mean public office ? Q. Yes. A. Well, I have had none. I was counsel for the Governor. Final Report of Joint Legislative Committee 2043 Q. At the time of your appointment? A. Oh, no. Q. You had been previously? A. Yes, for the last year of Governor Dix term, I misunderstood you when you said " official." Q. I meant in that way. A. I misunderstood you. I think that is all. Oh, I have had some designations by the Governor to represent the State on various Commissions; but I took those as purely complimentary. Q. What condition did you find things in when you came on the Commission, Mr. Van Santvoord, with reference to the affairs of the Commission, as to their being up-to-date or having accumu- lated ? A. Very, very badly congested, I thought. Q. Along any particular line or class of cases ? A. Well, there were some very old cases and there were a great many cases — there were some cases which apparently had been ripe for disposi- tion and had not been disposed of. I say " apparently " as it seemed to me at the time. Q. What particular cases have you in mind that were old when you came on ? A. Mr. Hayward, I have a statement — a list — made out by the secretary, I think within a week or so after I was appointed, and at my request, the list included all pending cases, with the year in which each case originated. As I remem- ber, there was one case that dated back to 1908 ; two or three in 1909 ; and then in 1910, 1911 and 1912, and 1913, I think there must have been 100 of those cases, and a great many in 1914, mak- ing, as I remember, between three and four hundred cases in the aggregate. Q. Undisposed of at that time ? A. Undisposed of. I will not be positive as to the figures. I speak from general recollection. But there is such a list extant. Q. What case or cases were there that you recall, as old as 1908 ? A. I think there was but one, and that was the West- chester Lighting case. Q. That was 1907, was it not ? A. When ? Yes, that was the one I have reference to. Q. What did you do about such cases ? Did you ever take them up in the order of their seniority, or age, or whatever you have in mind to call it ? A. It was a very great problem with me. I, of course, was absolutely fresh to the work. I did not know how to treat them, and they were important. 2044 Investigation of Public Sekvice Oosimissions Q. May I interrupt you a minute? Did you find these cases that had apparently been dragging along, did you find that they had been assigned from time to time to particular individual Commissioners ? A. Most of them, as I recollect. Q. Had been assigned? A. Had been assigned. There were a few of those ancient cases, I think, which apparently were there at the time I came in not in the charge of any particular Com- mission; but that may have resulted from the fact that they had been assigned, but that Commissioner had subsequently gone out of office. Q. And no successor in charge of that case had been named? A. I think so, a few. Q. Do you remember whom you found to have had charge of the Westchester Lighting case when you came on? A. Mr. Decker. Q. He had had it since 1910 ? A. That I cannot say. Q. That is what the records show ? A. It was assigned to him in the list given me by the secretary. Q. Well, now, you say that you found that condition. What did you ultimately do about it? A. I had the choice of three things, either to take the old cases and dispose of them in turn, or to take the current cases and dispose of them as rapidly as they came in — as rapidly as possible — upon the theory that the pub- lic was entitled to the disposition of current business, and then give what time was left to the old cases; or to hit in between and take what seemed the most pressing of the new cases and what seemed the worst of the old cases, using the adjective as expres- sive of the degree of misfortune due to the fact that the case had dragged so long. I took the middle course, as most men do when they are not sure of the extremes on either side. Q. Well, did you do anything with particular reference to the Westchester Lighting case, Mr. 'Chairman? A. I saw from the record that that was a hard situation. It was a very bulky record, and as I remember it, the case had been 'summed up before either Mr. Hodson, I or my other two personal associates had been ap- pointed. It was an involved rate case, and I, of course, had had no experience in rate cases, and it seemed as if that case must necessarily be disposed of by the Commissioner in charge. FixAL Repoet of Joixr Legislatine Committee 2045 Q. That was Decker? A. Commissioner Decker, yes. I re- member Mr. Bemus, who had been employed by the Commission in the case, coming to see me about that case one day - — I think probably three or four weeks after I had been made Chairman, possibly earlier — and I spent an hour or two with him, really taking a lesson in the case. Of course, I did not know the first rudiments of it. I felt more and more confirmed in the convic- tion that Commissioner Decker would have to dispose of that case. I knew I could not help him. I thought that I might. I said to some friend in commenting on the case: '' Perhaps if I took that case and went to school with it for six months, I might prepare a decision ; " and if there had not been any other work on the Com- mission I might have ventured that thing. Q. I find, Mr. Commissioner, that you wrote letters to the com- plainants, who kept writing in about this case, in the summer of 1914; and in these letters you say practically this — here is one; " July 1, 1914 " — replying to someone who had written to the Commission — who had written to the Governor, and it was evi- dently referred to you — "I have your letter of July 18th, in re- gard to the Westchester Light case, pending before the Commis- sion. Since coming upon the Commission, I have never been im- mindful of this case nor of the regrettable fact that it has been so long pending, having commenced in 1907. The record in the case is so bulky, it would require months for anyone to familiarize themselves with the details. For that reason, it has seemed im- possible for the Commissioners to afford any assistance to the Chairman in preparing a decision." A. That rather bears out what I have just stated. Q. You say : " I can therefore only say to you that the matter is now well under way and an order may be expected within the next few weeks." That was in July, 1914. You remember, as a matter of fact, when the opinion came along ? A. It did not come along until the 15th of December, as I remember. We dis- posed of that then. I think we had the opinion of the Commis- sioners in' advance of that a week or so, but that is the date we made the order, as I remember it. Q. And there is an application to reopen the case, an applica- tion fof 8 rehearing by both sides ? A. Yes, sir. 5 2046 ISVKSTIGATIOX OF PuBLIC SeKVICE COMMISSIONS Q. iNeither side was satisfied ? A. No. Q. Did you employ Mr. Bemus to go on this case, or had he been hired before you came on the Commission ? A. Before I came on the Commission. Q. How far did he progress with it, do you know? A. My recollection is that he was employed for not to exceed a certain number of days at a per diem. I do not know the number of days. I do not remember whether his employment continued during the entire time or not Q. Some of the records seemed to show he was employed for sixty days at $50 a day — ■ something like that — and that he got $3,000 ? A. I thdnk something of that sort. Q. Was he able, in the sixty days, to make a pretty fair conclu- sion of the facts, etc., of the case and a recommendation? A. I did not gather from him, in his conversation with me, that he would be able to make such a conclusion. Q. You did not gather from him what? A. I did not gather that. Q. Did he file a report? A. Yes, I trust it was filed. I sup- pose 'it went to the Commissioner in charge. There was a report from Mr. Bemus. Q. Well, from your conversation with him, do you think he had, from the information he gave you, do you think that his work would have been beneficial to the Commissioner having the case in charge and throw any particular light on it? A. Oh, I should expect so. I should hope so, for Professor Bemus' sake. By Chairman Thompson: Q. While you are on that subject, I would like to ask the Com- missioner one question. You were talking about the telephone rate proposition — Colonel Hayward. — No, sir. Mr. Bemus was employed by the Commission in the Westchester Lighting case for sixty days at $50 a day, on this case that was started in 1907. Were you pres- ent, Mr. Chairman, when Commissioner Decker told us about that case? Chairman Thompson. — No. That was a case partially con- sidered, and it has been before the Commission for years ? Final Eepqet of Joint Legislative Committee 2047 Colonel Hayward. — Eight years ; but it is independent entirely of the telephone company. By Chairman Thompson: Q. I wanted to know if Commissioner Van Santvoord could tell me, for my information in reference to other matters, it was said about the telephone rates — the press have carried the statements that the telephone company was ready and willing to reduce its rates in the city of New York. A. New York City ? Q. Yes, and I wanted to know from some authoritative source whether or not there is anything behind this rumor, if, in fact, the New York Telephone Company is ready to reduce its rates voluntarily in the city of New York ? A. I do not know whether they are ready to do it voluntarily. I would have assumed not. They have presented a proposed new schedule. Colonel Hayward. — Mr. Chairman, may I make the suggestion that this telephone matter be taken up a little later ? Chairman Thompson. — Yes, I will take it up a little later. The reason I am taking it up now is for the benefit of counsel and the witness both, and as a member of the Senate Committee on Public Service. There are several rate bills pending, and I am unwilling to see the Legislature adjourn without taking 'any action on the subject, if there is a rumor, apparently well-founded, that the Public Service Commission is going to order the rate reduced, and the company itself admits that a reduction is necessary; be- cause I do not care to subject the Legislature to criticism in permit- ting a continuation of the rates for a year, which the Public Serv- ice Commission and the company might permit ; and that is the reason why I want this information, 'and I want it correct, as to whether there is to be a reduction ; not as a part of this inquiry at all, but for my personal information as a member of the Committee on Public Service, in the Senate. I want to know whether there is anything in those rumors, or whether there is not. A. I am will- ing to make a correct and comprehensive statement on that snbject. 'Colonel Hayward. — Senator Foley expressed the wish that he might be here when that was made. The Witness. — At any time, Mr. Chairman, I am willing to answer yoxir question, I think, to yonr satisfaction. 2048 Investigation of Public Seevice Commissions By Colonel Hayward: Q. Well, it seems there was a letter which came from Mr. Wood, down there in Mount Vernon? A. One of the counsel in the case ? Q. He wrote a great many letters ; I do not think he was coun- sel or anything. He seems to be a private citizen. A. I think he was one of the counsel in the case. Q. He says, anyhow : " If you have received the report of Professor Bemus in regard to the Westchester Lighting Company, please send me a copy of the same at your earliest convenience. With kindest regards, (Signed) Wood." You answered him and said — oh, it was addressed to Commissioner Decker, I see, and the copy of the reply of July 6th is signed " Commissioner ;" so that was undoubtedly Mr. Decker. You always signed " Chair- man ? " A. Oh, if I wrote a letter, my name appeared on the letter inevitably. Q. Who is "J. J. F." ? Do you know who he is, Mr. Van Sant- voord? A. That is Mr. Decker's secretary, his confidential sec- retary, I presume J. J. Parley. Q. " J. J. P." ? A. That is it undoubtedly, J. J. Parley. Q. It is July 16th. He says: " I have your letter of the 6tli instant in which you say if we have received the report of Profes- sor Bemus in regard to the Westchester Lighting Company to please send you a copy of the report at our early convenience. Professor Bemus has not made any formal report to the Commis- sion. He was not employed for that purpose. He was employed for the purpose of analyzing certain of the data in connection with the appraisal or so-called valuation, and his analysis is not part of the record in the case. He is simply assisting the Commission. I am preparing, within the next few days, to take this case away with me for the purpose of getting up a complete statement of the facts and the general conclusion and to stay with it until I have finished. I hope sincerely that I shall not strike any snags and that we can before long reach a determination in this difficult case." A. What was the date ? Q. July 6, 1914. The reason I referred to this was that it would seem that there was not any — this man asked, in July, for Professor Bemus' report in regard to this, and then Mr. Final Eepoet of Joist Leoislatiye Committee 2049 Commissioner Decker says tliere was not any report, and that that was not the intention of the 'Commission, and there is here in the file somewhere a report on the situation by Professor Bemus, dated in March. A. I am not able to answer that. I certainly understood there was a report. I could not possibly say when the report was filed. I have no doubt if a report was filed it bears a filing date. Q. If the date it purports to bear is correct in March, I was wondering why Mr. Decker here wrote this man that there was not any report ? A. l^aturally, I cannot explain. He would have to explain hinaself. Q. He was not employed for' that purpose? A. I do not characterize the employment, Mr.' Hayward, because it occurred before I was a member of the Commission. I never saw the con- tract or had the curiosity to look at it, but if a report were filed and bears a filing date, I should assume that it were filed on that date. It would have to be explained to me otherwise. Q. You say you had the Secretary or some other person con- nected with the Commission prepare this list of ancient and modern cases; when you got on the Commission, Mr. Van Sant- voord, did you look into the question of the outstanding orders of the Commission with a view to determining whether they were effective or whether they were being enforced or not? A. None whatever. Q. You did not make any inquiry in that regard ? A. No in- quiry. Q. And have you ever looked into that matter ? A. Why, only as it came up incidentally. I never made any special inquiry. Q. In the examination of one of the Commissioners — I think it was Mr. Maltbie, down in the other district, all of them, in fact — some in a vague 'sort of way of the division of the work, the assignments of the work, as made by the Chairman down there. We could not ever find out' just what it had been, but they all seemed to think that, at least tentatively, there Tvas some sort of a division of the work. ' Did you attempt to divide the work up when you became Chairman, in that way, at all ? ■ A. I did not try to divide it, but I not only attempted, but accomplished, the 65 2050 Investigation of Public Service Commissions fact of having it divided. It has all been divided since I came on the Commission. Q. Along what general lines did jou proceed ? A. I will make it brief. My recollection is that, of the 300 odd cases pending — 390, as I carry the numbers — the larger number were assigned to Commissioner Decker, the next largest to Commissioner Hod- son, the next to Commissioner Sague. Commissioner Douglas had only two or three. That was explained to me by reason of the fact that the sword of Damascus was suspending over Commis- sioner Douglas' head, so it was thought better not to give him any more cases. That left a large number of cases unassigned. I thought it would be better to have a Commissioner in charge of every case except those cases which had been reserved for the Com- mission as a body. I was told that the first Chairman of the Commission had made the 'assignments himself, and it seemed to me that perhaps the accumulation of work had, to some extent, occurred by reason of that fact. The first Chairman, by common consent, a very hard worker, and he took the bulk of the work; and then the next Chairman followed the same course. Q. Who was the next Chairman.'? A. That was Mr. Decker, my predecessor. Q. There had been three Chairmen? A. Yes, sir. Q. And only three Chairmen? A. Yes, sir. Q. Starting with Mr. Stevens ? A. Yes, and then Mr. Decker. Q. And Mr. Decker filled up the interim between Mr. Stevens and yourself ? A. That is it ; and I said to my associates that I did not want to assume responsibility for assigning these cases. In the first place, I was new to the work, and I never knew any of the Commissioners until after my appointment. I did not know their capacities or shortoonaings or my own, as far as the Commission's work was concerned; therefore, I proposed that each week there Tvould be reported by the Secretary a list of new cases and they would be apportioned by and among the Commis- sion. I also proposed that all cases of large importance, and all capitalization cases, should not be apportioned or assigned to any Commissioner, but should be kept and considered as Commission cases; an'd that suggestion was adopted and has been followed from that date on. Final Eepoet of Joint Legislative Comjiittee 2051 Q. In that division of tlie cases, did they include the cases that had accumulated up to that time, Mr. Chairman ? A. No. it did not absorb any oases. There were quite a number of capitalization cases that had been assigned, and I did not want to suggest to re- assign tbose cases, because it might look as though there was some unintentional reflection on the Commissioner in charge. Q. What did you do witb the cases you did not find had any parent at all ? A. We gave them a father at once, directly after- wards they were all assigned, as I remember. Cbairman Thompson. — -You gave them a father. Did you bring them up "and produce anything with them ? A. Most of them. I think a very large percentage of those old cases, un- assigned cases, had been disposed of in one way or another. By Colonel Hay ward: Q. Did you, at any time, Mr. Van Santvoord, go into the file of the Commission, in which were kept the complaints against corporations — the public service corporations — for the purpose of acquainting yourself with the situation, or the method, that, had been followed by the Commission in the handling of those com- plaints ? A. I did not go into the files. I had so much to learn — everything to try to learn — that I tried to learn it in the easiest possible way, by conference with those who had been on the Com- mission, in decisions of importance, and who appeared to be es- pecially intelligent. Q. And from what you learned from those conferences that you say you thought would be the easiest way, did you come to any conclusion as to the adequacy of the system that had prevailed in previous times? A. Yes, I did. For the most part, I very greatly admired what had been accomplished. I had had rather special experience in executive work, and in some cases it seemed to me that there was not a proper system. Q. And did you make what you thought were corrective changes ? A. I suggested what I thought would help, and I think for the most part my suggestions were adopted. Q. Did you ever come to the conclusion, from what you had learned, that there had been sufficient personal supervision by the Commissioners over subordinates in regard to the handling of com- 2052 I^•VEST1GATI0N OF Public Service Commissio^ss plaints, prior to that time i A. Well, during what you might call the interim, when the Commission was short-handed, I think there was not. I doul;)t whether they could have done much more, at least the men who then controlled the Commission with their previous training. Q. And do you feel that the system that is in vogue now in- cludes an adequate supervision by the Commissioners themselves, or some member of the Commission, over this department, if I may call it a department — I mean the complaints ^ A. I think there could be some substantial improvements made. I 'have al- ways favored rather more centralization than there is. The fact that I did not urge that at the beginning was absolutely because of diffidence and because of the very great respect that I have been taught to hold for Chairman Stevens, the first Chairman. I never knew him, but I thought that a system that he had set in motaon ought not to be lightly torn to pieces. Q. Well, supervision by the Commission, or some one of the Commissioners, would not have necessarily torn system to pieces, would it ? I mean you could have added that feature without dis- turbing the other ? A. I did not mean to infer that. I may have been off upon another, line of talk. I quite agree with you that all the departments ought to have been supervised, and that is what I had in mind when I suggested that perhaps there should be more centralization, and so from the bottom up it would come up to the man who would walk off with all the responsibility ; that is myself, in that case. Q. What do you think about the sufficiency of the supervision over the correspondence or over the records of the subordinates, like the Secretary, touching the question of outstanding orders of the Commission, and the disobedience or obedience of those orders by the corporation? Before you answer, let me make my ques- tion clear that Mr. Hodson told us yesterday or this morning — I asked him about certain cases where the order had been apparently violated by the corporation affected by the order for a number of years, in one case I think as much as three, or four or five- years, and then Commissioner Hodson had been to this city and held a hearing covering the very matters involved in the order, and that, at the time he held the hearing and up to the -present time, he had Final Report of Joint Legislative Committee • 2053 never heard of this order ; and with reference to a situation of that character arising in the Commission, I wondered what your opinion was to the sufficiency of the personal contact between the Commissioners and the iSecretary and his files, which would show these facts? A. Dealing with a case of the character you men- tion specifically, I should say unhesitatingly that it was the duty of every Commissioner to report any disregard or infraction of an order to the Commission, for action by the Commission. Q. Well, now, suppose the Commissioner did not happen to find out about it in any way, because of his not coming in personal contact with the correspondence as, for instance, in this case there were letters from different people from this city, calling attention to the fact that the order was being violated, and there was a com- munication from Mr. Wells, who is connected in some way with the Commission over here, stating that this order had never been complied with. Now, what would you say as to that state of facts? A. Why, if such things occurred, I should think they ought to have been brought to the attention of the Commission, and I think they have been brought to my attention, since I have been on the Commission, and if not, I am not only mistaken, but disappointed and surprised. I am not ready to concede that that happened. I do not mean to insinuate that you are suggest- ing something that did not happen, but I should wis'h to see the papers. Colonel Hayward. — Can we not get those papers, Mr. Scudder, pretty readily, about that Syracuse case ? Mr. Scudder. — They are here. (Mr. Scudder hands to Colonel Hayward the papers referred to.) By Colonel Hayvpard: Q. The young men are taking these out, and I will direct your attention to the order of the Commission in this case. This, of course, was long before you went on the Commission? A. Yes, sir, that was Kennedy. Q. And the date was the 25th of May, 1911 ? A. Yes. Q. " Ordered that the Syracuse Eapid Transit Company " — let us see what they were ordered to do — " paragraph 10. Within five years from June 1, 1911, construct and have in operation in 2054 Investigation of Public Seevice Commissions connection with its lines and service tlie following additional ex- tensions and improvements, adding to its said lines and service at least full proportion of said extensions and improvements each year." A. Yes, sir, that is specific. Q. B, let us find B. A. Farther down. Q. Call that B. Mr. Buchner. — "A" has been omitted. There was a mistake. Colonel Hayward. — Have you got a copy of the order ? Mr. Mott. — That is the printed order connected with it. Those contain all the order. (Indicating). By Colonel Hayward : Q. I have it here. It says : " Extension of the double track on Seneca Turnpike from Salina street to Cortland avenue. " That is B." " C," extension of the double track through Burnett avenue and private right of way to the village of East Syracuse." A. Yes, to the village of East Syracuse. Q. " D, the complete double-tracking of the present East Syra- cuse line from Townsend street to Lodi street ? " A. Yes, sir. Q. " E," purchase and put in service not less than twenty-five new large double truck cars ? A. Yes, sir. Q. " E," construct on " E " additional transformer station with proper feeder connections. A. Yes, sir. Q. JSTow, there seems to have been an amendatory order to that, Mr. Chairman, in September of the same year. " The company shall, for each year, for the five years ensuing, beginning with the month of December, file with the Commission a statement showing what it has done during the then calendar year in the way of making the extensions and improvements required by paragraph 10, which required your company to add to its lines and service at least a full proportion of the extensions and improvements each year. Your statement should show the details of compliance with this provision, and the cost thereof." A. That refers only to para- graph 10. That is the first one. Q. ISTow, December 13, 1913, which was about sixteen months after this order was filed, Mr. Wells, who was — I don't know what he was. What was Wells at this time ? Final Repokt of Joint Legislative Committee 2055 Mr. Mott.— Chief Clerk of Records and Titles. By Colonel Hayward: Q. H« was one of the subordinates. He is writing referring to this order as modified, September 27, 1911, requiring the company to file with the Commission a statement what it has done during the then calendar year in the way of making the extensions and improvements required by paragraph 10 ? A. Yes, sir. Q. He says, writing sixteen months after this order : " It is evident from this that B, C and F have not in any way been com- plied with. 'No work has been done. This matter is, therefore, called to your consideration." That was called to whose attention ? " Memorandum for Secretary." That was called to the Secre- tary's attention ? A. That is dated when ? Q. January 13, 1913. That is sixteen months after the order. iSTow, let us see ; so in February — oh, this file here, Mr. Chair- man, contains numerous letters from the citizens of Syracuse and the clerk of the city of Syracuse, asking for inf oi^mation as to why the railroad is not made to comply with the order, why they are not complying with it, February 1, 1913, Mr. Wells again writes a memorandum — can we find these, Mr. Mott ? He called it to the attention of the Secretary, called attention to his former mem- orandum, and suggested that an inspector be designated to look over the ground. A. That was the same year and month, you say ? Q. Yes, referring back to this, and says he thinks it requires an inspector to look over the ground. Mr. Mott. — That was Mr. Grant, the Assistant Secretary at the time. , ^ By Colonel Hayward: Q. Mr. Grant says : " Mr. Wells : I think this simply refers to checking with the railroad," undoubtedly referring to the origi- nal order ? A. May I see what he thinks should be checked, re- quires the checking up of these items? (Examines papers.) Yes. Q. Well, now, the Secretary then wrote to Mr. Tilton, the gen- eral manager of the road, calling his attention to that portion of paragraph 10 which required the company to add to its lines and service at least a full proportion of the extensions and improve- ments each year. That was, however, when the Secretary wrote to 2056 Investigation of Public Sekvice Commissions Mr. Tilton, it was a year later ? A. A year later ttan the last letter ? Q. Yes; so that January Y, 1914, Mr. Wells wrote a memo- randum for Mr. Disney and Mr. Barnes, in which he says : " It appears from the report for the year 1913 in this matter, just re- ceived from Mr. Tilton, general manager of New York State Rail- ways, under date of January 5, 1914, that nothing was done dur- ing 1913, nor is anything contemplated apparently during 1914, relating to provisions C or F of paragraph 10, and nothing is said about further compliance with E during 1914." What was E ? That was A, B, C, D and E. Was that the purchase of new cars ? I^othing has been done about that. Q. itfothing was done down to then? A. No. Q. So, September 10, 1914, the Secretary writes — here is one, September 10, 1914 — the Secretary of the Commission writes to the General Manager of the New York State Railways and says : " It appears that nothing was done during 1913 nor was anything contemplated during the present year relating to provisions C and F in Mr. Barnes' report embodied in subdivision 10 of the order of May 25, 1911," but he does not say anything about further compliance with E ? Now, September 10, 1914, the Secretary of the Commission wrote to Mr. Tilton : " Nothing appears upon our records as to why these recommendations were not complied with and your attention is therefore called to the matter." I thought they were in the form of a formal order ? A. They are. Q. It is a formal order? A. Undoubtedly. Q. It goes on and says: "Your attention is therefore called to the matter." Now, this letter here — A. I said " undoubt- edly." I did not read it. I would like to see the order. Q. It covers the complaint ? A. I think so. Q. The order seems mandatory, to me. It says " ordered." In some way that was in another pile. I do not know what that says, but January 12, 1915, the City Clerk — A. Is this the case here? Q. Yes. A. I would like to look it over a minute. Q. Involves double tracks ? A. He says : " Be held in abey- ance until then." Which is the order? "I make the above sug- gestions " — well, those are suggestions. I do not remember ever seeing that. Final Report of Joint Legislative Comjiittee 2057 Q. Then came along this letter from the City Clerk of the vil- lage of Syracuse, January 12, 1915 — where was Mr. Irvine's leitter * It was on that yellow sheet. Is that it ? When is that dated ? Mr. Bnchner. — October 14th. By- Colonel Hayward : Q. October 14, 1914 — that was last October — here is a letter signed by the Secretary, apparently, but dictated by Judge Irvine — I think Mr. Hodson said that was frequently done ? A. We frequently do that. We prepare letters and send them to the Sec- retary to sign. Q. This is addressed to the general manager of that road. It says: "In the light of your communication of September 15, 1914, and the report of Mr. C. R. Barnes, Electric Railroad In- spector, the Commission authorizes me to inform you that if traffic conditions do not improve in the meantime, the Commission ■will entertain prior to June 1, 1915, an application for an extension of time within which you should comply with subdivisions C, E and F of section 10 of the order of May 25, 1911." Now, in this let- ter he said the traffic conditions were bad? A. The 19th of Sep- tember. Q. This is a month later. It says : " If traffic conditions do not improve in the meantime the Commission will entertain, prior to June 1, 1915, an applioation for an extension of time within which you should comply with subdivisions C, E and F of section 10 of the order of May 25, 1911 ; " and following that letter of Judge Irvine's, on January 12, 1915, there comes along a letter from the City Clerk — may I ask, not for the record, how hap- pened the Judge to write? Was there some letter to him? A. Well, I do not know. Do you know, Mr. Mott ? Mr. Mott. — Mr. Barnes had the matter in charge, and then this letter was sent over to the Commission and sent up to Judge Irvine. I do not know whether it came to him personally or not. The Witness. — Had anyone had the case ? Mr. Mott. — It was an old case. The Witness. — An old unassigned case? No, it was not un- assigned. 2058 liS'VESTlGATION OF PuBLIC SeEVICE COMMISSIONS Mr. Mott. — It was a continuing case. The Witness. — I think possibly it went to Judge Irvine, be- cause they wanted some new man to take it. By Colonel Hayward : Q. It was a continuing case, no doubt; but only a continuing case because the order was not complied with? A. There is a tradition there that a case never ends, because we may open a case after ten years. We made an order the other day to open a case that was decided seven years ago, upon an application for a differ- ent ruling. I only wondered how Judge Irvine came into it. Q. January 12, 1915, the City Clerk of Syracuse wrote to the Commission that the ^people of the city would be glad to know that Mr. Barnes is coming to make an investigation of the traffic conditions in Syracuse at the earliest possible date, supplemental to the investigation he made in 1911; that when he comes he will find a prevalent public belief that the street railway company, in addition to failing to comply with the order of 1911, that it add to its number of cars, has, in the face of a steadily growing popula- tion, both in the city and suburbs, really decreased the number of cars actually in operation, thereby producing overcrowding of cars and longer waits for a car by would-be passengers. It goes on to say : " Of course, the figures as to the number of cars actually operated are authoritatively accessible only to your Commission or your representative. The Syracuse public will be grateful if these figures are accurately obtained by you and thoroughly con- sidered in connection with the present potential traffic of a grow- ing city the size of Syracuse. It is with appreciation of your judgment that I note that in your order of May 23, 1911, relative to the Syracuse Street Eailway System, you observed : ' It is plain that the increase of population to be expected in the next decade will render necessary increased transportation facilities for the city, and this includes addition of a proper number of modern cars.' !N^early one-half of that decade has now passed and the urgency of the necessity you referred to is thereby increased that much." Now, I think that is a fair resume of the attitude of the citizens, as expressed by the letter of the City Clerk of the city of Syracuse. !PixAL IJepoet of Joint Legislai-ive CoMJirtTEE 2059 The Witness.^ Is this corporation, Mr. Mott, a constituent of the ISTew York Kailways l Mr. Mott.— Yes. The Witness. — Are you sure. Mr. Mott— Yes. The Witness. — This minute refers to this action ? Mr. Mott— Yes. By Colonel Hayward: Q. I will not take time to have the record read of Commissioner Hodson's testimony, but simply will say that, in reply to a ques- tion either of Mr. Kincaid or myself that he did say that he had been up to Syracuse during some part of this three-or-four-year interval here and had had a hearing covering these matters in- volved, and that all the time while he was having that hearing at Syracuse, Mr. Chairman, and until yesterday, when he took the witness stand, he testified that he had never heard of this order of the Commission outstanding against this road. Now, predicating your answer on that state of facts and the facts shown from the record here of the existence of the order, what would you say as to the adequacy of the supervision of the subordinates and the adequacy of the contact of the Commissioners with the subordinates and their files? A. I cannot be expected to make any answer which would be construed as any reflection on a fellow Commis- sioner. Q. I said as to the system ? A. I think those facts ought, under a proper system, to have come in an orderly way to the knowledge of the Commission. I think I ought to have known those facts. Q. And would you say that there was something — A. There was some breakdown sonievsnhere if those facts occurred without explanation. I did not know them. I was not familiar with them, and I ought to have known about them. Q. And you do not know to-day of the existence of facts like those in. any case, do you, Mr. Commissioner ? A. I do not know that those facts do exist in any case. I yesterday was told of the case, but not to the extent you have explained it to-day. 2060 Investigation of Public Service Commissions Q. Let us eliminate, Mr. Chaimiaii, the pai-t of it covering entirely Mr. Hodson's knowledge or ignorance of this particular matter, confining your answer solely to the record; the facts as disclosed by the record, which we have gone over together, what would you say of a system over there which would permit you to remain uninformed of this situation until yesterday? A. Well, if that is in the record, I cannot approve of a system which naturally resulted in that way. Q. And it would certainly be fair to say that, predicating your answer on those facts, and on the facts involved here, that no Com- missioner could render efficient service with that kind of a system; would that be a fair statement ? A. Oh, no, if that happened all the way through ; but if that did happen and there is nothing else in the record to explain it, I must believe that it is a most excep- tional case. I cannot believe that that would run through the system. It would be too great a reflection upon my own mediocre ability. I am not prepared to concede that. Q. Mr. CJommissioner, suppose, as Commissioner Hodson has testified 'here, he never made any inquiry or never made an in- vestigation to learn what orders of the Commission were outstand- ing, you say on the stand — I think you said, I certainly do not want to misquote you — that you did not make any such investiga- tion to find out the outstanding orders of the Commission, now how could that condition help but result from a failure, we will say, of the Commission or the Commissioners, to familiarize them- selves with the outstanding orders ? I have stated that very awkwardly. What I mean is that, if you do not know of the out- standing "orders, bow can you know whether or not they are being obeyed ? A. Wby, it is inconceivable to me that I could know, or should be expected to inquire into all the orders which have been made prior to my aippointment. There were thousands of them. I have asked everywhere if there were any orders of the Commis- sion that were not being obeyed, and found that there were none. Q. Of whom ? A. In the case of street railways by the street railroad inspector. Q. Mr. Barnes? A. Yes. He mentioned this particular case. He said this, that the Committee had made an order there, but the conditions had so changed, that he had recommended that the order FI^•AL Report of Joikt Legislati\'e Committee 2061 be uot complied with ; that compliance -with the order be not en- forced before, I think it w&s this fall or next fall, in line with this letter that we found there. Q. And that was since this last correspondence read by me, I mean within three or four months 'i A. Why, I think so. I can explain one that happened. It was only an accident. I do not mention it to show there had been any activity on my part to ex-' plore. It came to me one day when I was alone here, a resolution of the Board of Supervisors of some town out in — well, it was the town of Sohreiber — where it is, I do not know. It was a unanimous resolution to the effect that the Board of Supervisors had just learned, in the course of a pending hearing in some live case, that a former order of the Commission in regard to a surface railroad had not been complied ■with, and this was sent to me per- sonally. That is -why I happened to know about it. I was alone at the time. I did not know what the case was. I finally found that Judge Irvine had a case in that locality, and I assumed that it had occurred in his bearing; so I sent for Barnes and showed him the resolution and said: " Investigate that and return it to me." He came over and said : " These gentlemen are entirely wrong. I inspected that surface railroad after that order was made, and my report is on file to the effect that the order had been complied with," and on the strength of that report I wrote them that they were mistaken, and have never heard anything of it since ; and then incidentally I said to Mr. Barnes : "Are there any cases where orders have been made in regard to the service of street railroads that have not been complied with ? " and he said " jSTone that I know of except this case," and then he explained that, in this case, the conditions had changed so that he had recommended to the Commission that the enforcement be postponed. Q. Mr. Barnes had one assistant, didn't he, Mr. ' Chairman ? A. He had one fixed assistant, and I think that he was at times able to borrow one other man from some other department to help him. He is authorized to have another one now, for the present he has not filled the vacancy. Q. The law evidently placed a great deal of importance on the publication of these orders of the Commission in that the law re- quire copies of their order to be filed with the Legislature as part of the anniual xeport ? A. Yes. 2062 Investigation of Public Service Commissions Q. So that by going through the annual report you would get the orders for that year ? A. Oh, yes. Q. Do you know whether there was any docket or any record kept of the orders of the Commission showing for instance com- pliance, partial compliance or non-compliance of the order? A. No, I don't know that they did. I understood that there was a clerk, I think; it was this man Wells who has been mentioned, whose duty it was or is to follow down the orders and to rei>ort it and when there was an indication of non-compliance. Q. Do you think that it was the duty of anyone to occasionally take care to see that he was doing it? A. I shouldn't think so. I have assumed in cases of service complaint if the order was violated, we would soon have our attention called to it by the com- plainant, and, of course, place reliance on them, I have relied on those. As a matter of fact, I had a talk with Judge Hale about the prosecution of corporations who failed to comply, and found that there had been such a dearth of prosecutions that there had been no evidence of refusal to comply that I assumed that they had complied, and I was rather surprised to find of the lean record we had in that respect, I remember only two cases under the first Chairman ; maybe they feared him more than they do us. Q. Under the misdemeanor section they have not attempted to have a prosecutiooi, I assume, at all, under that ? A. Prosecutions of corporations for failure to comply with the orders of the Com- mission under either section, under the third section or any other section for a penalty, why, the remedy would be by writ of man- damus, and there never had been, as I said, any suggestion of prosecuting a corporation for a misdemeanor, for I suppose that would be through the medium of the public prosecutor, the Dis- trict Attorney. Q. That is an olficer of the corporation for failure? A. Yes, I suppose brought to his attention and he would prosecute. That is, I assume that, because we never had a case, never tad one. Q. Never had one ? A. Never had one that I 'heard of. Judge Hale said he had heard of one, I have never seen any, they pros- ecuted to the extent of one sinner who failed to comply with the order of the Commission, involving both remedies, an action for a penalty and writ of mandamus ; after the writ was issued, the cor- poration complied and the Commission also continued the penalty Final Repoet of Joint Legislative Committee 2063 action, as I was told by counsel. That was under Chairman Stevens' regime. Colonel Havward. — Mr. Chairman, may we have a recess of five minutes while I talk with Senator Foley ? Chairman Thompson. — Take a recess for five minutes. After recess. By Mr. Buchner: Q. In this case 2371, Mr. Commissioner, discloses the fact that the order had been violated for some two or three or four years, and that Commissioner Hodson who is holding hearings in this case didn't know of the existence of the order, and of course didn't know of Mr. Barnes and the order ; I believe that you told us that you didn't know of the existence of that order until to-day ? A. Tihat is the one Mr. Hayward asked about 'I Q. That is the one that Colonel Hayward asked you about and you said I believe that tbere might be exceptional oases, you didn't believe tiey were from other cases in which orders of the Commis- sion were being violated. A. Yes, I don't believe there were* I won't believe, I don't believe there could be many cases and I not know it under tJhe existing custom. Q. On the Commission's files is Case ^STo. 363, this was a matter of a complaint of rates of the Eochester, Syracuse & Eastern Rail- way Order which was entered in that case on June 15th, I believe, calling for a reduction of rates ? A. 1908 ? Q. 1908, on June 8, 1909, about a year later the railroad writes to Chairman Stevens in this letter 'here that they couldn't comply with the order since for the distance — A. Allow me to interrupt you. Tiiere is an error in the date you gave the 15th of June, 1908, that was the date we gave them to answer the complaint. Q. Then until the 19th of May, 1909, that was 1909 ? A. Yes. Q. And on June 8, 1909, the railroad writes to Chairman Stevens that it cannot comply with the order since for a distance of about a mile after the company^s car reached the city of Rochester, they run over the tracks of local lines there. The Com- missioner writes back to the railroad stating that in view of the situation the Commission will give this matter its consideration at some future date. Tliat is on October 5, 1909: "It has been 2064 Investigation of Public Service Commissions actually impossible for me to give any attention to this case owing to the pressure of other matters." And then he says, " I expect to be able to get hold of it and find out what the facts are and endeavor to straighten out the mistake if there was any in this case." Then nothing seems to have been done at all in this matter for a period of about three or four years, and on June 3, 1913, there appears a memorandum from Mr. Wells, so during all this period from the making of the order in May, 1909, until at least June 3, 1913, the order was in force and effect? A. Yes, sir. Q. And the order was being violated by the company com- plained against? A. I do not concede that; I should think the contrary. Q. Well, the record sihows the company did nothing to comply with the order. A. It was apparently an allegation of a mistake which apparently very heartily impressed Mr. Stevens, as he made the order, and wrote the letter, and until I heard his explanation to the contrary, I should have to believe it, although I don't know him and never saw him, I should believe that he considered that that order was entered under a mistake and ought not to be in force. = Technically there was 'a violation ; but he didn't amend the order, that would be my conclusion; of course, I don't know any- thing about it; it was before I ever heard of the Public Service Commissions Law. Q. Of course the order was being violated ? A. Yes, technically violated, but I don't include that kind of a violation in the class of violations I had in mind when I gave the answer which you used in the inquiry. Q. Would you consider a refusal to reduce the rates as this case calls for, a technical violation? A. I would not if they couldn't possibly do it because of a city ordinance. Q. There doesn't appear to be any city ordinance in there. A. Well, I forgot what you said. Q. It was a matter of arrangement between this company and another local company in the city of Rochester. A. Can you refer to it again? Q. Yes, it was June 8, 1909. (Hands letter to witness.) A. Why, that is a patent declaration that because of the existing city conditions they couldn't comply with the order. FiXAL Eepoet of Joint Legislative Committee 2065 Q. Not by reason of any statutory prohibition, however? A. No. Q. Merely because the railroad was not able to make an arrange- ment or enter into an agreement with another local line. A. It says an ordinance of the city of Rochester doesn't allow it to oper- ate its cars to Franklin street in said city. Q. But if the company had been able to make an arrangement with the local lin«s, they might have been able to give this relief ? A. It might, yes. Q. And would have been able to give this relief ? A. I cannot go any further than that; that is my opinion. If I am wrong, you have got to get Chairman Stevens to explain it. Q. Well, then, on June 3, 1913, Mr. Wells calls the attention of the Commission to the fact that this oixier still stands on the record as in force, and on June 6, 1913, the Acting Secretary writes to the Commission that this order is still in force and effect and is not being complied with. On April 18, 1914, there is a gap there of another year ? A. Another year. Q. And then Commissioner Decker writes to the attorneys for the railroad, " This old case No. 363 is on our docket with the question as to compliance with the order not yet disposed of, and it is important that proper disposition be made of this case." Then about this time the Empire United Railways became the owner of the road ? A. Or its subsidiary. Q. On May 27th, Commissioner Decker writes to the railroad stating that the new tariff " which you are to submit for approval has not been received," which they had promised to submit, and it seems Commissioner Decker had a conference with an officer of the railroad, and he promised to submit new tariff' to comply with this order, and he writes for that promised new tariff schedule. On July 13, 1914, Commissioner Decker again writes in these courteous terms : " I will thank you for definite advice as to when tariff authority may be expected to be filed." Then the railroad replies that they would appreciate a talk with the Commissioner on this matter ; then the Commissioner makes an appointment for the 17th of July, and on July 18th, the railroad writes to the Com- missioner and says that they were sorry they missed him at Roch- 2066 Investigatiom of Public SeevIce Commissions ester. On October 21, 1914, during all this time, of course, the order was not being complied with ? A. Yes. Q. A petition was received from the railroad asking that the Commission suspend or vacate the order and then a hearing was set for November 13, 1914, and Mr. Saunders, who was the at- torney for the complainants, said that he didn't understand why the Commission had never enforced its order. A hearing was held on November 20 th again and both parties were given until Decem- ber 11, 1914, to file briefs, and on February 10, 1915, the order was abrogated and from the time the order was made back in May, 1909, until the abrogating of the order in 1915, that order was never complied with, is that so ? A. I don't know, I suppose you have read the facts just — Q. Well, that is the record, we will go over all these things. A. Well, if that is the record, I don't know; I am perfectly willing to admit that our record is right, pertinent to this question. I think it is unfortunate that Chairman Stevens didn't abrogate the order years ago as I would have done under those circumstances. I think that was where the mistake occurred ; but of course that is a sort of a superficial observation, because I was not a party to the original proceeding. Q. It indicates, however, Mr. Commissioner, that the system there that an order of this kind might continue to be violated under cover for a long period of time without coming to your attention ? Well, it indicates to me that the Commission knew all about this all the way through. It was a continuity of advice from all the parties and the people? A. No, I don't think so. In regard to that system I am very frank to say I have always believed that the orders should be followed by the head of the division through which was made the technical examination upon which the order was based. This was the principle of the orders that I made in such cases, to hold the division chief responsible for the failure to bring it to my attention when an order I have recommended is not complied with. By Colonel Hayward : Q. Mr. Commissioner, Mr. Oortelyou, George B. Oortelyou, who is now president of the Consolidated Gas Company — A. Yes, I have met him. Final Report of Joint Legislative Committee 2067 Q. Used to be in President Roosevelt's cabinet, etc., lie was one of our witnesses down in ISTew York, and he described to the Com- mittee his system of handling complaints, complaints against the corporation — • A. Yes, his own corporation. Q. He had a special complaint bureau, and he said it had done more to bring the company and its subscribers in harmony than any other thing they had done ; and he said that they had certain subordinates who had charge of this complaint bureau; when a man wrote, sent in a complaint, that whether it was up to the com- pany primarily to take care of it or not, that they always had sent a man out to take care of it to get prompt action, and he said that lots of times it was about fixtures which didn't have a thing to do with it, but their man went and gave first aid, as he called it. A. Yes. Q. Then after that was done, that the company had a practice to write to the complainant, and find if the complaint was fully satisfied, to write to the complainant as to whether it was satisfied or not, do you see? A. Yes. Q. And so get an answer. I asked him I said, " l^Tow, how do you find it possible to supervise that complaint bureau; what do you do to supervise it ? " And he said that the only way it could be done in his opinion that he personally, occasionally and at un- known and irregular periods of time, but not necessarily very far apart, went right into the complaint bureau and do what you did when you came down from Albany to ■New York, went in and took the complaints out of the bureau covering a particular period of time, say thirty days, or two months, whatever arbitrary period he did fix, and he took those then, Mr. Commissioner, himself, the president of the company took those to his own office and sat down and went through them, went through the correspondence and the files, and he said that by means of the information he got that way and the suggestion he was able to give those subordinates and the knowledge he gained by those unexpected, unprepared forms of ex- amination, in that way and no other had he been able to keep that complaint bureau up to a high point of efficiency, as well as having information himself as to the various matters which he thought it was his business to know all about, and which he couldn't have found out in any other way. ISTow, it seems that this Commission down in the First District, in all of its history no Commissioner 206S IXTESTIGATIOX OF PcBLIC SeKVICE CoMMISSIO>S had ever done such a thiug as that. In other words, no Couunis- siouer had ever gone and made an_v examination of anything any- where, and I was wondering if any such plan, to your knowledge, had ever been followed up here ( A. Xever, by me at least. Q. Well, if that had been done, what do you think of that as a scheme ? A. Mr. Hayward, that i* a very grave question to my mind, how far a Chairman of the Commission ought to dissipate his time on details. I have been criticized for giving so much at- tention to detail. I regret to have done so. Q. May I interrupt you, Mr. Commissioner < A. Yes. sir. Q. Would you consider that procedure Mr. Cortelyou followed was fairly to be said to be giving his attention to details I A. I think so. Q. Or wotild yoti say — A. On the proof. Q. — it was moi^e in the nature of an adequate superxision, the only adequate supervision that woidd be possible. A. Of course it is nevertheless following a detail and involves time to go through the complaints individually. At one time I worked evenings and occasional Sundays doing it, too. I wouldn't undertake to do it. I might make a failure. Only a man of genius ought to admin- ister the office without doing that work. I am a practical man. and I have to do detail work. I think my method is the best. I don't believe there are a great many cases where complaints have been properly disposed of. that is. where it was necessary to write a letter to the complainant to ask him, because often when com- plaints have properly been disposed of, the complainant doesn't agree with you. We get a crop of letters condemning the Com- mission for having made a disposition as we thought properly, and as they think quite improperly, and we are condemned. I want ti.1 admit very cheerfully that I believe that the proper system should put upon each division chief the burden of following up these o^del^s and report in writing to the Commission whether or not they are complied with, and I had supposed that that sv^tem was in vogue here. It is in a very important division of the Com- mission's work, the Capitalization Division. We hear from that division and the Statistical Departments and we hear of it when a corporation don't comply with .any of the requirements in r^ard to filing their periodical reports. Final Report of Joint Legislative CoinriTTEE 2069 By Chairman Thompson : Q. How many complaints do you have a year ? A. Why, I think ten or fifteen hundred, either informal or formal. Q. So many of those complaints that you get out of patience with the complainant, and there is a great many of them, so many that you get out of patience with the fellow that makes the com- plaint? A. I would if I hadn't become an absolute philosopher in the administration of this business. Q. But a man can't be a philosopher and a Public Service Com- missioner at the same time, he gets out of patience with these com- plainants and thinks they are unreasonable. A. Many of them are very, utterly unreasonable; utterly beyond prayers, many of them. Q. So when a complaint comes in, it means the atmosphere in the Public Service Commission office, it is somewhat unreasonable to that man ? A. Not a bit. Q. That is on the presumption of unreason when it arrives ? A. I don't think so, I try not to be. Q. Well, now, for instance, a little instance of my own matters up in Niagara county, in relation to shipping apples, or was it peaches, principally peaches to New York. The arrangements were made to ship for delivery the next morning, — I don't mean the kind of peaches that Colonel Bayward means at all ? A. No, you mean real peaches. Q. Those peaches he means stay in New York all the time. A. They have always got them there. Senator Foley. — Mr. Chairman, who took care of the peaches in Niagara county ? Chairman Thompson: Q. Seriously, they arranged to deliver them in New York the next morning, and they didn't deliver them for two or three days. When the peaches do arrive, why, they are second quality, and can't get a market, and as a country lawyer at Middleport I tried to take that up with the Public Service Commission when Chair- man Stevens was Chairman, and nothing was done; and then I got elected Senator from that district, and the Public Service Com- mission had a hearing within a very few weeks then, and disposed 2070 Investigation of Public SEEVici; Commissions of it to tlie satisfaction of all the farmers up and down that road. Now, don't you think that the matter ought to have been taken care of just as readily for plain George Thompson as it was for Sena- tor Thompson ? A, I prefer to put it the other way, I think Sena- tor Thompson shouldn't have been considered any more than for Mr. Thompson. Q. You think when the Commission did take it up at the re- quest of Senator Thompson, if they meant to be fair, they shouldn't have done it to accommodate us farmers up there at all ? A. If it was properly considered by the Commission, and I think you implied it was. Q. No, I didn't imply it was, I believe the farmers were satis- fied after it was finally taken up ; don't you think the railroad should have taken it up and arranged to satisfy it? A. I don't think a complaint properly considered by the Commission at all should be considered any more because a man of importance pre- sents it? Q. That is what I meant. Take the case Commissioner Hod- son spoke of yesterday, now before your Commission, and the question of changing the name of a station, either on the Erie or Lehigh Valley Railroad at Darien; that has been before your Commission over a year, and the people of both Dariens have been before the Commission and they thought something was going to be done, and there wasn't anything done for over a year, and the question of renaming the station for the people that live at both Dariens, didn't see the necessity of it, and it was dropped by the Commission until Senator Greiner sent some flowers to his father or his mother, whichever the case may be, that went wrong, went to the wrong station, and the flowers wilted, and Senator Greiner takes it up with the Commission, and now they are going to have another hearing. Do you think that is right? A. -No, no, Sena- tor. Of course, delay is justifiable, I don't excuse it, or justify it. I excuse it, much of the delay don't justify it. Q. That is not the question. The question is shouldn't a plain citizen, no matter how humble, receive the same treatment, and good treatment? A. Surely. Q. At the hands of this Commission ? A. Yes, sir. Q. Will the Commission succeed until that happens? A. I don't know that they will succeed at all. Final Eepom of Joint Legislative Committee 2071 Q. Do you think they have been a success up to date? A. I have thought very seriously of whether the Public Service Com- mission idea is worthy of being preserved. My judgment is, after a year's experience that it is worthy of being preserved, but it never will be or can be unless it is written into the constitution, terms of fixed salary of the Commissioner, are protected by the constitution, and the office of Commissioner is surrounded by the same safeguards which are accorded to a Justice of the Supreme Court. If that cannot be done, then I am in favor to-day of fight- ing to abolish the Public Service Commission ; Ijhat is my opinion after one year's experience ; and I want to siay to Senator Thompson absolutely without prejudice or bias in one way or the other, but I have been of the opinion and we have it upon very excellent au- thority, that a man who is without acquaintance of the details of a business is often the best one to pass judgment upon a change in the theory under which the business should be administered. I have some confidence in my conviction on the subject which I have just referred to, and you have suggested it to me by your in- quiry. Everybody must concede that the most humble applicant should receive the same consideration proportionately as the wealthiest one. Almost the first remembrance that I have of undertaking the work was commencing with the file papers, and the first one on the file of the Public Service Commission involved $'2.58, and I worked over it for half an hour, and I smiled when you asked the question about peaches, because that case was a question in regard to apples ; the next case involved $600,000,000 and took half an hour for the first case, and five minutes for the second. The first case resulted in also the farmer ultimately get- ting his apples, the price, from the American Express Company, and he never even thanked the Commission for it. Q. He shouldn't. A. Well, we left it. Q. You should help him, that is what you were there for, what you were paid for, he helps pay you and shouldn't thank you. A. Yet I want to say, Mr. Thompson, that that — that that old man had no right to appeal to this Commission, it was absolutely with- out the intention of the statute. It was a question of law; it was a question of whether the road, the Express Company should pay him for the admitted loss at his estimate of the value of his apples or its estimate; but the old man wrote in and as it happened he 2072 I>-VESTIGATIOX OF PuBLIC SeEVICE CoMMISSIOXS touched my particular sympathy, for those apples in question ■were Xorthern Spies which are my favorite fruit, and I pride myself I raise some as good as can be found in the country, and I wrote to the Express Company and it went over to Boston and came back to Xew York, and in reply the attorneys wrote, or the company wrote and said their counsel said there was absolutely no question of jurisdiction of the Commission, it was a question of law, but inasmuch as we had given our time to discussing it, they had advised their claim department to pay the claim, and the old man got his money. Q. The old man, you have no doubt but what he was saved by the Public Service Commission ? A. I don't know about that, I don't know but what he may have thought he ought to have costs, too. Colonel Hay ward : Q. Do you remember whether it was a communication to the Commission ; I thought the Commission under the statute had the right to help him I A. It was a personal letter, that is the only way I happened to take it up. If it had been an informal com- plaint, I never would have heard of it. He dug up my name some- wheres and addressed the letter to me, and I like everybody al- ways feel that a letter addressed to me personally I personally answer it if I can. I was rather interested that it resulted that way, and I was very much pleased that it resulted that way, and I think that little thing gave me as much satisfaction as anything ever did. By Chairman Thompson: Q. There is another little thing; there are a thousand little things that aimoy a man ? A. Oh, yes. Q. Which you are supposed to take care of, but I was wonder-, ing if you couldn't, for instance, take the sleeping car proposition, the reservation of sleeping car berths. Did that ever come up be- fore you I A. Well, I have had a number of complaints coming just in that way, personal complaints, yes. I had one a little while ago. A lady was traveling and she said that it happened several times that she did not want to take a whole section ; she had a lower berth, and a man had an upper berth, and it hap- FiiNAL Eeport of Joint Legislative Committee 20Y8 peiiedthatiall the half curtains had been used up, so they had to inake up the berth with a whole curtain. I took it up at once and wrote Chicago' and they wrote back that they had allowed always for each car such a number of half curtains as in their judgment would meet all ordinary requirements, but inasmuch as I seemed to think that the circumstances required attention, they would promise to increase the number of half curtains. I wrote that lady and had a very gracious reply from her expressing her thanks. Q. Did you ever hear of anybody who went to the window and asked for a lower berth and couldn't get it and then somebody else went to the window afterwards and did get one ? A. Yes, I have had that experience. Q. Did you ever look into it? A. No, not for me; I never had any attention called to it, I generally meet that situation by buying a section at the beginning. Q. What I was getting at, this is not in regard to the important matters before the Commission. A. I agree with you, it is not necessary to question me a minute. By Senator Foley: Q. Do you think the law ought to be straightened up for the enforcement of your orders; do you think the law ought to be mandatory with reference to the enforcement of your orders ? A. I don't think so ; I think you have got to leave that to the discretion of the Commission. I would not hesitate one minute if I believed that any corporation was willfully violating any order of this Cammission to proceed • against it in every way possible, not a mirnite, but I think you have got to leave something to the dis- cretion of the Commission. Q. "What can we do with a company like the ISTew Haven Rail- road ? A. Well, we fortunately do not have to do much with it. Q. Where you put into effect a reduced schedule of rates and the company immediately reply with a writ of certiorari and the next thing we heard of it was in the Appellate Division and then in the Court of Appeals. A. Well, as it formerly existed, Sena- tor, when it was construed by the Appellate Division that the burden of proof was on the Commission to establish the fairness of the proposed rate. That has been changed now, and I can only 20Y4 Investigation of Public Sekvice Commissions say about that that our counsel, who is a reasonably good lawyer when he has good assistance, thinks he has got a fair chance of reversing that decision. We thought that way. You know you passed a law, your Legislature, reducing that rate. Q. Yes, I know we did — the suspension of rates. A. And we advised the Governor not to sign the bill. He appealed to us, as the Governor always does to a Commission. Upon the ground that the right of regulation had been left to the Commission and that every Governor from Hughes down had refused to approve of a legislative act reducing a rate, but especially because of the fact that we were testing that question and it was in the Court of Appeals and at least until the Court refused to reverse, and thereby perhaps it having become demonstrated that a regulation in such circumstance was out of the power of this Commission, that be better leave it alone. Q. Well, are there any cases at all in your Commission of orders being violated? A. Why, there is this one that is suggested to- day, and it looks to me as if that one is technically being violated because of the peculiar wording of that clause 10' which Mr. Hay- ward called to my attention ; and I am very frank to say it looks to me as if that clause required the railroad to do this extension work from year to year, but the Commission understood, I under- stood, and Mr. Barnes, our supervisor in that department, cer- tainly so stated, that they were given until October of this year to complete that work. I never looked at that order. Possibly I have been guilty of negligence in not looking at it. I honestly do not think so. I would have been perfectly willing to look at it. It is not a matter of failing to follow out the orders of the Com- mission, but you simply have got to stop somewheres and when I saw the volume of work we had I did stop going back into Frank Stevens' regime ; I thought he would have to run his own orders unless someone called my attention to the fact that they were being violated. By Chairman Thompson: Q. Commissioner, what do you think about the Commission having the right to suspend rates or to make temporary rates pending an investigation ? A. We have the right to suspend rates now. We have suspended a lot only the other day. They in- creased rates — Final Eepokt of Joint Legislative Committee 2075 By Senator Foley: Q. Eailroad rates only ? A. Yes, proposed by the — yes, rail- road. Q. ISTot telephone rates ? A. Oh, no. By Chairman Thompson : Q. I meant that kimd of rates. A. That is true, I was thinking of that. Well, I hadn't thought of that. Senator. I would prefer not offhand to express an opinion. Q. Only one more question I shall want you to answer before you leave, and that is whether or not you ought to have the power, in case of an overcharge, to require a railroad to pay it back ? You haven't that power now. A. An overcharge? Oh, yes, those re- muneration orders. Oh, we make dozens of those. They cannot pay back without getting our approval, you know. That is to guard against an abuse,- — a restoration order. Q. You cannot make them; you haven't any authority to make them pay back ; you have got authority to permit them to pay back, but you haven't authority to require them to pay back, have you ? A. Well, no. I don't think the Commission ought to be made a court of law. Better let that go I think with the courts. Let the courts say that a corporation owes a man. I would rather depre- cate that. I think we would get into more trouble than good would come of it. Q. Up to now the questions I have asked I suggested; I take no personal credit for them but I have been asked to ask them of you by a constituent of one of the Senators in this vicinity. They may be regarded as not very nice questions? A. Oh, I will regard them as nice. Q. But you are taking a chance on them. The first question they ask, they didn't say Mr., they didn't call you anything only Van Santvoord. A. All right, that is my name and I have never been ashamed of it. Q. The first question was, do you directly or indirectly own any stock in any railroad? A. Any railroad, yes, the Great Northern. No public service corporation in this State. Q. The second question they want to know, have you ever directly or indirectly received any free transportation for yourself or family from any D. & H. Eailroad official. I suppose they mean Delaware & Hudson? A. Never. 2076 Investigation of Public Sebvice Commissions Q. Appended to this is a clipping from the Troy Tinaes of Wednesday afternoon, February 24, 1915, in which it says that it was a well-satisfied crowd that went to Lake George on Washing- ton's Birthday to the Fort William Henry Hotel and that they went out on the smooth ice — A. Was I in the crowd, I didn't know it ? Q. There was a thaw, that is what they say, and that resur- faced the lake so the ice got smooth. And then says Mr. and Mrs. C. S. Sims and others arrived in the former's private car on Saturday and remained until Monday and they were accompa- nied on the return trip by various people including Miss Van Santvoord, and it is all underscored here. A. Well, I have a daughter who went to Lake George with a party of young people. I do not believe she ever heard, to think of it, the name of Sims in her life. She certainly don't know him. Q. Then the next question I want to know from you is, are you a fellow director of General Manager Sims in any banking or other corporations? A. No, I am not a director in any banking corporation. I never saw Mr. Sims until I came to Albany; I have never seen him but three times in my life. I never had any- thing to do with the T). & H. Company except to sue it, and my law firm has been suing it for the last ten years. We had heavy suits against it when I withdrew, to my sorrow, because I have lost part of the retainer. I am answering more than I am asked. Q. That is right. The fourth and last question answers itself now. It says, if so, would membership in such corporation bias your judgment in determining the complaints of the people against the D. & H. Eailraad ? A. Well, I — Q. Now, I asked Commissioner Hodson and I ask you in refer- ence to an order made on December 11, 1914, in the matter of the service conditions on the lines of the United Traction 'Com- pany in and about the city of Albany. This order provided' that they improve their snow fighting equipment in the city of Albany by putting on some snow ploughs ; that they shall make continuous aind clos'e observation of traffic ; and tliat they shall increase the service on the belt line during the morning rush hours; that the service on the Delaware Avenue line shall be increased, and that they shall arrange with the Schenectady Railroad in reference to passengers to get a transfer within the five-cent zone ; and that they FiA'AL Report of Joint Legislative Committee 2077 shall equip all their single-truck cars, and that they shall purchase twelve modern cars, and various other things. I assume yon are familiar with that order. Among other things you required them to purchase a motor truck of sufficient size. Are you familiar with the order dated December 11 ? A. I am. Q. Can you tell me who of the Public Service Commission originated this order ? A. What do you mean by originated ? Do you mean actually prepared it? Q. Yes. A. I think the order was blocked out originally by Commissioner Emmet and submitted to the Commission and after- wards taken over by me and put in its final form. I think that occurred because of the fact that he was in Albany and I was not there at that time. There is nothing significant in the fact. I made this last statement because you might think there was some- thing significant in it. Q. There is nothing particularly significant in the asking of these questions. I ask them because I am asked to ask them. That is all. By Colonel Hay ward : Q. Mr. Van Santvoord, I want to go a little into the activities of the Commission in regard to the telephone inquiry? A. The I^ew York City telephone? Q. Yes, Now, just when was the matter of the investigation by the Public Service Commission into the telephone situation taken up, do you remember ? A. By the Commission ? Q. Yes. A. After I came on, or did you mean before that ? Q. Well, what is the first you knew about it ? A. The first I knew about it was when I was appointed I was told that there was pending a proposition by the New York Telephone Company to contribute $200i,000 to meet the expense of the investigation. Q. Which investigation was to include an appraisal of the com- pany's property? A. It was considered necessary to make an appraisal of the property, yes, and we had not enough money to make it. There had been work done before that, but I do not know how much had been done, or how. long it had been under way. I think a year, perhaps, or part of a year. Q. Probably not very comprehensive be«iause of the. fact — A. Because they hadn't much money. 2078 Investigation of Public Sekvice CoiiiiissiONS Q. — that they did uot have much money at that time. Well, at any rate, there was a difference of opinion as to whether or not the company should be allowed to pay this expense, wasn't there ? A. Two to two when I came on. Q. Mr. Decker, I think, was in favor of letting them furnish the money to the extent of their offer of $200,000, if that would be necessary? A. The Commission was divided. There were four Commissioners and it was hung up because they were evenly divided when I was appointed. Q. And did you cast the deciding vote on it ? A. After I was appointed we voted five to none not to accept the money. Q. Voted what? Five to none? A. Five to none. Q. Well, Mr. Decker had been in favor of it before that? A. Yes, and I wish to say that at the end he still thought it would be proper. I thought it was not only inadvisable but improper, and I based my — oh, you don't want me to discuss that. Q. No, that is aR right. It is immaterial now. At any rate, an appropriation was made by the Legislature ? A. One hundred thousand dollars. Q. For that particular purpose, to be expended by the Com- mission of this District? A. In inquiring into the New York City case. Q. Why was that figure fixed, do you know, why was $100,000 taken ? A. I suggested the amount. Q. You thought it would require that amount to do the work? A. Everybody else thought dt would require $250,000. I said to the Governor, if you can give us $100,000, I hope we will hand you back some, maybe $50,000, perhaps only $25,000, but we want enough to go through with it and we don't want to come to the Legislature again. Q. Your idea of going through with it finally and completely was what? A. To bring it to a point when, within the court decisions, we would be enabled to make a decision which we thought would stand the test of any hostile action by the corpora- tion on an appeal, if that happened. Q. That included such a comprehensive appraisal of the prop- erty as — A. As might be necessary. Q. — as might be necessary to make the thing stand up after you get it ? A. That was what we had in miai, yes. Final Repoet of Joint Legislative Committee 2079 Q. Just what did you do after you got your appropriation, pursuant to that idea and that intent? A. Well, we first had to lay out a plan of doing the work and not exceeding our appropria- tion, and first of all, we thought it necessary to select an engineer. We had 197 applications and so we had to devote a little time to it. Q. How much time did it take for the preliminaries? A. I think it took two or three weeks. It seems to me we had the appropriation in June — the extra session, wasn't it ? I have forgotten, Mr. Hayward, the record will show. There was the time between the announcement of the appointment of Mr. McClellan and the signing of the appropriation. Q. Who was Mr. McClellan? A. He is an engineer in New York City who had formerly been an employee of the Commission at the head of one of the divisions. Q. How long prior to his employment as the engineer of this Commission had he been employed by the Commission in another capacity ? A. I do not know that he had so been employed ; I do not know that he had not ; I do not know that he had. Q. Well, I thought you just said he had been? A. Oh, he had been at the head of a division, yes. Q. Well, he was not a volunteer; he was employed? A. No, but you said how long — oh, I misunderstood. I thought you said he had been employed in some advisory capacity. You mean how long between — Q. How long after he ceased or terminated his employment as the head of the bureau you are speaking about was it until he was employed by the Commission as its engineer? A. I do not remember, if I knew. Colonel Hayward. — May I ask Mr. Mott? Mr. Mott. — Why, I think, Colonel Hayward, Mr. McClellan's time expired, or he resigned in August, 1913. That is my recol- lection. It was shortly after I came here, and I came in June, 1913. Colonel Hayward. — Well, it was less than a year, wasn't it? Mr. Mott. — About a year, I should say, or perhaps a little less. Colonel Hayward. — Well, you came in June? You say you think he ceased his former employment the previous August ? 2080 . Investigation of Public Skrvige Commissions Mr. Mott.— With the Commission ? Colonel Hay ward. — With the Commission, yes. Now, do you know how much he was paid in his previous employment with the Commission ? Mr. Mott.— Well, I think it was $5,000 per year. Colonel Hayward. — Well, do you know ? Mr. Mott. — Yes, I am very sure. Colonel Hayward. — All right. He was paid at the rate of $5,000 a year in August, 1913, and he devoted all his time to that position, didn't he? Mr. Mott. — I think so, yes, sir ; substantially all. Colonel Hayward. — I mean on the supposition that that is what he was paid the $6,000 for? Mr. Mott. — Yes. Colonel Hayward: Q. Wow, do you remember, Mr. Chairman, how much the Com- mission hired him at the -following June? A. We? Q. Yes. A. Oh, yes, $1,000 a month. He asked for $15;000 a year at that rate. We gave him $1,000 subject to the apprdval of the Civil Service Commission, and employed him by the mtinth for not to exceed six months, as I remember it, and subsequently requested the Civil Service Commission to extend his employment, maybe two months, perhaps from month to month, at any rate the term of service in which he is now empfeyed. Q. Had he ever, while drawing the salary of $5;000 from the Commission, undertaken to make any investigation of this same telephone situation ? A. I do not know, because I was not with the Commission when he was employed. Q. Well, you said — A. I should think not, but I do not know. Q. Pardon me. You said a little while ago that the" Commis- sion had, in a way or after a fashion, prior to getting this big appropriation attempted to look into the telephone situation? A. Yes. Final Eeport op Joint Legislative Committee 2081 Q. And to cover somewhat the same ground that you did under- take after you got the appropriation. Now my question is directed to whether or not he, in his $5,000 capacity, had ever gone into that question ? A. I do not think he had at all, but I do not know. I do not know the character of the work done there- tofore but it was not at all like the work which has been done under Mr. McClellan's direction. Q. It was a different kind of work. Now, what do you think the particular qualifications were of Mr. McClellan for the $1,000 a month job? A. Well, if he was fitted for the work at all I thought we got him at a fair price. I made inquiries, I tried to get one man, I was very anxious to get one man who had not been recommended. He said no, he would not accept the place if we would guarantee him $40,000. I asked him what he thought we ought to pay, and he said, well, you ought to pay $25,000: He said you may get someone for $15,000, or you may get someone for $10,000. I doubt if you will get any one competent. I am willing to say, if you wish, vsnho my advisor was, although I per- haps would prefer not. Q. I do not care about that. A. He is a very eminent engineer who is capable of advising. Q. When you considered the qualifications of Mr. McClellan, did you consider that the work he had been doing on the Com- mission during and previous to August, 1913, qualified him for the new job ? A. Well, we thought so or we would not have appointed him, of course. Q. I wondered if it was because of any other qualifications, if he had acquired a lot of qualifications between August and Juiie; that is what I am getting at ? A. He was very well spoken of and recommended and had left an excellent impression upon the Com- mission, a good reputation, was considered a man of ability and integrity, and we thought well of him. Q. Who recommended him, Mr. Chairman? A. I cannot remember, Mr. Hayward, there were so many applicants, and so many people wrote letters. I was very greatly personally im- pressed by the fact that the Commission had confidence in him. Q. Well, I was not speaking so much of the confidence they might have had and still have in his integrity, and so forth, as I was considering just what qualifications the man was stated to 2082 Investigation of Public Service Commissions have, and in connection with that whether his work in the Com- mission in the $5,000 job had been along these same lines? A. Well, you know there is a time when a man sometimes jumps from $5,000 pretty high up. The former chairman of the Commission was only worth apparently $15,000 from the State but report says that he jumped from that into $25,000. I thought that Mr. M' of Public Service CcMMISSIO^-s $94,000,000. The testimony taken before the Public Service Commission reached a figure almost identical with this, namely, $94,594,823. In neither case did the figures purport to be the result of any complete appraisal. In both cases the overhead charges, contingencies and omissions, were between $17,000,000 and $18,500,000. There appears to be no good reason why these figures, which evidently are estimated rather than appraisals — they used the word " estimated " where you used the word " guess work." A. Yes, that was it. Q. And which were 30 per cent, higher than actual cost should be given any weight in determining a fair and just charge for telephone service in New York City. Wow, I have before me the figures in Mr. McClellan's handwriting, written by a pencil on this sheet of paper which was evidently used by him as the memo- randum from which he testified. Now, he seems to have been a great fellow for round numbers here. He says right of way — this is McClellan — $725,000. Buildings, specials, $300,000. Poles, special, fittings, etc., $150,000. All cable, $1,200,000. Oity cost adjustment, $1,650,000. Land, $2,000,000 even. Buildings, 15 per cent., $1,650,000. Liability insurance, $1,000,000: Now, here he has omissions and contingencies, $3,731,833. Overhead, $14,106,329. Working cash capital, $3,770,000. A. How much for the working capital ? Q. Working cash capital, $3,770,000. A. The cash capital? Q. That is what he says, the working cash capital. A. All right. Q. To make up his total as a valuation. Now, did these figures as you finally got them from your expert in the form of testimony, which you say, much of it or part of it, whatever you want to say was guess work — A. We will use the word esti- mated, because I said he did not use the word, you know. I do not want to be unfair to him. Q. All right, estimated. Now, did that fairly carry out the original intention of the Public Service Commission to advise itself on this subject in order to take action resulting therefrom? A. Yes. Q. It did? A. Those estimates, those have to be m;ade any- way. He started in his reproduction cost with his plant measure- ment value. We did not know what that was to begin with. We Final Report of Joint Legislative Committee 2089 had to start with that. Starting on the other side with his book cost. We have to estimate a fair amount of interest during con- struction, for reproduction cost. There isn't anything on the books. There were a lot of estimates that McClellan made there. I was not present at the hearing when he finally testified, but it was understood in advance, I had an express understanding with Mr. Littleton and with the Commissioner who presided that Mr. Mc'Clellan's testimony was not to be considered as that of a witness which would be binding on us, because this, Mr. Hay ward, was an inquiry. We left the case, you know, at the point where the complainants couldn't go on with it because they did not have any money to prepare their case, and under the statute we took it up and made an inquiry, and Mr. Littleton advised us that we would not be bound by the testimony introduced by our engineers and experts as ordinarily would obtain in the case of a party to an issue. And I thought, when I read his figures, that some of his estimates were a little too airy. I remember one particularly of a million, that I thought was just about $500,000 too high. That I think was the employers' liability. Didn't he put that in there ? Q. He has a million dollars. A. Well, I thought he had that about twi'ce as much as it ought to be. I don't know but his guess was better than mine ; I don't know but mine was the better. By Chairman Thompson: Q. Why do you think you would be bound by anybody's testi- mony? A. Well, it had been suggested by counsel for the tele- phone company that we might be bound by it. Q. Your 'Commission is not bound by the rules of evidence? A. I just mentioned the fact that that suggestion had been made, and for the sake of caution I wanted to be sure we were not, and our counsel said no we would not be. By Colonel Hayward : Q. Well, you heard this testimony given, did you ? A. No, I was not there when McClellan testified that day. That was a hearing at which I was not present. I had something up here at Albany, I have forgotten what it was. I could not go, to my regret. Q. Did you read his testimony ? A. Oh, yes. 2090 Investigation of Public Seevice' Commissions Q. Talk to tim about it outside? A. Oih, I read it after the hearing, yes. Q. Yes, did you talk to him about it other than his testimony ? A. Yes, I have talked with him about it ; yes, generally. I didn't see him for a week or so after that. Q. Did you come to the conclusion that he knew what he was talking about or not ? A. I think he did. Q. You think he did ? A. Yes. Q. And his appraisal was something like $96,000,000 ? A. I thought it was a bit under $95,000,000, but if you have the figures, it was so. Q. Well, I totaled them up myself here from the figures that show on his statement, $96,244,823. A. Well, if those are the figures from the record, yes. But the total never seems to have gotten into the testimony. I mean he gave the several items and then nobody ever asked him what the total was, but it is easy enough to figure up. Possibly that is the reason that I do not carry that figure that you now state was the aggregate. Was he higher then than Gillette ? Q. Yes, I think he was. Senator Foley. — He was about $500,000 higher. The Witness. — Higher than Gillette. Senator Poley. — Higher than Swayze's statement. By Colonel Hayward : Q. Now, after all this had occurred and he had had this testi- mony, you had a meeting up here in Albany for consideration of this rate matter ? A. Yes. Q. And Commissioner Decker indicated then a result of $82,000,000 as the proposed valuation of this telephone plant, do you remember that? A. Well, I remember that was the con- clusion of the Commission, yes, for the purposes of the announce- ment that was to be made at the next hearing. Q. Now, do you remember what Commissioner Emmet's atti- tude was ? A. Yes, he thought it should be higher. Q. Higher than $82,000,000 ? A. Yes. Q. How much higher? A. Well, he read a memorandum at FraAL Eepoet of Joint Legislative Committee 2091 the hearing in New York. I think he said from eighty-seven to eighty-nine or to ninety, or from eighty-eight to ninety something. Q. Now, he based that, did he not, on the testimony of Mr. McClellan, by allowing $6,000,000' for depreciation? A. I think probable. Q. Don't you remember that that was his reason, that he took the expert's figures? A. No, I won't venture to say that. I think he will have to say that, but that is my impression. Q. Now, how did you get at the $82,000,000 ? A. Well, we built it up. I really think — I am willing to answer the ques- tion, but this case is still pending. It is by no means certain of an adjustment, and I really deprecate putting in the details of our valuation now, which is somcrthing that the telephone company tried to get from us on the hearing. I am perfectly willing, but I think it would be a mistake to make it a matter of public record yet, because the case is just at a delicate point of possible adjust- ment, and I would be sorry to jeopardize it, and I wanted to make plain to you the only reason I have for giving those items. Q. Here is what I want to make plain, that you hired an expert in whom you had confidence and the fellow you hired was a fellow of merit? A. I think so. Q. By subsequent development? A. Yes. Q. And he comes here and reports to you after asking from June to whenever it was, January ? A. February. Q. That the valuation of the plant is ninety-five or ninety-six million dollars, and you didn't have the testimony of any other expert before you except the telephone company of this $95,000,- 000, we will say, and yet you arbitrarily apparently decide on a figure of $82,000,000. Now, if this man was an expert, if the Commission had confidence in him, if he was worth that money you paid him, why didn't you accept his figures instead of your valuation of $96,000,000? A. Oh, no, I don't think so; I don't think that is a conclusion. Chairman Thompson. — He asked you why ? A. Why we did so ? Q. Yes, he said $96,000,000, and you had confidence in him, he was the expert hired by the Commission, and he put it $96,- 000,000, why didn't you take his word, why didn't you take his estimate, take his engineering results ? A. Well, the figures 2092 Investigation of Public Seevice Commissions which were used in making up the final estimate of value were produced by him; I don't think that we took anybody's figures except the figures produced by McOlellan and his engineers. 'Chairman Thompson. — He asked you why you didn't ? A. Why we didn't what ? Q. Why you didn't take the figures of the expert, $96,000,000, instead of taking the $82,000,000? A. Because we didn't agree with his estimates of the uncertain iteins; there was the question of interest which should be allowed for what was a fair rate of interest to be allowed and for how many years. I thinlc Mr. McClellan suggested a rate of interest for a term of years which we thought wasn't a proper one. I don't think we were obliged to agree with him in an estimate which was quite contrary to that of their engineers. We took his figures for the cost. By Colonel Hayward: Q. You mean you reduced it four millions? A. I was only mentioning one item, the employers' liability. Q. You thought $500,000' would do ? A. I think so. Q. Yet Mr. Gillette made a comparative cost which was better than McClellan's? A. Well, he was an expert on those subjects. Q. Do you know Prof^sor Bemis, the result he arrived at? A. I know what his figures of the cost were, and he didn't under- take to build up a new production cost, I have understood. Q. How did you find out what his figure was? A. I saw it in the papers, $95,000,000, when I saw that first, and then of course we had the report. Q. You had that before you and made your deduction of $82,000,00 from that? A. I think so, but it was published first, I am certain that it was published. Q. And the figure that you arrived at, $82,000,00, is about half way between Professor Bemis' figures and your figures, the figures of your expert? A. That was an accident; we have abso- lutely jio supervision of the figures first arrived at, which was two or three millions I think less than that. Q. Well now, don't you think Mr. Emmet's idea of $19,000(,000 based as it was on the only figures you had, your own witness, sworn to before you, which were except the figures of your esti- mate less than $6,000,000 depreciation, was more logical and more Final Repoet of Joint Legislative Committee 2093 constaBt than your judgment of $82,000,000? A. We arrived at that, but I don't think I agreed with them. Q. Whose figures did you base your estimate of $82,000,000 on ? A. I based my estimate upon the figures before us at the time it was under consideration after some changes were made, and I myself suggested some changes, I wanted to add a million or two as I remember. Chairman Thompson: Q. Was there any of the items in the papers on the files? A. No, nothing on the file, nothing except the record in the opinion. Q. Is there anything in the record that shows it? A. No, nothing but the vote. Q. Is there any reason why the Commission couldn't have cov- ered this as easily for itself if they hadn't had this hundred thou- sand from the Legislature? A. Oh, we never would have acted upon it, because we were advised by a man, and I have every con- fidence in him, that a prima facie case had been made out, and we could make a decision which would stand an attack in the courts. I don't think we would have gotten along, because the telephone company had insisted it would be a term of years before we could get the testimony on which to make an order. Colonel Hayward: Q. Do you want to make an explanation of anything, if you do, you have authority to do so; you want to volunteer anything before you leave the stand ? A. I am coming again ? Q. To-morrow morning. A. No, I don't think of anything unless possibly there might be some explanation of the Traction Company order. I would like to see Mr. Barnes and see what it is. Q. Well, make your explanation to-morrow morning. I thought possibly there might be some inference drawn that you might like to explain, and we don't want to adjourn without your having a chance on the record to deny it if you desire to. By Colonel Hayward: Q. One matter I see that I take from these files. Do you remember a request from Mr. Woods ? A. Yes. Q. And Professor Bemis, the Westchester Lighting case? A. Yes. 2094: Investigation of Public Sebvioe Commissions Q. Do you remember the answer of Mr. Decker in whicli he said Professor Bemis hasn't given me any formal report, hasn't made any formal report to the Commission, and he must have replied for that purpose, and it was available for answer, dated July 16, 1914. Now I hand you the memorandum of Professor Bemis in the Westchester Lighting case and ask your attention to the file mark of the Public Service Commission of April 6, 1914 ? A. I have no doubt of that, unless the file mark has been counter- feited, and if it has not, the figures must have been received then. Q. If this document was there when the representative of one of the complainants wrote and asked this Commissioner or asked the Commission for a copy of the report, and he was told there wasn't any report, whereas a report was actually filed with the Commission some months before he wrote asking for it — A. Well, of course, you wouldn't expect me to criticize my associates on the Commission, because his letter as a record, and I think he fairly ought to explain it. Chairman Thompson. — Well, it is on the record. We wiU suspend now until 10:30 to-morrow morning to meet in the As- sembly Parlor in the Capitol. Adjorned to March 11, 1915, at 10 :30 a. m. MARCH 11, 1915 Committee met at the Assembly Parlor, in the City of Albany, New York, on Thursday, March 11, 1915, at 10 :30 a. m., pur- suant to adjournment taken from Wednesday, March 10, 1915. Present : A quorum of the Committee being present. Appearance: Colonel Hayward, for the Committee. Setmotje Van Santvooed, recalled as a witness, testified as follows : The Witness. — Mr. Chairman, last night, before we separated, you very kindly offered me an opportunity to make any statement, Final Eepoet of Joint Legislative Committee 2095 which was a very considerate expression, of the things, as you suggested, I might wish to have in the statement which might go out with the record of the proceedings. In answer to some ques- tions which were put to me by request, while I replied directly and specifically I was not at the moment able to amplify my answers as much as I might properly do. With your permission I would like to very briefly — for I am sure I would say nothing that you or your counsel would be unwilling to have go into the record — Chairman Thompson. — Say whatever you wish, Commissioner, that you think proper to. The Witness. — The first question, Mr. Chairman, you asked me, whether I owned any Delaware & Hudson stock ; I replied I did not. I think I may properly also have said that neither I nor any member of my family, as far as I can learn, ever owned any Delaware & Hudson stock or bonds, or any securities whatsoever. Tou asked me if I owned any other public utility stock, and I think I said I owned some Great ISTorthern stock. That is the only public security stock I have owned, and I might say that as far as I can remember during the past five or ten years at least I have not owned any stocks or bonds in New York State public service corporations, except some shares of express stock at one or two times, and of course at the time I was appointed a Commis- sioner, I owned no such stocks, because that is prohibited by law. You asked me if I ever had sat in any banking board of directors' room with Mr. 'Sims? I answer no. I think I might properly have said as far as I can remember I never even met Mr. Sims until some weeks or months after I came to Albany, and then only when I summoned him to come before — requested him to come before the Commission for a conference. Mr. Sims was, I believe, a director of the Manufacturers Bank of Troy, and for a number of years I was a director and president of a trust company in Troy. There may have been some confusion. I know only that I never even saw the man and didn't know what he looked like. Colonel Hayward. — At that time you hadn't seen the pictures — A. I hadn't seen them, I hadn't seen, any of the Janey Crow supper. You asked me finally if I ever had, as I remember, rid- den on a pass on the Delaware & Hudson. I have never received 2096 I^TESTIGATIOX OF ' PCBLIC SeEVICE CoilMISSIOXS a pass, franking or other privilege whatsoever from any public service corporation or from any corporation; I never liave been counsel for any public service corporation; the only relations I have had with them have been the relation of attorney for the plaintiff in actions against them; the only business relations I have had with the Delaware & Hudson was once when I was put off the cars at Green Island for refusing to pay double fare. You finally read an extract from a Troy paper which perhaps inti- mated that a member of my family had ridden free. Chairman Thompson. — I think so, I remember the questions and I made an extract of them. (Hands paper to witness.) A. I have them here; I am willing to stand on my own recollection, and I ask leave to read this affidavit covering that last point: ■' State of Xew York, County of Rensselaer, ss. : " Edith Yax Sas^tvooed, being duly sworn, says that she resides in Troy, is a daughter of Seymour Yan Santvoord and knows the nature of an oath ; that unfortunately not hav- ing the pleasure of a personal acquaintance with Mr. and Mrs. Clifford S. Sims, deponent did not, as she is informed it has been reported, journey to Lake George on or about February 22d last, in Mr. Sims' private car; on the contrary far from enjoying 'any such hixury at the expense of the corporation, deponent traveled on that occasion at her own proper cost of $1.92 not to mention the fact that by rea- son of the heavy holiday traffic, deponent and some of her friends were actually compelled to occupy the smoking com- partment of the drawing room car during part of the ride to Lake George. '' And finally deponent is of opinion that so far as oppor- tunities for traveling de luxe are concerned, it is better to be the daughter of a public service corporation president than the daughter of a poor (not meaning inefficient) chairman of the Public Service Commission. (Seal) •' (Signed) EDITH YAX SANTVOOED. " Sworn before me March 11, 1915. " MijririE J. Reeves, " Depiiiy Clerl- of the Surrogate Court." FrNAL Report of Joint Legislative Committee 209Y If the counsel has no objection, I would like to file the affidavit with you, Mr. Chairman. I wish to say seriously that while I am sure it is not necessary for me personally to clear myself I think it would be very unfortunate to have a doubt linger in the minds of any citizen, however humble he may be, that would cast any possible dishonor upon the very important public office which I hold. Chairman Thompson. — I assume that if they make a complaint to the Public Service Commission on account of the facilities afforded by the Delaware & Hudson between Troy and Lake George, you will take it up and investigate it thoroughly? A. They might hand it over to the Committee which is investigating the Delaware & Hudson, I think. By Mr. Buchner: Q. In Case No. 363, Mr. Commissioner, yesterday, which is the Rochester, Syracuse & Eastern Railroad case, we inquired about? A. Yes. Chairman Thompson. — The witness and counsel are now talk- ing between themselves and there are others, other people in the room who want to hear, so raise your voice. Q. I find a memorandum which appears to be not a formal statement, but simply a summary for the convenience of the news- paper men, on the files in this case, of your Commission, and I shall read it : "A hearing was held at Rochester this winter — " A. Will you read the date of it? Q. It is February 24, 1915. "A hearing was held at Roches- ter this winter, and it was there shown that the company had since put into effect a commutation rate to Culver Road which would be cheaper and more convenient for passengers going into the center of Rochester, than the old rate ordered by the Commission in 1909. The Commission now has abrogated the old order without prejudice to the reopening of that case on new grounds." Do you know, Mr. Commissioner, when that new rate was made, that cheaper rate for commuters, when it went into effect ? A. ISTo, I do not. Referred to in the order? Q. It is referred to in this statement? A. Does that refer to the order that was entered ? 2098 Investigation of Public Service Commissions Q. That refers to the abrogating order ? A. Well, that was — • Q. February 10, 1915? A. Yes, it was handed to me, but I hadn't had an opportunity to read itj it is quite a long order, as I remember it. Q. In that order, the same thing is said substantially, that since the order of 1909 went into effect, this new tariff was made, but doesn't give the date? A. I am not able to inform you. I am not able to answer. It was before my day. Q. I show you an extract from one of your files, will you look at it, Wo. 40, please, and see whether this is not the tariff referred to in this statement for the newspaper? A. I don't think I can — I cannot tell you. I think you would have to inquire of Mr. Decker about that, who prepared this order, and recommended it, and disposed of it finally. Q. Last night I inquired of your Tariff Department, and they were not quite sure whether that was in the commutation rates or not? A. I am sorry, I can't tell you. I will be very glad to look it up and inquire myself if you like. Q. If they did change any tariff rates, it seems the new tariff schedule didn't go into effect until February 7, 1915; that is the date, isn't it ? A. If that is so, yes ; if that is the one. Q. If that is the one, the violation of the order was not a tech- nical violation? A. Well, you are asking now for a legal con- clusion, and I wouldn't venture to say; what they might be able to know, what was meant by technical — perhaps I didn't use the word technical. What I meant to imply yesterday, being of course taken unawares on this subject, was if the Commissioner who was responsible for the original order was of opinion that he didn't have all the facts before him, if there was a mistake, perhaps it was felt that although the order hadn't actually been modified or suspended in any way, it was fair to think the Commissioner assumed that he thought it properly should stand in suspense or shouldn't be regarded as an order that was being violated ; and I only guess as to that; and yet I have a very strong conviction my guess is right, because of the confidence I have in the man who made the order. Q. It appears from this statement, however probable the con- sideration of the abrogating order of 1909 was, that the commu- tation rates had been reduced; it appears from this statement? Final Repoet of Joint Legislative Committee 2099 A. I don't so regard it. I voted for this order myself, and I recall it. Q. It says here "A hearing was held at Rochester this winter, and it was there shown that the company had since put into effect a commutation rate to Culver Eoad which would be cheaper and more convenient for passengers " ? A. Well, of course, that is said to be an informal statement. Q. It is a statement of your Commission, however ? A. No, gotten up for the press men. Q. ISTo, this appears to be your own statement, " State of ISTew York, Public Service Commission, Second District." A. It doesn't say here — it is not a formal statement of the Commis- sion, but seems to be a summary for the convenience of newspaper men. Q. A statement by your Commission for the newspaper men? A. I don't think I am bound by that. I decline to be bound by this statement; because frequently they contain things which I do not approve of; for example, any implied praise of the Commis- sion, commendation, that is not any official statement. That indi- cation at the left^and comer of that order you mention made as — Q. Suppose we find the statement, I think I can find it? A. Will you let me just finish that one thought of mine? Q. Yes, surely. A. The order recites that on October 5, 1909, former Chairman Stevens wrote and asked the complainant, stat' ing that after the decision was made, his attention had been called to the fact that unknown to him a decision was rendered, and which apparently produced a different state of affairs; that the railroad company had been called upon to advise, and that the order was suspended until a further examination could be made. That created in my mind the impression that the former chairman had a doubt of the propriety of the matter. Of course there was no order entered amending it, and therefore, there was a technical violation of it, because it was still on the record. Q. Well, it says here " The reduced commutation fare to Culver Eoad, the fact that a five^cent fare from the City Line to the center of Rochester, a passenger unless riding on a through car cannot utilize the combination fare to and from the City Line for riding to the center of Rochester without changing cars," etc., and the fact that the original order was made under a misapprehen- 2100 Investigation of Public Service Commissions sion, and that tlie real difference in fare is now less than one cent constitute considerations of weight. Now, do you know w'hen that change was made, so that now the fare is less than, the difference is now less than one cent? A. J don't know; it might have been that very recent date, as you say, for all I know, and if it was that very recent date, then that wouldn't cut very heavy weight. Q. It appears that for five years those commuters were paying a higher rate than they should have paid because that order was not being complied with? A. A higher rate than they should have paid, but I wouldn't say higher than they should have paid, because thart order if it was unjust to the corporation, then I don't think they were paying more than they ought to. Q. Don't you think if the Commission had taken up this order during that five years that a reduction might have been made four or five years ago ? A. I think it might have been done propei'ly. Q. You think it might have been done.? A. I believe it could be; I think and always have thought that if an order has been mistakenly issued, I think it ought to be modified precisely, but if there was an order, to be pressed ; but I do not assume that? A. It might, of course. I don't know what wo aid have been disclosed. Q. It is also fair to conclude that the delay of this Commission has increased the rate paid for four or five years ? A. Well, pos- sibly, but if those people who were suffering didn't make a formal application — I don't mean they ought to have — there are many complaints not formal complaints, simply write to the Commis- Final Report of Joint Legislative Committee 2101 sion complairiing of this thing and that as the record showed yes- terday. Yes, I think those complaints properly should have got to the Commission when they had been taken up, and satisfied if such things were being made; I don't know about them By Colonel Hayward (to witness) : Q. Mr. Van Santvoord, is your telephone investigation still going on ? A. Woul-d you like me to state the precise situation ? Q. Yes, I would. A. I could say yes, but that would — we are in this situation. Two or three weeks ago Mr. Littleton said that he thought by the middle of February, a little earlier, we would have a prima facie case, provided nobody offered other evi- dence, the telephone company did not offer evidence, that we would be able to make an order, and we were told that the tele- phone company indicated a willingness to inaugurate a new schedule of rates provided the schedule did not prove to be drastic. And so it was agreed at a hearing, and I think that was the hear- ing when Mr. McClellan testified as was spoken of yesterday ■afternoon, that the following week the Commission at a hearing would announce its decision on two points. First, what it con- sidered the fair value of the property properly used by the Tele- phone Company in the business in the Greater City; second, — three questions. Second, what it believed was a fair rate of re- turn on ihat property; and, third, the resultant cut, so-called, in telephone operating revenue. That announcement was to be made to enable the Telephone Company to decide whether it would or would not introduce evidence, that is to say, if our conclusion, although not fully acceptable to them, were reasonably satisfac- tory, they would rest the case and then they would proceed to make up a new schedule. Now, we made that announcement, and I think I might properly say, apropos of your questioning yes- terday about the method of making up that value, we were not a little hurried in making up that value. That was a very large proposition, and we made it up as best we might and announced it with the express reservation that it was to be con- sidered only as the value of the property for rate making pur- poses in that proceeding, and that it was subject to change one way or the other by the 'Commission if not accepted by everybody in the case, and especially if other evidence as to value was intro- 2102 Investigation of Public Sebviob Commissions duced. Well, the Telephone Company when the announcement was made said through their counsel that they would take this statement to the corporation, which was to have a directors' meet- ing on the following Wednesday, and that the day following that they would be prepared to announce their position. They came in and said that they would not resist that decision as to value and rate and the resultant cut in the telephone operating revenue on three conditions, as I remember. Yes, I think there were three. First, that we should specify the time -within which the new schedule would take effect and that we should allow them at least six months to get it in working condition ; second, that we should specify a period during which the new rates should continue, and they proposed five years as that period. I think perhaps that there were just those two conditions. And then they said they thought there should at least be added to the property valuation a proper sum representing the cost of extension work during the six months which elapsed from the time we took as the value. We said we would not give them but three years, because I think there is very grave doubt of our having legal right to give them more than three years to test the schedule. We said we thought a new schedule ought to be inaugurated within not to exceed four months. And as to a possible increase in that valuation we made no announcement, because we were not all present. They then presented, Mr. Hayward, a proposed new schedule of rates, and that was presented at open hearing, and we adjourned with the understanding that not later than yesterday, I believe, the parties interested were to have the privilege of filing briefs or arguments upon the question whether the proposed new schedule of rates would result in reducing the telephone operating revenue by three millions of dollars. !N'ow, as soon as we are relieved from attend- ance here we propose to take that matter up, I should think with a final public hearing in l^ew York or here, allowing everybody an opportunity to argue on that schedule, and then make an order. Q. Based on that schedule, requiring that schedule? A. Make an order for a schedule ; make an order. By Chairman Thompson (to witness) : Q. Who is this fellow McClellan, Mr. Commissioner ? A. The one we were speaking of yesterday ? Final Eepokt of Joint Legislative Committee 2103 Q. Yes. A. Our engineer. The man in charge of the inquiry. Q. How much did you pay him ? A. One thousand dollars a month. Q. Twelve thousand dollars a year? A. At that rate, yes. Q. Do you pay him when he works or all the time ? A. He is supposed to be working all the time. Q. There has never been any let up on his pay up to date ? A. Oh, no. Q. His pay has been drawing right along all the while? A. Going on. Q. What is he doing now ? A. He is working on that schedule with all of the force who are capable. The others have had notice that at the end of this week, I think, that their services would terminate. He has three engineers who were appointed under his selection, all competent to do that work. And we have not re- ceived his report yet. He hoped to get it to us here yesterday, but they had not finished it. Q. What he did was to take the company's books, that is, the Telephone Company's books, to make the statement that it amounted to ninety-five millions valuation that he gave you, is that right? A. Well, there was infinitely more involved in the inquiry than would be implied by your bare question. Of course, if you just make that statement, — we are compelled, of course, under the decisions of the Courts, with which you are quite fa- miliar, we are compelled to take every element of value into con- sideration. We cannot take the book cost. If we could do that we would not need any investigation. Q. Where did he get the information from besides the com- pany's books ? A. Nowhere. Took it out of the books. Colonel Hayward. — Didn't he take a tax statement for most of those figures ? The Witness. — He had the tax statement too, I suppose. Isn't that what they call the plant measurement statement ? Is that the same as the tax statement, Mr. Scudder, are those synonymous terms ? I think so. By Chairman Thompson (to witness) : Q. He didn't attempt to go about and value the property from 2104 Investigation of Public Service Commissions first hand inspection at all? A. It would have taken him ten years. They said it would take them two years with their force of employees and it would cost them a half million to do that. We wouldn't undertake that. It was not possible. Q. It would take a year to go through the company's books; you think a man really would be profitably engaged a year to go through the company's books in this matter ? A. Well, I would never get through them. I understand the accountants thought it would take them a long time. It has taken them five or six months. I think it was three or four months before we began to get results. They said they were going — McClellan at the be- ginning did not have any assistants, I think, for four or five weeks, and he built up his force gradually, and, as he said, only as fast as he could use them, because we wanted to be as eco- nomical as possible. Q. Well, the hearings that you had, did you take the testimony in those hearings, that is, the first ones anyway, was that the records of the Telephone Company largely at those hearings, or was it on the records of the Public Service Commission? A. The Telephone Company largely. This question is a very in- volved one, by reason of the complicated history of the Telephone Company — the stock of the l^ew York Telephone Company be- ing, as you probably all know, all owned by the A. T. & T. Com- pany, I think it is called. Q. ISTow, did you get at the books of the A. T. & T. Company ? A. ISTo, we did not get at their books. Q. Why not ? A. We didn't need to. Q. Why? A. Well, I don't know why. We got the informa- tion that we wanted from the other books. Q. Did you find out how much the New York Telephone Com- pany were paying the A. T. & T. Company each year? A. In dividends, yes. That is a matter of record. Q. That is, for rents? A. Yes. Q. For service? A. That was all produced, those amounts; 4I/2 per cent. Q. How much did that amount to? A. I can't carry the fig- ures in my head. They are large figures; they are up in the hundreds of millions. Q. Several millions of dollars? A. I should think so. That Final Eepoet of Joint Legislative Committee 2105 sounds small. But I can't carry those figures in my head, — utterly impossible. Q. The New York Telephone Company, when they send a mes- sage from New York to Albany, they send it over the New York Telephone Company wire to the City Line, and then they put it on an A. T. & T. wire to send it from there to Albany, do they not? A. Well, it is the New York Telephone lines way up through the State now. Q. I know, but they send those messages over the A. T. & T. then, don't they? A. Well, I didn't suppose so. Q. Don't they have the A. T. & T., a service charge on that? A. Well, that question was not involved in this case. Q. You did not look up that question at all ? A. No, because we limited ourselves deliberately so as not to involve the State too much, and we were limited by the appropriation, too. Q. Wouldn't it affect this question quite materially if they are paying a large portion of the profits to the A. T. & T. Company by way of paying it for service? A. I don't like to concede that, because from the beginning we took the position — Q. I do not ask you to concede it. I ask you whether or not that ought not to have been investigated? A. I will say no, be- cause of the reason that the corporation was insisting that we should make a State-wide valuation, ''and we have been insisting that we should not. Q. I know; but isn't it quite material to know how much money was being paid to the company out of the profits of the Telephone Company, to the A. T. & T. ? A. We thought we got all the in- formation needed to hold the decision there, and that was what we wanted to get, because we could make this investigation go on for years if we wanted to. Q. Did you go far enough to find out whether or not the A. T. & T. and the New York Telephone Company were both controlled by the same people? A. Oh, yes. Q. You found that that was true ? A. Yes, we found that, yes. Q. Then I would like to know why it was not quite material to your inquiry to know what the A. T. & T. Company were taking from the New York Telephone Company, inasmuch as the A. T. & T. Company did not report to you, and the New York Telephone Company did, Senator, and we had the whole expense 2106 Investigation of Public Seevice Commissions account, and we had the entire statement of the Telephone Com- pany within the Greater City, we had all they paid out to every- body before us. Q. You don't think that was material to this inquiry? A. I think it was material to get figures on that, on one side of the ac- count, and I was told we had it. I think our figures in that re- spect tally exactly with the Foley Committee's figures. I under- stood so. By Colonel Hay ward (to witness) : Q. Well, Mr. Van Santvoord, I have here Mr. MoClellan's handwriting, in figures, this paper that I referred to yesterday, from which he undoubtedly must have testified ; and I direct your attention to the initial item, $65,961,661? A. Yes. I should think that — it doesn't say what it is. I should think that was the book cost of the property. I do not say that, because — Q. Exhibit 6, there. You see where he says Exhibit 6 ? A. Yes. Q. Well, that is the tax statement. A. Well, then it is. I said I wouldn't presume to say, because the item is headed " Mc- Clellan," and very large figures, and I do not carry them in my head ; neither am I an expert accountant. I can understand them when they are explained to me by accountants, and that is about as far as my ability goes. Q. I am not boasting about my ability on figures, either, Mr. Van Santvoord. A. I understand figures, but all their relations to accounts I am humble to — Q. It seems Mr. McClellan in arriving at his $96,000,000 worth of value, started off here with one item of $65,900,000 from the tax statement. Then it would appear that he has simply arbitrarily added these other items, wouldn't it? I call your at- tention to the fact that there are no definite figures there; they all end with hundred thousands, even figures. A. That illustrates what I tried in my imperfect way to convey to you yesterday. I believe I used the word " guess " and you said the word " esti- mate," which I thought was fairer. Q. Yes ? A. I think a lot of these items are estimated ; and I believe that they always must be estimated in making up a re- production cost, which unfortunately the Courts have said must be made up in a case of this kind, as I understand it. Final Eepoet of Joint Legislative Committee 2107 Q. Do you know as a matter of fact whether he took these cost records from the books of the company, or not? A. We were supposed to have gleaned everything from the books of the com- pany thiat they had, and I suppose he did. Q. And Mr. Littleton told you, when you got to the point where you now are, that in his opinion you had made a prima facie case? A. He did. He so announced at the hearing. Q. Well now, was it your intention, when you started out on this investigation with $100,000 appropriated for the purpose to go to a point where your counsel could tell you that you had made a prima facie case and no further ? A. It was as far as I expected to go, yes. Q. Well, now, suppose they come along and put in some evi- dence, what will become of your prima facie case? A. I do not know. They may not be able to shock that, and I rather hoped that when we got our prima facie case in, they wouldn't have much temptation to put in evidence, and it rather looked so. There was going to be this question, Mr. Hayward: It has openly been discussed, so there is no objection to mentioning it; the Tele- phone Company openly claimed, from the start, and it so appears in the record of the first hearing which I attended, that no prop- erty, — that is, no legal decision could be made in this case, unless an appraisal, an inventory of the entire property of the corpora- tion in the State of 'New York, was anade. I asked them how long they would take, and they said two or three years, and it would cost $500,000, and that they had a corps of very high-priced ex- perts who were now engaged upon it; and we talked it over and decided that if it was so, a rate making case by the Commission would break down, and we thought we would test it in another way; we thought we would see whether it was possible to make what I call a short-cut valuation. Having what we fairly con- sidered a prima facie case made, which a Court might stand on, and uphold our decision, — that is what we had in view, and we had in view from the beginning the hope that we would be at this point by the 1st of February, and that was what we were aiming for. We didn't get along as fast as we hoped; the death of our first counsel caused it at the beginning, and afterwards the job was a bigger one than we had anticipated. Q. Well now, what made you think that a Court would pay any attention to this prima facie case you say your counsel thinks 2108 Investigation of Public Seevioe 'Commissions you have made, when it is a fact — as it is, I think, — that these figures that Mr. McClellan has put together here in this way, ap- pear to be about 30 per cent, higher than actual cost'^ A. The case just decided in New Jersey, where the Court, final Court, reversed the lower Court, which had not allowed them anything for franchise valuation, and told them they must put franchise value in; they didn't tell them how much, but they said "You have got to consider them." Q. Do you know whether they have the same kind of law over there expressly providing the capitalization of franchises ? A. No. We did not follow that decision. But I was only mention- ing it illustratively. Kings county rate case held that you must consider going concern value, and laid down the principle which we should follow; they said you must consider it in a case, and they held reversible error because in that case the First District Commission did not give them anything, did not consider it. Q. Yes, but Professor Bemis considered that, and added 10 per cent, for that one item, and then only got $68,000,000, didn't he? A. I don't think he had $68,000,000. I thought he stood on the book cost of $65,000,000. I wouldn't say what he had, be- cause that record shows. Q. And you have added 30' per cent, practically to the cost value, as shown by his report? A. We have added for various items. There were twelve or fifteen items added to the plant measurement value, by us, and as I believe, as I did believe, properly, under the Court decisions. I do not understand that Professor Bemis added any. I supposed he took just that ■ tax record, the book cost. Q. Book cost? A. Well, book cost. There was a couple of million difFerence between them, I think. But, really, I am sorry I cannot speak more intelligently, but I am not a rate-making ex- pert, you know. You could get much more intelligent informa- tion from some other members of the Commission. Q. Well then, as a matter of fact, your investigation and the hearing on this case has reached rather the stage of negotiation with the company? A. No, I think not. I do not agree to that at all. We have reached the stage where the company, as I under- stand, has accepted our conclusions that the rate of return to which they are entitled, the showing of income, which we decided Final Report of Joint Legislative Committee 2109 they had made, the value of their property which we think is proper, indicates that they must now cut their telephone operating revenue, the amount of money they receive from subscribers, by approximately $3,000,000. They presented a schedule, which I suppose they consider will result in that cut. We have that schedule under consideration and we will decide whether it does in our judgment, or whether it will result in that cut, and if not, we I suppose will enlarge the cut. Q. Well now, you knew, did you not — ■ I think I asked you yesterday — -that the Foley Committee was working on this mat- ter and had Professor Bemis ? A. Surely. Q. And you did not call Professor Bemis as a witness? A. Didn't call him. They called our attention to it and asked if Professor Bemis could have access to our records. We instructed our counsel and engineer, under direction of the Commission, to give him all the information that they possibly could. Q. But you did not think of the reciprocal idea of calling him and of his giving you a lot of information about this, did you ? A. I thought it was their duty. They were a party to the case, Mr. Hayward ; the Foley Committee is a party to this case. They had a right to come in there and offer evidence at any time. We in- vited them all to offer evidence. Senator Foley. — Do not let them get you and I into argument, Mr. Chairman, don't let them get you in any argument. The Witness. — We won't have any argument. Colonel Hayward. — You don't want to get the Chairman and I in an argument. Senator Foley. — No, but I was wondering — The Witness. — I do not want to commit any impropriety. I simply want to answer. Colonel Hayward. — What I had in mind. Senator Foley, was : Here was this Public Service Commission paying a man a thou- sand dollars a month out of an appropriation of a hundred thou- sand dollars, and trying to arrive, I presume, at the real facts of this situation, and the real valuation; and here was probably the most noted telephone valuation expert in the world available at 2110 Investigation of Public Service iOommissions all times, with a report whicli he had made, to a committee of another branch of the State Government, and if the Public Service Commission had been seeking real information on it, I wondered why they didn't avail themselves of that information that Pro- fessor Bemis could have given them. The Witness. — I didn't see any occasion to call him. We had his report. We had his conclusions. We knew his ability and his standing. The committee could see everything that they had. Of course, we couldn't accept the report as evidence in the case, under objection of counsel. Any lawyer knows that. They had a right to have all the witnesses come there and swear them and cross examine them. Q. You couldn't do what? A. Couldn't accept their report and file them as evidence in the case if they objected. Q. Wasn't that all the more reason why you should have taken the testimony from which the Foley report was based, which was competent, which was material, and which was relevant? A. I didn't think so. Q. And you could have got that probably by the production of Professor Bemis for $50 for a day's testimony, couldn't you ? A. His report was not ready until very near the end of our investi- gation, and we were criticized for being so slow down to that time. We did not know that they were going to have Professor Bemis until the end of the year, I guess they didn't employ him until December or January. What would we have done; sat still from June to December, on the chance of their calling Professor Bemis ? Q. That is what you did so ; isn't it, Mr. Van Santvoord, prac- tically? A. What? Q. Sit still from June to November? A. Not at 'all. Q. You had one hearing prior to February, 1914? A. I do not think that the matter of the number of hearings was vital. It was the amount of evidence they were getting. I would like you to see the record in the case they have got there. Q. You got the evidence of Mr. McClellan. A. I think his evidence was the very smallest part of it. Q. Based on a tax statement, and what you have seen fit to call his guess on these other figures ? A. No. I think that is — you do not mean that. Final Eepoet of Joint Legislative Committee 2111 Q. You suggested it first, Mr. Van Santvoord. A. I did, but I disclaim the word, I said that word should not be used. Q. All right. A. And you very kindly suggested " estimate " which is the proper one. Q. Now, on page 31 of the Foley Report, it reads as follows: " Certainly the addition of over 10' per cent., or $6,000,000, to this amount as made up by Professor Bemis to cover possible omis- sion, is most liberal. It represents the maximum value of the property, based upon the cost, but with a large margin for other elements, of $65,000,000." That was on the question we were talking about that he had added I thought 10 per cent. A. For what? Q. For these — what does he call it here — possible omissions, he takes off first $6,000,000 for depreciation, no depreciation hav- ing been on the books, then he adds a little more than 10 per cent, for possible omissions, which you people show there at 30 per cent., there is 30 per cent, added higher than actual cost of this construction? A. Well, of course it is utterly impossible for me to sit here, you realize the fact of course, dealing with such vast amounts, abstruse questions, and give intelligent answers. I should like to have my accountant and Professor Bemis' report j I should have to 'have advice. I will try and answer it. Q. I am marking here the two paragraphs, one on page 31 and the other on page 32, and direct your attention and ask you if you will be good enough to read first that paragraph, and then if you will turn the page and read the last four lines of that paragraph and see whether I read them and stated from them correctly? A. I assure you, I did not mean to imply that. Q. Well then, go through them, so we will have it in the record. A. Well, I say I didn't mean that. Do wish me read it aloud ? Q. 'No. A. (Witness examines paper as requested). I have read them, Mr. Hayward. What is the question ? Q. Well, I say, as I read them, it was correct, was it not? A. Oh. yes. I did not mean to — I think you must have misunder- stood me. Q. Well, they seem very simple to me. You wanted to put an expert on them or something. A. No. I thought you wanted some conclusions from me. I said I was not expert enough to 2112 Investigation of Public Seevioe Commissions draw tie conclusions widcli I thouglit you were seeking. The figures, the statements, are simple enough, yes. Q. Well now, when do you expect to get this thing to a point where you will know whether you have made any progress or not ? When the company finally makes its decision ? A. Not at all. The company are waiting for us. They gave us a schedule a week ago Saturday. Our engineering force are working on that sched- ule, and I suppose over in the oflBce they are .working now. Q. Of course if you don't feel like saying — what do you think the Commission ought to do about this Westchester Lighting case ? A. I don't think I ought to say — I don't know as I could say anything, though, that would be improper. There is an applica- tion, you know, for a rehearing, by both sides, and I think that matter is down for to-day. It has been adjourned a number of times at a request of both sides. Q. Well, do you share Commissioner Decker's feeling of fear or apprehension at giving an opinion for fear of reversal by the Courts? A. I? Q. Yes. A. Now? Q. Yes. A. Oh, I don't know that he has that feeling. Q. I mean do you feel that you have got evidence enough to finally decide that Westchester case? A. I think there is in- formation enough to support the decision, yes. We reduced the electric light rates I think to twelve cents; I think there is enough to uphold that reduction, I surely think so, or I wouldn't have voted for it. Q. Well, how about the other matters asked for by the com- plainants ? A. The gas ? Q. Yes. Well, you did make a reduction on both gas — A. We made no reduction on gas. Q. No. You recommended a reduction. A. Well, I suppose there is no secret in saying, I made that suggestion ; we could make no reduction in gas, as the Commissioner in charge believed, and I read his decision and memorandum, and studied the case, and as far as I could judge, properly. I agreed with him. I say that with diffidence, because it is a very large record, a very intricate case, and I am not an expert in such matters ; but I agreed with him that there was not enough in the case for a basis for an order compelling a reduction in the price of gas ; and yet it did seem to FiNAi Kepoet of Joint Legislative Committee 2113 me that in these days a charge of $1.50 for gas, you know, was too much ; and so I said, " Why not suggest that we think it ought to come down ? " But it was really nothing more than a recom- mendation by the Comanission. Q. To the company? A. That is all, Mr. Hayward. That is as far I believe as we could go. Q. Well, now, did you come to that conclusion because of the lack of evidence, or because of adverse evidence? A. Well, the same thing, I would suppose. The counsel for the complainants did not think there was any lack of evidence. I suggested that we have a final summing up so we could hear their arguments. Here were four of us that were not on the case when they filed briefs. And they came before us and they were abunadntly convinced that they had ample evidence in the case to compel a reduction. We did not agree with them. That is all. Q. What had the Commission done to get evidence ? A. Well — Q. In the eight years that it had had this case ? A. Well, I am not familiar with that record. They had engineers at work, I be- lieve. I don't know whether the complainants furnished evidence or not. Of course, theoretically complainants are supposed to prove their case, but in matters of large moment of that kind, like the ITew York Telephone case, it does not seem fair that a few complainants should stand the expense of — Q. Why do you say that theoretically in a case like that the complainants are supposed to prove their case ? A. Why, I think that must follow. Q. Why ? A. Why, we haven't — how can we have the equip- ment or the money to go out and prove every case that comes? Suppose there is an inquiry into a whole enormous railroad sys- tem in the State ; it would take months and hundreds of thousands of dollars to cover the inquiry. We haven't either. Q. Well now, why do you think it was, then, that the people who made this law made a particular provision requiring very much additional formality in the filing of a rate case than they did in any other kind of a case ? A. I don't quite understand your question, Mr. Hayward. Q. Who made the complaint in this case, Westchester Lighting ease? A. Well, there were several; I think several complainants 67 2114 Investigation of Public Seevice iCommissions consolidated, as I recollect, a number of towns down there in the county, individuals in some towns, and I rather think some towns themselves. Q. Well now, of course you are familiar with section 71 of the law which — A. I would have to look at it. My memory — Q. As to " Complaints as to quality and price of gas and elec- tricity ; investigation by Commission ; forms of complaints. Upon the complaint in writing of the Mayor of a city, the trustees of a village or the town board of a town in which a person or a cor- poration is authorized," etc. That goes right ahead. Well now " or upon the complaint in writing of not less than 100 customers or purchasers of such gas or electricity in cities of the first or second class, or of not less than twenty-five elsewhere," etc., or upon the complaint of the corporation itself, " the proper Com- mission shall investigate as to the cause for such complaint." Now, don't you think that law means, where it requires a formal- ity of this kind of a petition which must be signed by the Mayor or the Board of Trustees or a certain stated number of consumers, that that was the very reason that was put in the law, that when those formalities were complied with, it relieved the Commission of the burden of 'little complaints and frivolous complaints, com- plaints of individuals ; that it was the intention that the Commis- sion should go ahead and carry this thing through ? A. Unques- tionably. 1^0 doubt about it. Q. And don't you think that under this law the Commission owes a greater duty really to do that on its own initiative and to take the laboring oar in a case of this kind, than in any other kind of a case ? A. Well, are you asking me to decide that that section serves to create a preferred cause, and I don't think — Q. No, it does not. What I contend is that — A. We owe the duty, there is no doubt about that, of course, to prosecute that case, cases of that sort. Q. Well then, why do you say that, as you did here a little while ago, — I forget your exact language - — that it was the duty of the complainant to produce this evidence ? A. Oh, I do not mean to imply that. I was speaking generally about complaints before the Commission. I said theoretically we expect complainants to pro- duce testimony ? Q. Yes, that is what you said, theoretically the complainant FiNAX Eepoet of Joint Legislative Committee 2115 was expected to produce the testimony. But certainly under sec- tion 71 that is not true, is it, Mr. Van Santvoord? A. We are compelled to make that investigation, yes. But I do not under- stand that we are compelled to prove the case. (Judge Hale speaks to the witness privately.) Q. What did Judge Hale tell you, Mr. Van Santvoord ? A. I was going to refer to the fact that this case that is pending now, we had a commutation case with the New York, New Haven & Hartford, and the New York Central, and the Appellate Division unanimously overruled our ruling. Judge Hale. — No. Three to two. The Witness. — That is better. They are in the Court of Ap- peals. They held the burden of proof was on the complainant. The Commission then did not think so. That law has been changed since. Q. Well, that was not pertinent to this inquiry we are making now, because that was a question of the burden of proof between the complainant and the railroad company ? A. Yes. Q. Not between the complainant and the Commission? A. The complainant and the corporation, in that rate case, commuta- tion case. Q. That did not decide this point we have been talking of. A. No. It was illustrative, though, of my proposition that the case had to be proved. We haven't always money and facilities and the time, and then I suppose the theory of the Commission is not that they shall start out with a determination to make a case for a complainant, but that it shall do justice, and if the complainant hasn't a case, that it shall decide against them. That is what I do, Q. Yes. But even on that theory, which we all concur in, it ought to be your idea to get all the proof that is available. A. Sure. Q. To throw light on the case. A. Surely, and we have tried, Mr. Hayward, to help complainants in many cases; they have come and said " We haven't the facilities to prove this case," es- pecially in telephone rate cases, and we have lent the help of our engineering force to establish the case. 2116 IinrESTiGATiorr of Public Seevice Commissions Q. How about the cases where they are marked " Dismissed on default of complainant? " A. Well, I personally think that is a proper method. If a man would not come forward and prosecute his case, I do not feel that we ought to prosecute it for him, unless it is a glaring — unless it brings our attention to the fact that the corporation is breaking the law. Q. Suppose it is a matter of rather general public interest ? A. Well, then it is. But a case where a man complained against a corporation, wanted to stop a train on flag, and we wrote him about it, and he said No, I have called your attention to it, that train ought to stop there ; if you won't make the order, I am done with it. We dismissed it. I would do it again a thousand times, I say. Q. Well, of course you would not dispute the proposition, Mr. Van Santvoord, that this law presumes that the Commission shall in many cases, or in any case where there is public interest in- volved, take the initiative ? A. It is our duty. We should begin it often ; we should not wait for someone else to complain. That is conceded. That is one of the objects of the law. That is one of its great purposes. Q. So that in the event a complainant simply called your atten- tion to an existing state of affairs, it would be your duty — A. Oh, yes, if it was a matter of large public interest. Q. Take it up and go right through ? A. Duty to, if we could. By Assemblyman Knight (to witness) : Q. There is one thing that occurred to me, and that is what do you say as to whether the orders fixing rates should not be retro- active, that is, date back to some time, say the time when the pe- tition was filed in the proceeding? A. Well, that is a very — I don't think I would care to express my opinion offhand on that. I think there is very grave doubt about it. I do not personally believe much in that kind of thing. Q. Would not that serve a good purpose in cases which have been continued for a year or upwards, a reasonable purpose? A. The theory sounds well and is attractive, but if you put it into practice I can see such tremendous complications. Take this New York Telephone case, — • suppose we make a new schedule now or five days from now and it dates back to the time the complaints were filed, eighteen months ago. People have moved and shifted Final Eepoet of Joint Legislative Committee 211T and died and gone bankrupt, and a thousand changes hare oc- curred. I do not see how you would make restoration. If you possibly meant that we would make a rate at the beginning, a ten- tative rate and compel them to meet it, but that would be almost impossible because we would have no basis on which to malce the rate. I think it would be very difficult to make that a practical working scheme. Assemblyman. Q. Then if not what would you say as to whether some time should not be fixed by statute within which a decision should be rendered after the submission of the case, or after the filing of the complaint? A. I have heard that suggested. If that could be done constitutionally without depriving anybody of his legal rights, I would very heartily favor such an arrangement. I am very earnestly in favor of some short-cut method of disposing of these rate cases. If we can't do it in a big case like the New York Telephone case, why, the system breaks down. It seems utterly absurd, you know, that the people of Westchester county should have to wait eight years to know whether or not they can get their electricity or gas cheaper, utterly absurd. Anybody who attempts to defend that proposition, you know, is beyond prayers in the matter of intellect or common sense. Assemblyman Knight. — That is all. By Assemblyman Maier (to witness) : Q. IMr. Van Santvoord, I was not here yesterday. What do you think about Long Island being placed under the jurisdiction of the First Commission ? A. I saw that suggested, and I won- dered whether that could be done under the existing arrangement as to the spreading of expenses. Now, the First District Com- mission had its expenses, other than the bare executive expenses, paid by the city. How, could the city of New York constitution- ally pay the expenses of the Commission outside of the city? I do not know that anybody suggested that; I do not know as there is anything in it, but it came into my mind the other day. Mr. Buchner. — That has come up before. The Witness.— Has it ? Mr. Buchner. — Yes. 2118 Investigation of Public Service Commissions The Witness. — Then I haven't discovered anything, but per- sonally I used to indulge the chimera that one Commission might do this -work, but I rather doubt it. I think Nevr York City ought to be left alone to run its own affairs. The only justification for putting ISTew York City telephones under the jurisdiction of this Commission and telegraphs, is the fact that the wires run all up through the State, you know, and that it is a sort of a transporta- tion through the rural districts, and the time will come when that very mixing up of business will be essential in rate cases. But I think that ISTew York City should have jurisdiction within the city alone, and the up-State Commission, if there is still to be one, have all the rest of the State; it is the better way. By Colonel Hayward (to witness) : Q. Do you hear down in the GSTew York office, for instance, could complainants about service or anything like that on the Long Island Steam Railroad go to the New York office and have a hear- ing before the Second District Commission; has that been the practice, I mean ? A. I will tell you rather an interesting episode that occurred only a few weeks ago. New York City, the First District Commission, has jurisdiction, you know, over service run- ning from a point in New York City to another point in the city, and in the case of the Long Island Railroad we have jurisdiction from New York City out into the county and back into the city. There was a complaint against the Long Island for withdrawing a train service from New York City to Far Eockaway — is that a point in the G-reater City ? Q. Yes, it is. A. Well, I think that is the point. Q. It is entirely within the city. A. Well, that was it, .then. It went from New York City out into the county and back into the city, and our order, as I remember it, upheld the Long Island Railroad in withdrawing that train. Then somebody applied to the First District Commission and they ordered them to put on a train from New York City to Far Rockaway but running within the Greater City. So the railroad has got to run the train and they said they couldn't run it because it ran out into the country. New York City says, you run it, it runs in the city. Now, they have appealed from the First District's order and under a stipula- tion that if the corporation is beaten they are going to run the Final Report of Joint Legislative Committee 2119 train but the city is going to let them run the train 'around through our jurisdiction. ISTow, that seems absurd, you know, but that is the only apparent clash, Mr. Hayward, that I have heard of. There has been one case when the other Commission sat with us in a ease down there where there was joint jurisdiction, but there has been no clashing and there is practically no overlapping. Q. Have any of those complainants against the Long Island Railroad had to come up here to Albany for hearing ? A. No, be- cause they have been accommodated by that ISTew York office. Q. At the Wew York office? A. I think they have all in- variably been permitted to go there. There is another very grave question. I have been against these scattered hearings over the State. There is a lot of time lost in it; I do not say wasted; I say lost. And I rather felt when I came here that I was going to reform all that, but reformers don't always come out ahead, you know, and there is a very strong argument in favor of the people from the localities having the right to be heard out there and not all trooping down here to Albany. And it is a difficult question whether we should compel them to come here, but I think they should come here more than they do. Q. Have you ever given any thought to Westchester being taken into the First District? A. Well, I think it would go with Long Island. Q. You think if Long Island went, Westchester should go, too ? A. Why, yes, if you once get over the line, why take whatever seems manifestly proper, because of its propinquity, but person- ally I- Q. The Long Island situation is unique in that it is discon- nected with every part of the State except New York City ? A. Yes, it is so and there is the electric zone there which, when you are operating through it, seems as if it is only a suburb of the town as it is like some of the suburbs of London. Yes, I admit all that. I admit that. There is very great argument, I think very great force to the argument that that properly, because of the geography, might be included in the First District, but I conclude not so far as my experience is concerned, for the reasons stated. I think New York City has an unique job, and it looks to me as if the job was big enough for any five men who can handle it. Q. You do not think, do you, Mr. Van Santvoord, that three 2120 Investigation of Public Seevice Commissions Commissioners could do the work up here in this district? A. I would not want to be one of the three unless I could pick the other two. Q. Suppose you could pick the other two, do you think you could do it then ? A. Well, I would make quite a showing, if I could get the right two. I have thought sometimes, you know, that if you could get the right man, but I do not know as the right man is born. I think, gentlemen, that my position is the most difficult position in the public service of the State, and I won't except anybody, not even the Superintendent of Highways. And I think that the position cannot be filled, there is not a man in the State that can fill it properly. I can't; I don't come within forty rods of it. Now, you may find a genius, but if you fiLad a genius he is not going to sacrifice his genius upon the altar of public service. If you could get the right kind of a man and put hion in here and let him make this his life work and let him appoint two men as nearly equal to him as he can, and he has got to be a big man, he has got to be a man big enough to be willing to get the biggest men he can to help him, as Napoleon did. He picked out the biggest men he could get ; and he was not afraid that his genius would be overshadowed by those fellows; he was big enough to know that everything that they did would make what he did seem so much bigger. Let these three men appoint, if you please, three deputies who would relieve them of a lot of the drudgery. Think of the time, Mr. Hayward, that is lost in my sitting at the head of a table and listening to complaints from Hell's Kitchen or Skunk's Hollow against a little corporation there four hours — yet they are just as much entitled to be heard, and as Senator Thompson said yesterday, as the big corporation, and yet I sit there and listen and listen and I know a lot of it is all wind but I cannot check them. Q. What do you think about this proposition, Mr. Van Sant- voord, of having the power, authority or whatever you are a mind to caill it, given to the Commission, both in the First and Second ; the same thing would apply, to appoint examiners, lawyers for in- stance, who would be examiners or referees, to talce testimony in these complaints and make a finding of facts similar to the methods used by the Interstate Commerce Commission? A. Well, that sounds very appealing. The only difficulty is that all men cannot Final Eepoet of Joint Legislative Committee 2121 make use of that thing. They doubt, they are afraid if they do not do it themselves it won't be done right — for the same reason that I have never appointed a confidential secretary. I said what is the use of having one, he will do things which I won't like and I will have to do them over again and h© won't save me any time, unless I could get the right kind of a man, and I couldn't get him because the place was too uncertain. ITow, there are men who are gifted temperamentally so that they can make use of other men's labors in that respect; they have the genius of sifting out, but I am not, and as far as I can learn the first "Chairman of the Com- mission was not, he was a doubting Thomas who had to do it all himself or thought it was not done right, who worked night and day here they say until 11 o'clock at night, you know, trying to do that work. Your method there has — Q. You approve that method, don't you? A. It sounds very well, yes. I think it would help. Anything that would take un- necessary detail from the Commissioners and enable them to give more attention to the executive work which is needed, and the service could be infinitely bettered if it could be done, should be hailed as a substantial advance. Q. And you think that these cases which you say take so much time and which are entitled to your attention to be sure, but not of relatively the same importance as the big ones, don't you think that the average lawyer we will say, the men you could get to do that kind of work, could make a finding of facts after taking tes- timony, that would be thoroughly reliable and dependable for the Commission to subsequently act upon? A. I do, just exactly as good as I, and in many cases better, because he is right in the active practice, you know; and you could get them you know for a third of what jou could get me for. I agree with you. Q. And that would undoubtedly relieve this Commission here C/f a great burden ? A. Well, it sounds well. In my own case I would want to pick my own examiner; that is all; I would not want to have any politician put one up to me. Colonel Hayward. — That is all, I think. Assemblyman Maier. — That is all, Mr. Chairman. Thank you. 2i22 Investigation of Public Seevice Commissions The Witness. — (Eef erring to a paper.) I want to say another little thing that just comes to me. There is a lot of harm done by leaving just such doubts as that floating around, a lot of harm done. Now, two or three weeks ago a minister who I know by name got up in a public meeting and said, yes, I have just joined the Cham- ber of Commerce and we are going to prosecute a claim before the Public Service Commission to reduce rates, such and such a rate; he says, nothing will come of it because, of course, all of the Com- missioners are owned by the corporations. Wow, there is a right- minded man, gentlemen; there is no doubt about it. That man never saw or knew one of us. That man, if he knew me and talked with m«, would have reasonable respect for me. He didn't in- tend to do a wrong, but he did a gross wrong, because his parish- ioners, good people you know in the working class of life, will say, why these fellows are all owned by the corporations, our minister wouldn't have said that is so if he didn't know it. Just think of that. I know that man by name; I am hoping to meet him some day. I want to tell you another thing, gentlemen, because we are here to get some benefit from this. Here in a public meeting in Albany a short time ago the former Mayor of Schenectady, Mayor Lunn, made an address in one of these Junie Crow meetings and he harangued against the Commission, charging among other things that they were guilty of the heinous offense of putting in their orders a request to the corporation to say whether or not they will accept the order. Just think of it, and we are required to do so by law. By Colonel Hayward (to witness) : Q. No, you are not required to do so. The law says you may do so if you desire it. A. Well, the law says we can do so if we think best to do so, and we have thought it best to do so, so we are required to do so. Q. The law says you may do so if you desire to? A. Now, there is that gentleman making that statement there. Mr. Charles H. Collins. — Gentlemen, Mr. Van Santvoord just made a statement that Dr. Lunn made this statement in regard to the Junie Crow meeting, as he called it, in the Ten Eyck Hotel. I wish to correct Mr. Van Santvoord and say that it was not Dr. Lunn that made the statement. I was the one that made it. Final Eepoet of Joint Legislative Committee 2123 T'he Witness.— I am very glad if I have done him an error. He was published in the papers as having miade it. Mr. Collins. — Well, I was the on© that made the statement, and I am ready to prove it if I get an opportunity to; I have documentary evidence to show it. Assemblyman Maier. — Better give him an opportunity. Colonel Hayward. — ^We will give him an opportunity. Mr. Chairman, we have been adjourning a little earlier on account I have had so much work downstairs I would like to do at the noon hour, disconnected, I mean, with the investigation entirely, if we could adjourn until 2 o'clock. Assemblyman Maier. — You have finished with Mr. Van Sant- voord ? Colonel Hayward. — Yes, I have finished with Mr. Van Sant- voord. The Witness. — Will I be needed — I will not be needed any- way after this week? Colonel Hayward. — Oh, no, I ho'pe not, Mr. Van Santvoord, If I don't get through — The Witness. — I ask that because we want to set the tele- phone case in operation. Colonel Hayward. — If some of the members of the Committee will agree to sacrifice themselves by staying here, Mr. Van Sant- voord, I will get through this week or know why. Assemblyman Maier. — I am in favor of evening sessions. Colonel Hayward. — I will go evenings. Assemblyman Maier. — Stand adjourned until 2 o'clock in this room. Adjourned until 2 p. m. 212-1 Investigation of Public Service Commissions AFTERNOOl^ PROCEEDINGS William Temple Ejimet, called as a witness and examined by Colonel Hayvfard, testified as follows : Q. How long have you been on the Commission, Mr. Emmet? A. A little less than a year. Q. When were you appointed ? A. I was appointed on — on or about the 1st of April. Q. Who did you succeed on the Commission? A. Mr. Sague, John K. Sague, I think his name is. Q. You were appointed the 2d of April? A. Well, it might have been, I qualified immediately after the 1st of April, whether I was appointed just before or just after, I do not recall. Q. That was April, 1914? A. April, 1914. Q. Where is your residence, Mr. Emmet? A. Westchester county. Q. How long have you had a residence in Westchester county? A. Since July 28, 1869. Q. What do you consider " residence " means ? A. Well, in the use of the word residence in that connection I spoke of actually living there. Q. Did you ever read the law of elections and qualifications of voters, etc. ? A. I have, that is, I have read it incidentally, not in any special connection lately. Q. You didn't make any change in your residence from 1869 up to the present time, is that what you want to say? A. I wouldn't say anything about living in a bona fide sense, of ha,ving one's household gods in the place and his Lares and Penates there. I never have lived in a place as much in my life as in Westchester county. Q. You voted in the city of New York? A. I have at times, I have voted in the city of New York; but Colonel Hayward I would be glad to make a statement of my entire connection with Westchester county. Q. Yes, when I ask you one or two questions. I want to get this thing straightened out. You say your residence has been up there in Westchester county all these years ? A. Yes, sir. Q. And you know the laws of this State require a man to vote where his residence is, if they vote, and you voted in the city of Final Report of Joint Legislative Committee 2125 iS^ew York in tie fall of 1913, didn't you? A. In the fall of 1913? Q. November, 1913, you registered there from 59tJi street? A. 1^0, I did not, sir, in the fall of 1913. I didn't vote at all in the fall of 1913. Q. Did you register there? A. I did, I registered from 59th street, or at the polling place further up. Q. What is your residence in ISTew York ? A. I have none at present. Q. "Well, -what was it then ? What was it when you went on this Commission? A. I had none. When I went on this Com- mission, for two or three years before going on this Commission I had been spending my winters here at Albany at all times after I had been appointed Superintendent of Insurance, and had entirely discontinued any formal residence in New York, and voted there one year, maintained a voting residence there, and then the following year I didn't vote at all and the next year I voted in Westchester county; previous to that I had voted for many years in Westchester county. Q. You voted in New York the last time you voted before you went on the Commission, did you ? A. I think so. Q. And you were registered there in the fall of 1913 ? A. Yes. Q. Just tell us what changed your qualifications from being a voter in the city of New York in November, 1913, to be a resident of the Second District of this State to make you eligible to the Public Service Board ? A. Do you want me to make a statement of my own ? Q. Go on and tell. A. Why, the history goes back to earlier years, that is to the things I would like to say since the time I have been here, my connection with Westchester county I will say that I was born in Westchester county and I have lived there all my life up to the time I was admitted to the bar there, and voted there for years after I became twenty-one. I was elected to cer- tain- — -one or two local offices there, when I was practically twenty-one years of age, and after that I was elected to the Con- stitutional Convention of 1894 from Westchester county and went as a delegate to national political conventions from Westchester county, and lafter I practiced law in Westchester county, from the time I was admitted until a year after the Constitutional Oonven- 2126 Investigation of Public Service Commissions tion, I think it was when I continued the practice in Westchester county, but my business gradually assumed a sort of a New York end, which in the end led me to find it necessary to go to New York for several months each winter, that is as a matter of convenience, I mean, it was desirable from a business standpoint. I never ceased to live in Westchester county, although I ceased voting in that county, but not many years, on coming to New York ; I did used to take temporary quarters in New York for several ^months in the winter, and go back in the spring. And then after doing that for a few years I found that it was convenient to vote in New York, and for a year or so I did work there, simply qualified from the place I lived in at that time. Q. What was that place ? A. Well, several different places. I have voted from the apartment house No. 12 East 58th street; from another apartment No. 40 West 59th street, and I voted one time from the Metropolitan Club, if I am not mistaken, and each year where I voted from in New York, I was living in the place, and voted from where I then had the legal qualifications, wherever they were. I only tried to vote once, I didn't try to vote more than once. Q. I understand, Mr. Emmet? A. So then after being there for a year or so I went — Q. You have told us about three votes voting from three differ- ent places ? A. Those are the only ones I recall. Q. How many times did you vote from each of them, just once? A. Probably I should think I voted once from the 58th street apartment, I have no recollection of voting more than once, I may have from the Metropolitan Club; I think possibly from the 59th street apartment I voted twice, probably. I am thinking about this for the first time now, and cannot recall, I don't think more than twice that I voted from that apartment, if I am not mistaken, for three years, and I may have voted three times from the other apartment, but I don't think so. Q. You voted a matter of five years in all in New York City ? A. Yes, I went back to it after I had gone from Westchester county all the time, and I want you to remember, Colonel Hay- ward, I was always living there, and this voting residence at the time was for the purpose of convenience in connection, I assume, in connection with business. Final Report of JonstT Legislative Committee 2127 Q. You say you assumed a voting residence in New York City for the purpose of convenience? A. Yes, sir; voting from the place I was living at. Q. That is the time that you began assuming a voting place for the purpose of convenience? A. Well, I will tell you. I had found an apartment that I wanted to live in in New York, and after I had lived there a sufficient length of time to entitle me in the election time to register and vote from there, and I did vote there. I had no ulterior purpose, but simply voted because I was down there through the winter montihs. Q. Did the winter months include October and November of each year ? A. Yes, they did at that time ; that was necessitated by other considerations, sending the children to school. Q. And you continued to be registered in the Greater City of New York, First District, under the Public Service Commissions Law? A. In some years, in November, 1913. Q. If you will pardon me, I would like to get up to that. A. I went back after voting in New York, the 59th street vote was cast at a later date. Q. That was the last place? A. No, that was a later date, after voting at the Metropolitan Club, probably, I may have. I think it was the 58th street apartment once. And then I went back and voted in Westchester county and ran for State Senator up there once, and after that I think I was elected too, as a dele- gate to the national convention from Westchester county. I think that for two or three years, I can't remember how long, and then I began to give some consideration to what had induced me in the first place to vote in New York City induced me again to vote there, and for several years — Q. Which were what ? A. Which was the fact I was spending the winter in New York primarily for the purpose of business, and secondarily and perhaps primarily for the purpose of educat- ing my children. Q. Hadn't your children these advantages of the same schooling there, df you had voted in Westchester county? A. I think not, no, they did not, and still they — I don't think — no, I had been spending the winter in Westchester county, for I had built a house there, and in fact, which I didn't do before, and which I have done since, I sold it and built another house there. 2128 Investigation of Public Service Commissions Q. Did you espeet to be a candidate for the State Senate by moving your residence, and voting from New York back to West- chester ? A. None whatever, I had no notion of running for the State Senate. Q. Did you own your house in Westchester county when you were appointed to the Commission ? A. This Commission ? Q. Yes. A. Oh, rather, not one, but several. Now, I don't mean several. That is the house I live in and also other real estate. Q. Where were you living in the winter of 1913-14? A. In Albany. Q. Pamily living here? A. Family living here, living here now. I will tell you about that, if you will allow me to, Colonel. Q. Go ahead. A. I went, as I say, I went back after voting a couple of times in Westchester county, first to New York, and then for some years again in Westchester county that time I ran for the State Senate, and then I went back to New York for the same reasons I 'had originally gone there to vote; and I was still living there and voting there along until, I think I had for perhaps three or four years, I can't remember now exactly ; maybe four or five years ; I am giving my very best recollection of it — when I was appointed Superintendent of Insurance. Q. You were appointed from where, Superintendent of Insur- ance? A. I don't know. Q. You were voting in New York City at that time ? A. Yes, sir. Q. And undoubtedly were appointed from New York? A. I presume I was appointed as a resident of New York City ; I never inquired where I was appointed from, but undoubtedly that was naturally so, because I was voting there at that time. Well, then, I concluded the only way I could 'handle that work satisfactorily was to close up everything in New York and move to Albany, and since then I have been in Albany excepting in the matter of qualifying for the purpose of voting, and I treated Albany except- ing in the m^atter of qualifying for the purpose of voting exactly as I had foi-merly treated New York. That is to say, I had been liv- ing all the time in Westchester comity, where my home is, where my interests are, and all my vital interests are, and that situation was never changed for the last four years I think it was now I Final Repoet of Joint Legislative Committee 2129 ihaTe been spending the winter months that I formerly spent in 'New York, in Albany. And I even thought once that I would vote up here, it passed through my mind that I might vote up here in Albany, for the same motives of convenience I did in New York, but I didn't do it anyhow. Q. Were you Superintendent of Insurance when you were ap- pointed to the Public Service Commission ? A. Well, I resigned at or about the time, I can't remember. Q. I mean the service, the work was continuous, you went from one to the other? A. Yes. So then I in the fall of 1913 — well, we will go back to the fall of 1912 — so then I lived in Albany and was not living in New York at all in any way or shape and since that I have no home there, but I was — Q. Registered there? A. I was registered there. Q. Are you sure you did not vote there in the fall of 1913? A. Absolutely certain, because it was a conscious act on my part, and I will go back and explain why. I voted in New York in the fall of 1912 and when 1913 came around — Q. Let me inteiTupt you. How long were you Superintendent of Insurance? A. Going on three years, between two and three years. I thought that it was — I registered in New York in the fall of 1913 as a matter of habit more than anything else, because at the same place I had registered before, and I hadn't- done any- thing about making the change of that, and I was entitled to vote somewhere, and I might as well vote there as anywhere else, so long as I didn't try to vote twice ; but having done so, having regis- tered, I thought over the situation between registration day and election day, and concluded it was a perfect farce for me to be voting in New York, not only I had no connection with the place in any way, shape or form, while probably having registered, I could go to the polls on election day to vote there, it was a ques- tionable thing anyhow in my mind to do, and I might possibly be interfered with, and being interfered with I didn't particularly like, and so I decided not to vote on election day there, because there was no real basis for it except the fact I had registered, and so I did not vote at all. Q. If there was a basis for your registration there, there was a basis, the same basis for voting? A. Yes, that is true, after registering, I hadn't done so, and it was practically that it may 2130 Investigation of Public Service Commissions have been a mistake. I did not vote at that time and I had abso- lutely made up my mind to resume my old connection with West- chester county where my interests had been getting more and more. Q. At the time you registered in New York, you had made up your mind? A. Yes, sir. Q. Why didn't you register in Westchester instead of Jfew York ? A. I don't know why I didn't ; it was a foolish thing to do, but the reason was — Q. It was only a short distance? A. Yes, but the reason, I would tell you the reason I think was because I had been registered from this place the last three or four years. So then I had formed the intention of going back to Westchester county because abso- lutely I had the intention without regard to anything that hap- pened afterward. I swore off my personal tax in New York, too, and swore myself to be a resident of Westchester county j that was either just before or just after election, I don't remember which. Then after that nothing at all had ever occurred to me in connection with being appointed to the Public Service Commission at that time, I hadn't thought of it, or upon the subject or spoken to anyone about it. A little later then, I can't remember just when, in the winter of 1913 and '14 I filed my income ta:x returns as a resident of Westchester county, and swore to the fact that I was a resident of Westchester county. Q. That was about March, 1914 ? A. I think it was, I don't remember if it was earlier than that, or earlier than March, I should judge it was in January or February. So then I was spoken to — I don't think there is any reason why I should not say this — I was spoken to in connection with a matter which in- volved a residence in New York City. Q. That was one of the judgeships, wasn't it? A. Well, yes; and I told the gentleman who spoke to me that I was not a resident of New York City and told him why I wasn't, and told him what I have been telling you, and I have done everything that any man can do to qualify as a resident of Westchester county, in accord- ance with the true facts in my case, which were that I lived in Westchester county, where I had been bom and brought up, and all my interests were there. Final Repoet of Joint Legislative Committee 2131 Q. So tlien at that time, as a matter of fact, you were living in Albany ? A. I was living in Albany in the winter. Q. You were registered as a voter in New York City and yet your residence was in Westchester county ? A. Yes, sir. Q. I see. A. Then I — Q. That was a sort of triple alliance? A. Well, to ease my conscience, all the time I was only trying to vote once. Q. You missed it entirely in 1913? A. I didn't vote at all. I thought if I did, I would keep within the law at any rate, within the spirit of the law. So then after all those long drawn out series of incidents have occurred, I was asked whether I would accept an appointment on the Public Service Commission, and I hesitated a little, not on the score of residence; I was absolutely sure of my ground there, and I hesitated on other grounds and finally decided to do it. Q. ITow, Mr. Emmet, I want to ask you about one other matter, I want to ask you when you were appointed Superintendent of InsuTance, what year ? A. Well now, I will have to thdnlc ; it was 1911 or 1912. Q. 1911 or '12. If I understood you correctly, you said at that time you came to Albany to live? A. Yes, sir; I came to Albany as soon as I had been appointed. Q. Bringing your family with you ? A. Well, the first winter I came alone; I was appointed in February, at the beginning of the year, and then the following winter, the following winter we all came up and established a residence here. Q. What do you mean establishing a residence, establishing here a winter residence or sojourning the first part of the winter ; at any rate, you told us when you were appointed Superintendent of Insurance, you then determined that you would come up here to Albany, that is, that you seriously thought of voting in Albany? A. I didn't mean to say seriously thought of it, it passed through my mind. Q. It passed through your mind that it would be really a kind of a logical thing for you to do, perhaps ? A. Well, since I was here in the winter, probably election day, would be convenient to vote here. Q. But instead of that, when you got this appointment, you 2132 IiTVESTiGATioiir OF Public Seevice Commissions finally decided to claim Westchester as your home, although you were living in Albany, did you ? A. No, that is not the situation, Colonel; I had definitely, absolutely not only decided to do so, I had done so, under oath, and done it under all the conditions which were possible to do it under, long before my appointment was first mentioned to me. It was not done with reference to my holding any political office at all. Q. That you went back to Westchester ? A. Yes, sir. Q. Why did you vote in New York City in 1912 and register that fall of 1913 ? A. In 1912 because I had voted there in 1911 and had not definitely decided anything about the future. Q. Didn't you just say that you had definitely decided to leave everything and go back to Westchester and become a resident of Westchester again long before you were appointed ? A. As a Pub- lic Service ■Commissioner, yes. Q. How long before? A. Well, as I say, I was appointed about the first of April, 1914, and I reached a definite decision to make Westchester my voting place as avcII as my actual living place again, in October, at least, and it was immediately after I regis- tered in New York. My registration brought out — and I want to impress you with this point of view because it is the accurate one — my act in registering in New York and voting in the fall of 1913, brought forcibly to my attention the absurdity of my doing so as long as I was not actually living in New York. Q. It was not anyhow, I presume, absurd to register in New York City, anyway, in 1913, and didn't vote, and did vote there in 1912 ? A. No, it was not. Q. It was the same thing, as a matter of fact, as far as the bona fides of your residence is concerned, or was concerned, you were just as much a resident of Westchester county in the fall of 1912 and fall of 1913, as you were in the spring of 1914, were you not? A. I suppose that is determined by the actual fact of living in Westchester county any more than the fact that I have always lived there. Of course, you used the word " resident," as I spoke of when I used the word, it may mean a different thing. I have been a bona fide resident of Westchester county always. Q. Do you think that there is any difference, a bit of difference in the meaning of the word " resident " as it is contained in the two laws of the State of New York, the Public Service Oommis- Final Eepokt of Joint Legislative Committee 2133 sions Law requiring a man to be a resident of tlie District in whicii lie is appointed to the Public Service Commission, and tbe Elec- tion Law requiring a man to be a resident of tbe place where he votes. Is there the slightest difference in the meaning of those two words of those two sections of the law ? A. I have not read it in any critical spirit, and I wouldn't like to say offhand. I am willing — it was not, Colonel, that I didn't know what would ap- pear to be perfectly obvious under the law was exactly the same in both cases, but I was a resident of Westchester county in every sense of the word when I was appointed to the Public Service Commission. Q. When you were appointed, you were just as much a resident of Westchester county when you were voting in 1912' in 'New York City and registering in New York City in 1913, were you not, Mr. Emmet ? A. No, because I think — I know I did vote in New York City, but I differentiate that from the year 1912 or the present time. Q. But you registered in 1913, and you differentiate that from 1914, it wouldn't be difficult to differentiate it if you followed it up by voting ? A. I decided not to vote and I have given you my reasons for having decided not to vote in 1913. Q. In 1913, you must have signed a statement there the day of registration? A. I signed whatever there was to sign. Q. Usually a pretty strong statement there as to your residence ? A. Yes, that is when I signed that statement I intended to vote then, and to have my winter residence — at least I signed the statement under the assumption it was the same way that I signed it the year before, but it was here as I have told you. Q. Do you think you were eligible to the appointment on this Commission on registry day in 1913 ? A. On registry day in 1913? Q. Yes. A. I wouldn't have accepted the appointment with- out calling attention at least of the appointing power to all the circumstances of the case and letting him decide whether I was or not. Q. Certainly you were not eligible in 1912 ? A. No. Q. What was there, what difference was there in your status, in your residence, between registration day in 1913 and the date of your appointment in 1914, the first of April, what had you 2134 Investigation of Public Seevice Coimmissions done in the meantime, ■w'liat single act had you done that changed your status as far as residence is concerned ? A. Well, I "will explain, Colonel, that I in the first place reached that decision which is purely a matter of intention to exercise the right to which anyone has to decide where he is a resident of. I carried that out, I carried out my original exercise of the intention to vote here- after in Westchester county, after making an affidavit, which is a public record, I assume — I have never seen it since — in connec- tion with the personal tax in New York City. Then later on I did another definite thing by filing my income tax returns as a resident of Westchester county. Q. Do you think you were eligible to the appointment of one 'of the judgeships in New York county on registration day, 1913 ? A. Do I think I would have been eligible ? Q. Yes. A. If I hadn't done the things which followed? Q. Well, confine yourself to registration day, 1913 ? A. I would leave that to the appointing power. I wouldn't decide the question anyway. Colonel, first, I think probably I might — Q. You have a house down in Westchester county now ? A. I certainly bave. Q. Have you any status in New York City ; you said you owned a home — A. In New York City. I don't live there; it is rented, and I have no control over it. Q. Where is that house ? A. 50' East 76th street. Q. Did you ever live in that house ? A. I did. Q. How long ago? A. I lived there for several years until I came to live in Albany; I never lived there since I was Superin- tendent of Insurance; I rented the house, and it has been rented ever since. Q. Now I find here, Mr. Emmet, in a summary of expense accounts of Commissioner Emmet, for the fiscal year ended Sep- tember 30, 1914 — please don't think I am criticizing the items of expense. A. All right, sir. Q. I am not presenting them for the purpose of belittling any expense account you may have filed there. A. All right, sir. Q. I find here you made trips to New York, April 11th, 13th, 18th, 24tli, 25th, 27th and 30'tli. May 2, 8 to 10, 21st to 25th, I presume those are inclusive, those dates? A. I presume so, I don't remember. Final Kepoet of Joint Legislative Committee 2135 Q. June 1st — May 2i8th, June 1st, June 4th to Sth, June 10th to 15th, inclusive; June I7th to 22(1, inclusive; June 25th to 29th, inclusive; July 2d to 6th, inclusive — that was over th« Fourth of July. A. Well, of course, I didn't charge for living in New York during all those periods. I dharge for a trip down to ITew York ? Q. Yes. A. Yes. Q. That was over the Fourth of July. Now I take it you were attending to the Westchester cases? A. Yes, evidently to attend to something about it ; I have no recollection. Q. July 9th to 13th, July 16th to 20th, inclusive; July 23d, August 6th to 12th, inclusive; August 13th to 20th, inclusive; August 21 to 24, inclusive; August 27, September 2d, September 3 to 8, inclusive; 10th to 14th, inclusive; September iTth to 21st, incMsive; September 24th to 28th, inclusive; September 29th to 30th. So that made eighty-six days in six months that you have been in — up to January 1st — A. Well, if the record shows. Q. Up to September 30th, from April 1st to September 30th, eighty-six days attending, out of 200 days. Wow let's take a look and see what was done by you. You have a copy of what I have ? A. Yes, I think so. Q. You just follow along with me. I find here April 11, 13 and 18, you were down there, three trips at an expense to the New York office " shortly after my appointment in order to familiarize myself with its organization and functions." Now, was that to familiarize yourself with the " organization and functions " of the New York office ? A. Yes, it was primarily to, as I remember it ; there may have been other things, I don't know. Q. Well, I am taking what you put down here as the reason for it, and I presume it is authentic? A. It is authentic as far as it goes. I didn't intend to be complete about it. Q. How much of an office was there down in New York? A. Do you mean physically ? Q. Yes, how many rooms? A. Two rooms, one large hearing room and one — Q. How many employees there ? A. Well, there is — two were in the office all the time, and others who do work. for that office. Q. How many? A. I don't know whether four, I should say more. 2136 Investigation of Public Service Commissions Q. Do you know how many employees there are? A. In the New York office ? Q. TeSj for sure? A. There are two regular employees and then there are others reported there who work from there at times, and who at times work up here at Albany. Q. Well now, Mr. Emmet, of the employees, how often they were there up to the time you made this investigation of the office to familiarize yourself with it, did you know more about that office and the employees than you do now ? A. Did I know more then than I do now? Q. Yes. A. 'No, I think I know probably more now than I did then, because I had a great deal of experience since then with it. Q. Now I find during these trips you were on how many days pay covered up to April^ May, June and July, including the Fourth of July trip down there, you handled complaint 3840, or at least that is the entry here, and it does not show what you did in complaint 3841, application 3794, complaint 4150' and applica- tions 4199 and 4200 ; then you had a conference In re L. & S, Railroad Company, same thing on the next trip, then petition 4283 ; then the Oaks residents against the G-as Company, then you had the telephone complaint, then you had from the I7th to the 22d of June conference, l7th to the 22d of June you had general conference at the New York office, what were those ? A. I don't remember now. It was seeing various people about these or about various pending cases. I decided that it would be a wise thing for me to, as long as I came from that part of the State, and people were constantly inquiring where I was, and wanting to know about various matters, that I should be at the New York office with some sort of regularity. The fact was known that I was there, Mr. Sweet, in charge of the office, let people know when they telephoned or inquired about me. On every occasion I was there I found engagements made for me. Q. For these general conferences? A. That is what I think probably ; I don't know whether I wrote that expression " general conferences." I think probably I did. But that is what it would refer to; if you want it, I will tell you the history of these nota- tions, if you want — Q. Well, I don't care about that. We find from April 11th to September' 30ih you were down there ninety-seven days? A. EiNAL Eepoet of Joint Legislative Committee 2137 Well, if tlie counts are right, I don't know. Colonel; where you have for instance — Q. Well, let me finish that statement. You were there ninety- seven out of 183 days ? A. Does that mean I — Q. I don't know. I find an entry here. A. Yes, June ith to 8th, do you count the whole four days ? Q. Yes, it would be fair to assume you must have gone to the office, gone the first day and come back the last day? A. Yes, that would probably — might be. I don't remember now the particular case there. For instance, June 4th I would have an engagement, we will say June 4th and June 5th, I might have my family, my family were living in Westchester, and I have gone from New York to Westchester and stayed there until June 8th, or in July, over Sunday or a holiday. Q. Did you ever go down any time when you didn't charge your fare to the State? A. Oh, my, I never charged my fare to the State except I have definite work there. I frequently go down on Sunday or a holiday perhaps where I paid my own expenses. Q. If you spent ninety-seven days in New York City out of 183 possible days for the entire period, if you went any other time on personal business when you paid your own fare, how many days were you in Albany? A. I have been in Albany I guess more than anybody else, I have been here as much as anybody else; I have been here in Albany I should judge on an average of four days, usually five days, a week. Q. You couldn't have been on an average, you couldn't have possibly, Mr. Emmet, because your record shows you were in New York more than half the days since you have been on this Com- mission, up to September 30th. A. I didn't speak so much of the summer months, of the time actually passed, I should say from recollection. Without reference to the records, but my best recol- lection during the summer months, I was in Albany three days each week when I came up from New York to Albany and I was here, I have been here all the week excepting when I was at New York, which occurred on Thursday and back Friday afternoon. Q. Now here I find, starting in July, immediately after the Fourth, I find seven trips during July and August, Mr. Emmet? A. Yes. 2138 Investigation of Public Seevice Commissions Q. For which you charge fare to the State. You were down in New York July 9th to 13th, inclusive; 161ii to 20th, inclusive; July 2'3d, also August 6th to 12th, inclusive; August 13th to 20th, inclusive; August 21st to 24th, inclusive; August 27th and Sep- tember '2d. ITow I note here this entry which I want to read into the record. It is a marginal entry covering these last days I have read from July 2d to September 2d : "I have no memo- randa now available to show what particular business was trans- acted at the New York office on any of the days here mentioned. But it has been my practice to spend one day each week at this office whether definite 'appointments have been mad© for me there or not. Except for these visits of mine the New York office is but rarely visited by any Commissioner and I have felt it was desir- able and necessary from the standpoint of the proper prosecution of a Commissioner's work, that some Commissioner should regu- larly keep in touch with this office to that extent in order to discuss with the subordinates there in charge their special problems of the matters they were handling ; on all such occasions I have invariably had many callers (not scheduled) in relation to the Commission's work in my particular charge, from people who have ascertained from the New York office that it was my custom to be there on one day of each week and have found it more oonvenieht to see me there than in Albany." Now, that was the reason you were down there those times to see people so that they wouldn't have to come to Albany? A. That is as far as I can find out at present. I have no memoranda which enables me to make it more definite than that. Q. Now, I want to call your attention, Mr. Emmet, to this proposition. Do you know Mr. P. Chauncey Anderson down at 25 Broad? A. Yes, sir. Q. His father was Ellory Anderson? A. Yes, sir. Q. August 3, 1914, the firm of Anderson, Islen & Anderson, writes to the Public Service Commission, Second District, The Capitol, Albany, N. Y., and say they are attorneys for a light com- pany, and they ask the Commission this question; mind you, this is August 3, 1914: "2. Whether any of your Commissioners, or their counsel, have not a day in each week when they may be consulted at your office in New York City." That was a perfectly sane request, wasn't it, of Mr. Anderson ? A. I should say so. Final Repoet of Joint Legislative Committee 2139 Q. He says, " We shall dierefore appreciate a reply at your early convenience." That was just at the time when you were making these trips down there for seeing all these people by pre- arrangement. Now, the secretary of the Public Service Commis- sion, on August 4r • — - now two days you had been down there the last of July, two days before you went down again the 6th of August to stay six days in ISTew York to see these people you spoke about in the margin, the secretary of the Commission wrote on August 4, 1914, to Mr. Anderson as follows: "Your letter of August 3d, making inquiry with respect," etc., " is just received. It is not likely that a member of this Commission will be at the, office for consultation during the month of August." A. Well, you have got to get the secretary to explain that. It is undoubt- edly his best judgment on the subject. Q. Well, if you were doing all this work down in New York, seeing all these people, don't you think it would have been a very good plan to have the secretary of the Commission know about it, that he might tell these people who wanted to know, who wanted to come and see you at the office during the time, these several days and save them this trip to Albany? A. Yes, I do; at any rate, I thought it was generally understood I was there. Q. Was it generally known by this Commission that ihere was times when you were in New Yom City and what you were doing down there? A. Why, I think so. I never made any conceal- ment of it. In fact, I talked it over with by associates, and with the chairman. Q. Were you assigned to the work in New York? A. Do you mean as a settled, permanent arrangement ? Q. Yes, in any way ? A. Oh, w'hy, yes ; it has been talked over and decided. Q. Who assigned you ? A. Who I talked with about that ? Q. Who that assigned you with reference to some particular work? A. Not with reference to going to New York; talking there in the office; I don't know that anybody assigned me. I assigned myself probably. Q. Now is it a peculiar coincidence that most of these trips, is it a peculiar coincidence that most of them covered the week- end, any significance? A. Well, only that it was best fitted in 214:0 Investigation of Public Seetice Commissions with my general convemence, my personal convenience to do it at that time ; it could be equally well done from the standpoint — Q.'Bid you ever tell the secretary on these days you were at the ISFew York office; did he know about it? A. Reallji, I don't remember talking to him about it ; I assumed he knew, of course ; it was a matter of record. Q. Well, in these cases, before you got into the general consulta- tion business, early in July to last through August at the New York office, and following your visits down there to familiarize yourself with the organization and functions of the New York office. We want a record here of your labors in connection with these cases, were complaints 3840 and 3794, etc. ? A. I presume the stenographer's minutes in each case. I never saw these. Q. These were hearings ? A. Must be I presume, I have no recollection. Q. Did you have hearings during July and August? A. I think it is unlikely, as to hearings, I don't believe they were. Q. Well, now, taking up this request of Mr. Anderson for infor- mation from the secretary as to whether a Commissioner would be available down there, would ever be available down there, it seems there was correspondence touching the same matter, and in a letter of August 5th this same firm, this law firm of Anderson, Tslen & Anderson write back to the secretary here saying " We are quite familiar with the Public Service Commissions Law of this State, and have written you asking whether a member of your Commis- sion would be at your office in this city for consultation during the month of August, only for the reason that the matter before us presents certain novel questions which we think could be best dis- cussed in a conference rather than by correspondence." Then he goes into the practical question of the powers of the village, and so forth, but they want to know how they can see some member of the Commission particularly with reference to sections 64 to 77, inclusive, of the law. ISTow, the secretary writes back. August 7th, and states that the only thing they can do is to submit a peti- tion setting forth in detail all the facts and circumstances of the particular case. " Thereupon," he says, " The question of the jurisdiction of the Commission in the premises will be determined, and you will be further advised." This correspondence runs 'along until February 13, 1915. Now, on the very dat-e when the FnrAi. Eepoet of Joiut Legislative Committee 2141 secretary wrote tkis law firm who so courteously asked for an opportunity to see the Commission at the New York office, and were advised by the secretary that there was no likelihood such would be the case, the very day the secretary writes that from Albany, August 7, 1914, you were at the New York office with yeur expense account charged to the State of New York, and this correspondence from the attorneys in New York, February 13, 1914? A. I am exceedingly sorry there is a misunderstanding, because I was there in the New York office and could have been reached by telephone, and it may have been my fault in not having more clearly stated to the secretary. Q. Now, isn't there general communication between the secre- tary and the Commissioner with a roving Commission — A. Well, I am not a Commissioner with a roving Commission. My beat is Albany and New York mainly; I have been pretty nearly often in those two places. Q. Does the secretary know when you go to New York ? A. I think so; I supposed he did. Q. Evidently he did not this time? A. Apparently not. Q. He didn't know of your going up there any time during that month ? A. Oh, it was a matter — Q. It was your custome to be there, and although you had been there within a month after that, one month after Mr. Anderson wrote this letter, you had been there ninety-seven days, when Mr. Anderson wrote this letter; more than half the days? A. Well, that is not correct, because as I understand your method of com- puting the days you take for instance, say August 21st to August 24th, and you count all the days between those. Q. That is right. A. And I may have been at the New York office only one day between those days. Q. But you were away from Albany office those days ? A. Yes, I was away from the Albany office. Q. And during the period of time when you were away from the Albany office you were in the New York office ? A. For some one day at least; possibly other days. Q. Well, wouldn't it be a fair statement, Mr. Emmet, counting your time, wouldn't it be fair to presume that you meant to convey the impression that you were there in the New York office those days ? A. Well, I didn't Intend to convey any impression other 2142 Investigation op Public Seevice Commissions than the actual one, any impression other than what the facts would justify. I have intended to say, and the fact is that in these days at the New York office I spent at least one day — here in this entry of August 13th to 20th. Q. Just a week ? A. It means I was in Albany — New York office some one day of that week on official business which would account that I went up and came back until the 20 th. Q. Which means you were away from here, from Albany ? A. Yes. Q. More than a week and at some time during that week yau were in the New York office ? A. Yes. Q. And you charge your fare from Albany to New York, don't you, on account of that visit to the office ? A. Yes. Q. And $7 worth of meals? A. Whatever it shows there. 'Colonel Hayward. — I want to offer this summary of expense account in evidence. (Summary of expense account received in evidence and marked Exhibit No. 39. Copied in record, see index.) Colonel Hayward. — I also offer in evidence Mr. Anderson's letter of August 3, 1914. (Letter received in evidence and marked Exhibit No. 40. Copied in record, see index.) Colonel Hayward. — Now I will offer the secretary's letters. (Letters received in evidence and marked Exhibits Nos. 41 and 42. Copied in record, see index.) Q. Now, one day w^hen Com.missioner Decker was testifying, he was explaining to us how it was that the Westchester Lighting case, that case started in 1907. and ran eight years before this Commission without any determination being made of it whatever; until December, 1914, and January, 1915, when a partial opinion was filed, at which time a partial opinion was filed and after that the complainants and the relator asked for a rehearing, and explained I think with somewhat extraordinary force, he said he had on the Commission certain non-working members ; he didn't say who they were ; and that that condition prevailed along during a number of years last past. A. Did he say when it ended ? Q. Well, he did not ; his inference was, as I got it, that the con- Final Eepoet of Joint Legislative Committee 2143 dition down to tbe time this opinion went in, anyhow, still con- tinued. A. Did you get the man who was the non-working member ? Q. He wouldn't say who the man was. He said some members went to JSTew York and some of them went to Buffalo, and a good deal of the time they were in ISTew York and a good deal of the time in Buffalo; that they couldn't help him in the Westchester Lighting case. Well, anyhow, do you think that you were doing your fair share of the work, if Mr. Decker's statement is true, that there was so much work up-State to be done, the five Commis- sioners, do you think that you were doing your fair share of the general work of this Commission when you spent ninety-seven days out of 183 in New York City? A. I do absolutely think I have been doing my fair share of the work of the Commission ; I have taken no holiday at all excepting such brief holidays as you can snatch from going up when I was done in JSTew York to South Salem for a day or so, and usually over week-ends; I have taken no holiday at all since I have been on the Commission for some- thing about a year. And Commissioner Decker's statement as. to the periods here when there were non-working members on the Commission, doesn't apply, as I understand it, to the period since April 1, 1914; and this question of short-handedness of the Com- mission has been very often talked over, and in the result that he refers to, when there were only two actual working members on the Commission, ever since I have been on the Commission I have worked steadily and regularly. Colonel Hayward.— How many cases, Mr. Mott, was it Mr. Decker told us he had on his hands at one time ? Mr. Mott. — I think in 1913 he had something like — was it, over a hundred considerably. Q. "Now to show your absence from here, ninety-seven days dur- ing the six months, and you find from the report of the Public Service Commission of this District, Mr. Emmet, that during the entire year from January 1, 1914, to January 1, 1915, the records of the Commission in their report show a total number of hearings in New York City as having been on thirty-three days ; that un- doubtedly includes the telephone hearings which crowded so thick 2144 Investigation of Public Seevice Commissions and fast, doesn't it? A. I presume so. Wliatever whatever it is here, those are undoubtedly included in the record of the number of hearings in New York City. Q. When you came on the Commission — A. It relates of course to formal hearings, at least I assume so. Q. When you came on the Commission did you know about these ancient and honorable cases that were pending here before you came on the premises yourself ? A. I did not. I did in a general way, but as I look back on it now, I knew very little about what I was going to encounter when I came on. Q. Well, did those in this locality, the residents of Westchester county bring up the Westchester Lighting case? A. I believe they did so. Q. Wasn't it such an aggravated thing that the people down there in Westchester county used to talk about it sitting in the grocery store and the post-office? A. ISTot as much as you might imagine. Q. And on the street corners ? A. ISTot as much as you might imagine. Q. What was your particular town in Westchester? A. Well, my town was the town of Lewisborough. My post-office address is South Salem; where we have a store, sir, and very much of a store. Q. Do they have gas and electricity in those towns? A. Not South Salem. Q. That is the reason they are not asking about this lighting case. A. I remember the lighting case, for gas and electricity in this case, but I don't know, it couldn't have been so constant a sub- ject then as you imagine. Q. When you came on the Commission, didn't the people down in Westchester, some of them, come to you and say, " Well now, Mr. Emmet, you were born and raised here, and you have been to the State Senate and national conventions from Westchester county, now this matter is of vital interest to the people of West- chester, can't you help us? " A. They didn't use just that, sub- stantially that took place. Q. I mean because you were from there and it was a case of local interest they would bring it to your attention ? A. Yes, sir. Q. What did you do? A. I brought it up frequently in dis- Final Report of Joint Legislative Committee 2145 cussions in meetings of the Commis&ion, discussions when a de- cision could be expected, and I spoke to Mr. Decker frequently, and he said he had the case and it had long since been completed as far as the taking of testimony went. Q. Six months and something went along for arguing it, and another period in which to file briefs ? A. I believe so. It was an enormous record of complete testimony, as I understand it, and Mr. Decker was actually engaged in working upon it when I came on the Commission ; it was one of the first things I inquired about and kept inquiring about steadily. Q. Did you ever hear about a report of Professor Bemis, filed covering his special work in this particular case? A. I did, although I can't say I remember now whether it had actually been made before I became — Q. It was April 6th, so it was almost at the same time you came on the Commission? A. Yes. Q. Did you know that Commissioner Decker was writing to your constituents down in Westchester county that there wasn't any such report that following July ? A. I did not Q. And was writing those letters, and that Professor Bemis had made the report ? A. No, I didn't know that fact, Mr. Hayward, but in a very recent conversation with Mr. Decker, he has made it so plain to me that his understanding of Professor Bemis' report, so-called, was, that it was not in lany formial sense a report, but an analysis of figures intended for Mr. Decker's information and guidance in reaching a conclusion. Q. When is a report not a report, that would be a natural ques- tion ? A. Well, I wouldn't assume to attempt to answer that in this case ; but I do know, Colonel, as to Mr. Decker's view of Pro- fessor Bemis' report. Q. The report for which the people had paid Professor Bemis $3,000, that Mr. Decker, a member of the Commission didn't see fit to tell counsel, for one of the complainants of one of the villages, that there was any such report in existence? A. I didn't know that fact ; I learn it now for the first time. Q. Didn't Mr. Decker say he didn't think much of Professor Bemis or his old report anyhow ? A. I don't recall his ever say- 68 2146 Investigation of Public Seevioe Commissions ing that. He understood it was for his assistance and guidance to him. Q. Now, did you find a ready response from Commissioner Decker when you began insisting, to inquire about the Westchester case? A. Find what? Q. I mean it wasn't easy to put in motion after you oame on the Commission, about that case? A. I wouldn't characterize Com- missioner Decker — Q. Mobile or immobile ? A. — whatsoever, but he told me not once, but several times, gave me the assurance that I was perfectly personally willing to accept, that he was doing his very best to get the case decided, that he had the matter well in hand, and that he was working on it all his spare time, and he did finally discontinue all other work until he got it disposed of. Q. He had it well in hand exclusively since July, 1910? A. Well, that I don't know. I think it was assigned to him in July. 1910. Q. Did he work very hard at the case, giving his time exclu- sively to this Westchester case ? A. Well, I don't believe so, that was until about perhaps a month before the decision was finally reached; I can't recall just the final stages of the touching process. Q. After the Legislature convened? A. That I don't remem- ber ; I think not, though, I think before. Q. One of the conclusions of the report with the opinion by Commissioner Decker was concurred in by others including your- self ? A. I concurred, yes. Q. So that the Westchester Lighting Company, you recom- mended that the Westchester Lighting Company should reduce the price of their gas from $1.50 to $1.25, and in the thickly-settled community, all they were paying for gas those days was a dollar and a dollar ten ; isn't that so ? A. Yes, sir. Q. When you came on the Commission, did you make any effort to find out what orders of the Commission were out or in force? A. Not being obeyed, do you mean ? Q. Yes. A. I made such an ordinary effort as inquiring of the Secretary and the counsel from time to time how they were getting on with their orders, and generally what generally were in force, Final Eepoet of Joint Legislative Committee 214:'? and in regard to the disobedience of orders, and tlie advice that I received from them, from this source was that there was prac- tically no orders being disobeyed. They said there were one or two cases where you might consider that there was a constructive disobedience of the order, but in those cases there was some ex- plantion, like the letter read from Chairman Stevens or some other reason which explained it. My understanding is that as to open, ovei't, deliberate violations of orders, refusal to follow them, there were no such cases. Q. Did you ever make an investigation to ascertain what the system was of handling complaints, either formal or informal? A. Oh, yes, on formal investigations I have frequently talked with Mr. Mott, and understand about them. (Eecess for five minutes). Chairman Thompson. — I understand that Mr. Collins desires to be sworn in reference to some facts that he stated here that he was ready to prove, and we will ask Commissioner Emmet to stand aside temporarily, and if Mr. Collins is ready to take the stand, we will ask him to come now. Mr. Mott. — Just make a note that the Secretary has filed the analysis of expenses. Chairman Thompson. — Here is a statement of expenses, analyzed expenses of the Commission, provided by the Secretary. They may go in evidence. And in that connection I ask the Sec- retary to give us the expense accounts of the various Commis- sioners for the last two years, the Commissioners^ accounts and also the counsel. Colonel Hayward. — I think we have Mr. Emmet's in connec- tion with that other matter, down to September 30th, Mr. Mott. I think that Mr. Emmet's own statement is in; I put it in the record. 'Chairman Thompson. — Outside of Commissioner Emmet's. We are only doing that, because it puts them on an equal footing. I do not care to show up Commissioner Emmet's that way and not the others. 2148 Investigation of Public Service Commissions ■Chaeles H. Collins, called as a witness and sworn, testified as follows : Direct examination by Colonel Hajward: Q. Mr. Collins, I heard your statement this morning, when Chairman Van Santvoord was on the stand, and I suggest the best way is for you to go ahead and tell your story as we allowed some of the people who came down in New York City, to do, without trying to interrogate you, because I do not know the first thing about what it is all about. A. Of course I would sooner have a little time to get this matter together so that I could cover the points. Q. You can keep your seat. A. All I can talk about now is the general proposition, but that is not the way I would like to go into it. I can give you a general idea of it, though. Chairman Thompson. — I wish you would give us what you have got, Mr. Collins. You say you want to prove this, and I want you to do it, before you change your mind. A. I won't change my mind. I will say this much, that between the city lines of Albany and Schenectady tibere are in the neighborhood of 350 or 400 families. The Schenectady Eailroad has a zone sys- tem. They charge five cents per zone. That is for transients. The people in Schenectady, they also have a commutation book for daily riders, that can be used by the public traveling from Albany to Schenectady, or Schenectady to Albany, which amounts to ap- proximately twenty cents per trip; by using this book they can ride for that rate; but that is only good in what we call the first and fifth zones. The first zone is the Schenectady side, counting from iSchenectady, and the fifth zone is the Albany end. These books are only good in those two end zones. The people living along the line, the workingmen, school teachers, school children^ in fact everybody that lives along this road, the Schenectady road as I call it, thought that we were entitled to the same considera- tion as the people that lived in Albany and Schenectady had ; they thought we were entitled to that. In other words, we wanted a commutation bock that would enable us to ride from any zone at that same rate of fare, namely, twenty cents through trip at that rate. That was our principal complaint, that we were discrimin- Final Ebpobt of Joint Legislative Committee 2149 ated against, that a man that lived in the center of the zone, in the center zone, had to pay fifteen cents to go to work in the morning and they had to pay fifteen cents to come back at night, making thirty cents a day, when the people that live in Albany could go to Schenectady, travel the whole distance for a trifle less than forty cents the round trip. What we ask the Public Service Com- mission for was relief whereby we would have the same advan- tages. What I thought was a formal complaint, they construed as an informal complaint; and after waiting weeks and months, we got a letter saying that the informal complaint was received, and to make a form-al complaint. We made a formal complaint and we produced witnesses, several witnesses — all on record here — proving the discrimination. We proved discrimination; we proved that children had to walk one and two miles to school, be- cause the parents could not afford to pay the exorbitant carfare exacted by the Schenectady Railroad Company. We proved that the workingmen had to pay this exorbitant price, more than the transients had paid. We proved also by facts and figures that the Schenectady Eailroad Company was more able to grant this re- quest than any other railway of its size in the State of New York, with the possible exception of — -I call it its Gold Dust Twin — the United Traction Company. We proved this by producing records, reports made by the Schenectady Eailroad Company themselves, taking their own fignires and assuming those figures to be correct, they were well able, they could carry the people for the great volume of business they do, for at least a cent a mile, and make money. But they didn't do anything. All they offered was, their attorney came there at the second hearing and said they would give us a round-trip ticket from a point in the middle zone — not in the middle zone; they were very careful about zones, only when we ask to pay for the distance we ride, they are very careful about using the word zones ; but when it came to suit their own convenience, they rejected the zone, cut out the middle zone, and said we will make it from a point in the middle zone; that means this middle zone here is three and a half miles long, that means if a man lives on one end of the zone, he has to walk out to this point, he has got to walk a mile and a half to save a nickel. That is what they handed to us. I asked llanager Hamilton if 2150 Investigation of Public Service Commissions he would walk a mile to save a nickel and he said, no. But they wanted us to do that. We claim when this thing was offered to us at the second hearing by Attorney Carr of the United Traction Company, or the Schenectady Railroad Company, we rejected it, said we didn't want anything of that kind ; that it was an evasion ; we rejected their proposition; said we didn't want it, it wasn't what we wanted, we wouldn't accept it; that it was an evasion and "wasn't the point "that we were trying to get at at all. In the face of that, the Commission, of which Mr. Emmet was the one that wrote the opinion, I believe, they ordered the Schenectady Rail- road Company to do just exactly what the Schenectady Railroad ■Company said they would do, and no more. I charge the Com- mission was not rendering their decision according to the evi- dence produced at these hearings. I asked Conimissioner Emmet in the presence of another gentleman one morning, I says " Is this Public Service Commission supposed to render their decision ac- cording to the evidence produced at the hearing, or not ? " And he says " They are." And I says " If that is the case, we should have gotten everything we asked for." That is what I charge. I charge this Public Service Commission with rendering decisions contrary to the evidence that is produced and proven, and that they are not favorable to the public at all. The E., J. & G. Rail- road Company a short time ago made application to have the rates raised. It was granted, everything they asked for, but the public •can come and ask for 'a little small concession and they don't get it Tinless the railroad company says they are willing to give it. That is the gist of the proposition. We have asked the Public Service Commission to reconsider this proposition. We got a letter saying they would, that they would give in certain points, that is, that they would have tickets sold at more than one place so that we wouldn't have to walk so far. That has not been done. That has not been done at all. The order, the original order that they served on the company has not been followed out in regard to flashlights so that they could flash the cars. Colonel Hayward. — What was that order ? The Witness. — That was the, when they made their rulings, their findings on this compaint they ordered that — there was some complaint made about cars running by the passengers and it Final Report of Joint Legislative Committee 2151 was brought out that the signs were not large enough and they were not well enough lighted and the conductors and motormen and passengers could not see the signs. They had to guess at it. Sti that is one of the things that we want. That is the press agent of the Public Service Commission made it out as a victory but that is not what we were after. We were after a commutation ticket and we haven't got it yet. By Chairman Thompson (to witness) : Q. Have they got a press agent ? A. The Public Service Com- mission ? Q. Yes. A. I believe they have. Q. What do you know about their press agent, just from what you have seen in the papers ? A. There was an article written by somebody attacking me because I saw fit to attack the Public Serv- ice Commission in the newspapers; they attacked me personally, wrote an article and sent it to the Times Union, mentioned my name thirteen times in there, and they had all the data and every- thing right at their finger tips of what had happened at this hear- ing. They accused me of certain things. And I went down to the Times Union and answered that communication and they didn't publish it. I merely answered the communication defend- ing myself. Q. Did you ask the Times Union who sent them the piece? A. ISTo, sir, but I did tell the Times Union, when they didn't pub- lish it, I wrote them a letter and says, asked them to send back my copy or give me a copy that they had set up. They had it set up and wouldn't publish it, my answer. Then I accused them, I says, it looks to me as if this article was written either by a press agent of the Public Service Commission or by some newspaper- man, and they never contradicted. Q. Perhaps I have got you confused as to identity, but yester- day afternoon I asked four questions to Commissioner Van Sant- voord, which were sent me by someone and I supposed you were the gentleman who asked me indirectly to ask those questions ? A. About the press agent? Q. Xo, about Commissioner Van Santvoord's connection with the Delaware & Hudson. I asked him if he was connected and he said he was not. A. I don't know anything about that. 2152 Investigation oi" Public Service Commissions Q. Tkat isn't what you are iere to prove? I understood you were present this morning when Commissioner Van Santvoord said those things were not true and you broke in and said they were true and you were ready to prove it. A. Commissioner Van Santvoord said Dr. Lunn made certain statements at the Junie Crow meeting at the Hotel Ten Eyck reflecting on the Public Service Commission. I told him Dr. Lunn did not make the statements, I made them. By Colonel Hayward (to witness) : Q. What Chairman Van Santvoord said, Mr. Collins, was that someone. Dr. Lunn I think he said, at this so-called Junie Crow meeting stated that the Public Service Commissioners of this dis- trict were controlled by or were in league with, or something like that, the D. & H. What did he say ? A. I don't think he said that. I didn't understand him to say that, I understood him to say that they said they were controlled by the railroads or some- thing like that. Q. Maybe it was something like that. And you spoke up and said it was not Dr. Lunn but it was you yourself who had made that statement that they were controlled by the railroads ? A. ISTo, I didn't say that they were controlled by the railroads. I said that they rendered their decisions according to what the railroad was willing to give. That is what I said in the Hotel Ten Eyck. Q. Well, you said, whatever it was you said, you had the docu- ments to prove it ? A. Yes. Well, I have got them here. Q. That is this case you have been talking about? A. This case here, yes, sir. Q. Where they decided against you on those facts ? A. Yes, sir. Q. And that is what you charged the Commission with? A, We charged the Commission with not rendering the decision ac- cording to the evidence produced, according to the proven facts. Q. That is what every appellant charges a Court with when he appeals, isn't it ? A. That is what I am doing, appealing. Chairman Thompson. — This is the only appeal you get a chance to make. You cannot have a certiorari, can you, under this law? The Witness. — This is the last chance. Final Eepoet of Joint Legislative Committee 2153 By Colonel Hayward (to witness) : Q. You said the order about the lighting. Here is an order I find on the 5th day of January, 1915? A. Yes, sir. Q. Where they say, "At each stopping place between Albany and Schenectady the respondent shall cause to be located on the south side of the tracks and at such height that passengers seated in a car may conveniently see it, a sign," etc., with black back- ground, with lights. That is the order you refer to ? A. Yes, sir. Q. You say that has not been complied with? A. The sign part is, so far as being the distance from the ground, and with the letters on a black background, but the lamps, the distribution of the lamps, the way they want them there, and they are supposed to be located 200 feet each side with that flash to stop the oars. There has no body seen anything of that ; at least I haven't. Q. " One on each side of the tracks 200 feet in each direction from the stopping place." And that these lights shall be enclosed and equipped with a proper and safe means of operation for the purpose of enabling persons desiring to stop the cars to light them as a signal. That was the idea ? A. Yes. Q. "The two lights distant 200' feet in either direction from the stopping place shall be normally dark. The others shall be burned during all hours of darkness when cars are in movement." l^ow, let us see if this other thing has anything to do with it. Section 3 of the order provides that the last-mentioned provision of this order aifecting the lights at stops shall not take effect in its entirety until after the thirty-day trial of such arrangement of lights at one of the said stopping places, it shall be demonstrated that the lighting system above prescribed meets the requirement of the case. If as a result of such trial it appears that modifica- tions of the above requirement are desirable this order will be modified accordingly. jSTow, do you know whether they made the trial within thirty days from January 15, 1915? A. I don't think the order means that. It means thirty days from the time — they gave them sixty days to do this to begin with, and then they, the way I understand it, they had thirty days more yet to try out this sign system. Q. No. I should say they gave them sixty days for the in- auguration of the practice of selling round-trip tickets at twenty- 2154 Investigation of Public Seevice Commissions five cents, and that on this light order that they had thirty days to try it on one of these to see whether it worked satisfactorily. I should say that was the effect of this order. A. Well, I haven't seen any lights of that nature. All I have seen are the same lights over the sign. Q. You don't know whether as a matter of fact then — this was the 5th of January ; the thirty days during which they should make the trial would have been up the 5th day of February. Colonel Hayward. — Mr. Mott, was there subsequent records of this lighting business ? Mr. Mott. — Commissioner Emmet just said 4;o me that he had them. ■Commissioner Emmet. — That is in my room. I have the letter stating that the order has been complied with in full. I have sent over for the letter. By Colonel Hayward (to witness) : Q. Mr. Collins, the Secretary of the Commission, Mr. Mott, •hands me a copy of a letter that, a carbon copy, purporting to have gone to you on the 28tli of January, 1915, in case ISTo. 4545 and 4587, the substance of which is that your letter was brought to the attention of the Commission, that the Commission was un- willing to grant a rehearing because it had been very carefully considered at the time the order was made ; but that the Commis- sion would be very glad indeed to take up for further considera- tion with Mr. Barnes the point that you make with reference to the selection of Stop ISTo. 19 as the place at which return tickets shall be sold at the reduced rate fixed by the order. If it should seem desirable to designate some other stop or stops in the center zone in place of or in addition to Stop No. 19 as the place or places at which return tickets shall be sold the Commission will probably modify its recent order in that respect, or suggest to the company that without an order it should institute the sale of re- turn tickets at other stops in the centre zone than Stop ISTo. 19. Did you get that letter from them? A. Yes, sir. Q. Did that suggestion, what they wanted to do, did that — A. Well, we didn't know what they meant. If they meant that they could sell tickets at more than one place, that is on each end, — Final Eepokt of Joint Legislative Committee 2155 Q. I don't take it they do. In other words, that would cut out Stop 19 and substitute some other point for it. I suppose if thej did that the people of Stop 19 would be in the same position you are in now? A. There are no people at 19, only two or three houses there. The point I made in my letter was that 19 was not the center of the zone, that that was not the center, and the place where they are selling the tickets is — Q. If they did change to some other point do you think that would remedy the — ■ A. No, sir, they would have to walk just the same. Q. I don't know whether their suggestion would help you much or not. Mr. Mott, — I might say that that matter is now waiting for Mr. Barnes to make some sort of a report to the Commission as soon as he can get to it. By Colonel Hayward (to witness) : Q. Did you ever talk to Barnes about it? A. I have talked to Mr. Barnes a couple of times, yes. Q. "What attitude does he take on it ? A. Why, I cannot hardly anwer it. I don't know what to say. It appears to me as if his attitude is, " I will see Mr. Hamilton and if Mr. Hamilton is willing I will talk it over with him and if we can fix it up between us I guess it will be all right." That is his attitude as near as I can judge. In other words I think Mr. Barnes is more of a Public Service Commissioner than any of the rest of them are. It seems everything is left to him. By Chairman Thompson (to witness) : Q. Who is Mr. Hamilton ? A. He is the manager of the Sche- nectady Railway Company. Q. Do you think Barnes is a good Public Service Commis- sioner, if he is a Public Service Commissioner ? A. ISTo, sir, not for the public. Chairman Thompson. — Any more questions? Colonel Hayward. — I haven't any more. Chairman Thompson. — If there is anything occurs to you to- morrow, Mr. Collins, that you want to come back and tell us, we will be glad to hear from you. 2156 Investigation of Public Service Commissions 'Colonel Hayward. — You said some of tlie matters, perhaps you didn't have in hand to-day and you might have them better later,, and if you want to come back — The Witness. — I might file a statement if that is necessary in the case. By Chairman Thompson: Q. Anything you think will be of value to the Committee and the State. We are trying to do the best we can for the public welfare. We are not a committee of appeal ; at the same time those things might aid us, what you have to say. And the only thing that impresses me about it now is that when the Public Service Commission makes an order on a complaint that if the order is against the railroad company they too have a right to appeal by means of certiorari, but when the decision is against the com- plainant he hasn't any appeal. A. Well this article that emanated from the Public Service Commission said that we had a remedy ; said we could go to the Appellate Court, is it? Q. Yes. A. But everybody don't want to do that. Everybody hasn't got money enough to do those things on their own — Q. What is your experience in anaking a complaint to them in reference to the fact as to whether you can go there alone and use the Public Service engineers and employees and organization to help you to work up the evidence for your complaint in your favor, or do you have to employ your own engineers and lawyers and. things to go before the Public Service Commission ? A. Well, I will say that I got information from the Public Service Commis- sion in regard to the cost of their cars there and the cost per mile of operation and the cost for labor and so on and so forth. I got that information from the Public Service Commission, through the Public 'Service Commission, from Mr. Barnes. Some other questions they did not answer. One question was the cost of con- struction of a road of that kind where they did not have any ex- cavating or blasting to do, what per mile. They couldn't, that was too big a problem for them to answer., Q. That information you would have to get at your own ex- pense? A. Yes, sir. Q. And in presenting your case would you have to get some- body to do it for you ? A. Well, so far I have presented my own case. Final Repoet of Joint Legislative Committee 2157 Q. You haven't got very far yet ? A. I bare got as far as I can go with it. Q. What I meant, you didn't get very much result, that you contemplated when you started ? A. ISTo, sir. Q. Did you get any sympathy from the Public Service Com- mission at any time during the course of your experience with them ? A. "Why, when the hearing was on we were treated with all kinds of consideration. They let us talk, gave us all the lee- way we wanted, didn't stop us, and the people that were there, that were interested in this proposition, they say " I guess we are all right." They let us go and prove our case. They were all right that way. But when it come to the final part of it — Q. Then they trimoned you ? A. Then we were trimmed, yes. Mr. llott. — jMr. Chairman, I would just like to ask Mr. Col- lins about the information — 'Chairman Thompson. — -Would you like to be asked questions from the Secretary of the Public Service Commission ? The Witness. — Yes. Mr. Mott. — I don't like to go into the merits of it, but — Chairman Thompson. — Go ahead. By Mr. Mott (to witness) : Q. Mr. Collins, you came in there several times and requested inform'ation ? A. Yes, sir. Q. And different facts about these railroads ? A. Yes, sir. Q. And wasn't every possible facility afforded you to get those that we could reasonably be expected to give? A. Yes, sir, as far as you are concerned. Q. I mean the office? A. I say there was one question that wasn't answered, the cost of construction. Q. Except that one matter? A. Well, that is one. That is the only one I can think of at the present time. Colonel Hayward. — That is the real one you wanted to know about ? .The Witness. — That is one of the vital points, yes, sir. 2158 Investigation of Public Seevice Commissions By Senator Mills (to witness) : Q. Did the Public Service Commission have that information ? A. They are supposed to. That is what those experts are for. Q. Well now, that is not what I asked you exactly. I don't want to know what they are for. I ask you if the Public Service Commission have the inf onmation for which you asked '( A. Ac- cording to their answer, I don't think they had it. Q. So that they gave you everything they had? A. I don't know. Q. They gave you everything you asked for with that one ex- ception ^ A. That is one point. Q. And so far as that is concerned they told you they didn't have the information ? A. No, they did not. They said that was — that circumstances altered cases, or words to that effect ; that -conditions were so that they couldn't give any kind of an idea. Q. What did you want them to estimate? A. I wanted them to estimate the cost of construction per mile. I wanted them to find out what the tangible assets, what the physical value of the road was. Q. You asked them to make a physical valuation of a railroad ? A. 'No. I asked them certain questions as to what the cars cost and as to what the cost of construction, what it cost for power. Q. Well now, what railroad was this? A. This was the Schenectady Railway. Q. How big a railroad is it, what is its mileage? A. Fifty- eight miles. Q. And they gave you the value of the cars, didn't they? A. Yes, sir. Q. And then you wanted them to estimate on the value of the railroad, that is to say, the original cost of construction and the value of the franchises and so forth and so on ? A. I wanted them to give me the cost of construction per mile. Q. In order to get an idea of what the value of the railroad was, of its physical property? A. Yes, sir. Q. And that they didn't give you ? A. No, sir. By Assemblyman Kincaid (to witness) : Q. What was this rate of fare you were objecting to, how much was it ? A. The through fare for transients is — Final Repoet of Joint Legislative Committee 2159 Q. How many miles is it out there? A. Out to Schenectady? Q. Out to where you live ? A. To where I live, there is a mile post there, four miles from the city line. Q. What is the fare ? A. Fifteen cents, single fare. By Colonel Havward (to witness) : Q. Is the country pretty well built up out to it? A. Yes, sir; there are 250 houses in these three zones that wanted this commu- tation book. Q. How many houses in the four miles you are talking about ? A. I should say 175. And no farms, mostly all people that work in these two cities. ■Senator Mills. — How far can you travel for fifteen cents, did you say ? The Witness. — If you go 'to the extreme end of the center zone, you can travel from the Albany side about eight miles, I should judge. That is counting from the terminal, going through the city. That is if you go to the extreme end of the other zone on the other side. By Colonel Hayward (to witness) : Q. If you go into town how much do you have to pay, fifteen cents ? A. Fifteen cents. Q. How long do you travel going into town from where you live? A. How long? Q. Yes, how far? A. The four-mile post is right in front of my residence. That is the city line. By Chairman Thompson (to witness) : Q. That is how long in miles, but he wanted to know how long in time ? A. In time, takes about twenty-five minutes. Q. Now, for twenty cents you can go from any part of Albany to any part of Schenectady ? A. Yes, sir. And if you are going in the Schenectady direction you can get a transfer besides, but if you come from Schenectady 'to Albany you cannot get any transfer. Another thing that was brought up at the hearing before the Pub- lic Service Commission that there has not action been taken on that I know anything about. 2160 Investigation of Public Seevice Commissions Q. How far can you ride for twenty cents? You can get on anywitere in Albany and go anywkere in Sekenectady for twenty cents ? A. Yes, sir ; twenty cents. Q. How far can you ride that way? A. Well, I should judge if you want to take advantage of it and go as far as you could — Q. That is what you did in the other case ? A. That you could probably go twenty miles. Q. Twenty miles for twenty cents and eight miles for fifteen ? A. Yes, sir. Chairman Thompson. — That is all I have. Do you want to ask any more questions, Mr. Secretary, or anybody ? I think that is all Mr. Collins. If there is anything more to-morrow you want to get in definite shape or any more details you think we would be interested in we will be very glad to hear you. The Witness. — All right, thank you. Chairman Thompson. — We are very much obliged to you for being here to-day. William Temple Emmet, recalled as a witness, testified as follows : Direct examination by Mr. Whedon: Q. Mr. Emmet, do you recall this case of the application of the Cattaraugus County Lighting Company and the Clean Electric Light & Power Company for permission to purchase property? A. I recall it in a general w^ay ; yes, sir. Q. A petition was -presented to the Commission on March 23, 1914? A. I don't know the date. Q. That is the date that is stamped on the back of this petition ? A. I have no doubt that is correct. Q. And in that petition the Cattaraugus County Lighting Com- pany asked the approval of the Public Service Commission to the issuance among other things of $100,000 of its 1 per cent non- cumulative preferred stock and $150,000 of its common stock for the acquisition of property, to wit, the property, franchises, works and system of the Clean Light & Power Company. ITow that matter was assigned to you ? A. No. Final Eepoet of Joint Legislative Committee 2161 Q. Was it not, Mr. Emmet? A. No, I think not. It was assigned to Mr. Decker, if I remember right. Q. It -was assigned to Mr. Decker for consideration ? A. Yes. In fact, as I remember, Mr. Wkedon, it was a pending case when I came on the Commission and Mr. Decker had it in charge. That is my recollection of it. Q. Did you take the matter up later ? A. JSFo, I never took it out of Mr. Decker's hands, or anything of that sort. It was never assigned to me, but one day Mr. Decker asked me to hold a hearing for him in jSTew York for the purpose of taking some supple- mentary testimony they wished to offer. Q. The hearings in this matter were held in Xew York? A. No. I think they were all held up here excepting the one day when Mr. Decker asked me to sit in New York for him, and that I did. Q. Then Mr. Decker heard most of the testimony in the case? A. That is my recollection. I may have sat jointly with him, several of us may. Q. It seems that on April 15, 1914, from the testimony here, you sat jointly with Commissioner Decker ? A. I dare say I recall sitting jointly with Mr. Decker I think on one other occa- sion, but that was — Q. Was there ever a hearing in this case at which you were not present ? A. Oh, I think so. In fact those are the only two hear- ings that I have been present at. My recollection is that the hear- ing in Albany where I sat jointly with Mr. Decker, it was some- what a matter of chance that I sat there. Mr. Decker happened to meet me at the time he was commencing the hearing and asked me to come in and sit with him. Then on another occasion I sat for him in New York City, as I state. Q. The first hearing apparently was held on April 15, 1914, and at that time you sat with Commissioner Decker? A. Yes. I didn't know that was the first hearing, but I sat with him once. Q. The next hearing apparently was on May 1, 1914, and at that time you sat alone ? A. Yes, in New York. Q. Pardon me. Then the third hearing was on August 4, 1914, and at that time the whole Commission, including yourself, were 2162 Investigation of Public Seevice Commissions present ? A. I remember. That was an argument I think, wasn't it ; that was a summing up ? Q. No, there was testimony. There were questions and answers. A. I was there if the record shows it. Q. So you were present apparently at all of the hearings ? A. If those were the only three, I was present. I thought there were more. Q. Apparently there were no others. These are the only hear- ings which are contained in this file of the Commission? A. I don't dispute the fact that I was present at all if the record shows it. I didn't think I was. I thought there had been hearings held at which I was not present. Q. Now, the application was for leave to issue $250,000 of stock for the purchase of the property of the Olean Electric Light & Power Company. How much did your iinal order permit them to issue? A. My recollection is that we permitted them to issue $200,000. Q. That was not an unanimous decision, was it, Mr. Emmet? A. No. Q. Who voted for the order ? A. For the order. Judge Irvine, myself, and Mr. Hodson; and against the order, Mr. Van Sant- voord and Mr. Decker. Q. Did you write an opinion ? A. No. Q. In support of the order? A. I did not write an opinion which I used. I wrote as a matter of fact, now that you ask it, a memorandum which I intended to use but I did not use it. No opinion was filed. Q. And Commissioner Decker wrote a dissenting opinion, did he not? A. Yes. Q. Now, I have here a file of the Public Service Commission containing a report by H. C. 'Hopson, Chief of the Division of Capitalization of the Commission, giving a balance sheet of the Olean Electric Light & Power Company from the company's books as of December 31, 1913. Do you know whether or not that bal- ance sheet was before the Commission during the course of these hearings ? A. I think it was. Q. That balance sheet shows the assets side $363,263.28, and liabilities of the same amount. Now on the liability side there is Final Report of Joint Legislative Committee 2163 capital stock, $85,000 ; funded debt, $250,000, and about $30,000 of other indebtedness. So that apparently the $363,000 repre- sented all of the assets of the company, and $85,000 represented the value of this company's capital stock? A. That is according to Mr. Hopson's computation and statement? Q. Yes. jSTow I find in the files of the Commission supple- mental analysis of application under title of Case 4200, which is this application of the Cattaraugus company. This is prepared by Mr. H. C. Hopson, Chief of the Division of Capitalization, and he says: "In the above-entitled matter, in which a hearing has been set for Wednesday next as has been pointed out to you, the total assets of the Glean Light & Power Company shown by its balance sheet December 31, 1913, were $363,263.28; less other intangible capital to be amortized, $30,000 ; balance, $333.- 263.28." And below that, "less liabilities to be 'assumed: Funded debt, $250,000; current liabilities, $18,809.20; deferred liabilities, $3,087.50; total, $271,896.70. ISTet capitalizable equity, $61, 366. 58." So that this statement shows that over and above the amount of their indebtedness as shown in the statement of December 31, 1913, there was a net capitalizable equity, accord- ing to Mr. Hopson, of some $61,366.58. ISTow Mr. Hopson goes on to say, " For this equity the Cattaraugus County Lighting Com- pany 'propose to pay $250,000. The following statement appear- ing in the supplemental petition of the Clean Light & Power Com- pany in response to a letter raising these questions." Then he quotes from the petition of the Clean Light & Power Company. And then he goes on to say — Chairman Thompson. — Mr. Whedon, we will have to suspend I guess until to-morrow morning. I am sorry that we cannot get through with you to-day, Mr. Commissioner, but there are a great many people over here in the Committee Room that have come from a long distance and I will have to hear them to-night. We will suspend now until to-morrow morning at 10 o'clock. The Committee then adjourned to meet in the Assembly Parlor, Capitol, Albany, New York, Friday, March 12, 1915, 10 a. m. 2164 Investigation of Public Seevice Commissions MARCH 12, 1915 Committee met at the Assembly Parlor, in the city of Albany, New York, on Friday, March 12, 1915, at 10 :30 a. m., pursuaiit to adjournment taken from Thursday, March 11, 1915. Present : A quorum of the Committee being present. Appearance : Colonel' Hayward, for the Committee. William Temple Emmet, recalled as a witness, testified as follows : Mr. Whedon. — Mr. Chairman, when we adjourned last night, I was reading from the Supplemental Analysis of application pre- pared by Mr. Hopson, and I would like to finish it. " The net corporate income of the Clean Electric Light & Power Company during the year 1913 was $6,T51.76, which included depreciation to the amount of only $2',100. Assuming a composite life of forty years, with the resulting depreciation of 2% per cent, applicable to the entire plant, gives an annual depreciation charge of $6,832.10, from which there should be deducted the amount of depreciation actually charged during the year 1913, of $2,100, leaving as a necessary approximate increase in depreciation $4,Y32.10'. If it is assumed that the year 1914 is to be no better than the year 1913, to ascertain the earning power, which is prob- ably too conservative, the actual net earning capacity of the Glean plant for which the Cattaraugus County Lighting Company desires to pay $250,000 is as follows: Net corporate income, December 31, 1913, allowing only $2,100 for depreciation '$6,'751 76 Deducting increased depreciation to bring it to $6,832.10 4,732 10 $2,019 66 " If this amount were capitalized at only 1 per cent., it would not give a value of the figure applied for by the company, $250,000, but only $202,000, whereas 8 per cent, or 10 per cent, is the more Final Kepoet of Joint Legislative Committee 2165 usual figure in attempting to compute tlie value of a public utility plant in a community of that size on tHe earnings basis. These results are so far from the apparent desire of the petitioner, that it may be I have entirely misapprehended the purport of the peti- tion." Q. In other words, Mr. Hopson says for the year 1913 by de- ducting all that he considers should be deducted for depreciation, their income was $2,019.66, which is less than 1 per cent, of the proposed capitalization of the company, whereas 8 to 10 per cent, is the figure most usually adopted. Did you read this supple- mental analysis, Mr. Commissioner ? A. Yes, sir. Q. Now I want to read from page 6 of Mr. Hopson's report in the Cattaraugus Coimty Lighting Company, in this Case ISTo. 4200, dated July 8, 1914: " Olean Electeic Light & Powee Company December 31, 1913 Assets Side: Fixed capital $272,087 94 Floating capital 35,963 78 Miscellaneous investments 1,700 00 Miscellaneous temporary debits 45,532 43 Corporate deficit 4,519 29 $359,803 44 Liabilities Side: Stocks $85,000 00 Bonds 250,000 00 $335,000 00 Floating liabilities 19,790 70 Eeserves 5,006 74 $359,803 44" In other words, Mr. Hopson says on December 31, 1913, the company had a deficit of $4,519.29 ; then he goes on to say : " The income account for the period from June 1 to December 31, 1914, has been estimated." Then he says on the bottom of page 7: " The above statement shows that while the gross income increased 2166 Investigation of Public Sbevice Commissions approximately $4,057, the net inoome shows a decrease of $665 due to the increase of $4,700' in the company's fixed charges. Seven per cent, of the increase in the operating revenues is derived from pumping contract. While the company may contend that as the gross income shows a large increase, its earning capacity should be judged on the basis of this increase, still the fact must not be over- looked that the deductions from income are fixed and will not be decreased until after which they will be $2,000 a year less because the company will have fully compensated the Traction Company for the cancellation of its contract." Then he goes on to say, on page 8 : " The company earned 4.78 per cent, during the year 1913 on the outstanding capital stock and will earn as shown by this report approximately . 78 of 1 per cent. As annual dividends of 6 per cent, were paid during 1913, and as there is no accumu- lated surplus, it is evident that this rate cannot be maintained on the present Showing. This is an unfavorable showing of earnings, considering the risks in^-olved and the general conditions under which the business is conducted in Olean. Taking the corrected balance sheet as it stands the book value of the $85,000 outstand- ing stock is $80,480.71 or 94.68 per cent. In the event that the company is only going to sell its property, rights and franchises, there should be deducted the amount $30,000 set up as Other In- tangible Capital, the book value of the stock then being $50,480.71 or 59.39 per cent. In the event that the plan, as it is understood, also involves the retirement of outstanding bonds, the Unamortized Debt, Discount and Expense of $43,513.83 should be deducted as this account which merely represents a suspended item, a por- tion of which is charged off each year as a part of the interest burden and therefore may only be considered an asset on the theory that the bonds are to remain outstanding until maturity. Deduct- ing this amount from the $50,480.71, representing the value of the stock equity less the Intangible, leaves only $6,966.88 or 8.2 per cent, of the par of the $85,000 outstanding. The existing ratio of stock and bonds should not be forgotten — Capital Stock, $85,000 ; 5 per cent. Bonds, $250,000." In other words, he says in his opinion the actual value of these assets which were to be turned over by the Cattaraugus company for the $250,000' stock issue is $6,966.88. Did you read this report, Mr. Commissioner? A. I read it at the time; yes, sir. The facts and figures have largely gone out of my mind. Final Eepoet of Joint Legislative Committee 2167 Q. That is a report taken from the files, prepared by Mr. Hop- son ? A. Yes, I read the papers in the case. It was cue of the cases where we — a majority of the Commission differed very radically on the theory of value. Q. Wasn't it, wasn't the whole burden of the petitioner's argu- ment in this case, und the petitioner's testimony, that they were entitled to the increased capitalization because of the prospective earning power would be much greater than their present earning power? A. That was certainly an important part of their case. Q. "Wasn't it the most important part of their argument? A. !N"o, I wouldn't say now, because I don't remember; but I know it was dwelt on and was an important part of their argument. Q. Mr. Hopson in his statement describes that their contention is they were going to earn more money than 4.78 per cent. during the year 1913. On page 8 he says: "As annual dividends of 6 per cent, were paid during 1913 -and as there is no accumu- lative surplus from which to pay the excess of such dividends over the current earnings, it is evident that this rate cannot be main- tained on the present showing." In other words, Mr. Hopson's contention was that they couldn't even maintain the rate of divi- dends which they had been paying with the basis that they were going to earn other dividends. By Senator Mills (to witness) : Q. On what did they base that ? Mr. Whedon. — Who base ? Senator Mills. — The contention that the earning capacity would be increased. Mr. Whedon. — They needed more working capital. The Witness. — Oh, yes, .as I remember the case the organiza- tion that was planned for the purpose of putting in a considerable amount of working capital for the construction of a transmission line a good m.any miles long, I have forgotten just now how long, giving these two companies the benefit of a large territory which had been formerly opened up ; there was a considerable amount of testimony presented, as I remember it, from people in the neigh- borhood, 'and from experts who testified as to the effect of this new 2168 Investigation of Public Seevioe Commissions work upon the profits, based upon conditions -which, existed in the neighborhood. By Mr. Whedon: Q. That was based on the prospective earnings under the im- proved plan, was it not ? A. Well, the testimony you have now re- ferred to, there was a considerable amount of testimony, of that character of testimony, which, as I recall it, took into 'account the local conditions, the new field that was to be opened up, the proba- bilities of growth of business in that field, and the probabte profit. Q. ISTow, Mr. Commissioner, I find in the files here a paper entitled " Memorandum for Mr. Hopson," and it is signed by Mr. Hasbrouck. What position did Mr. Hasbrouck hold with the Commission? A. He is our chief accountant in the — head of the Bureau of Accounting. Q. Statistics ? A. Statistics. Q. I want to read certain extracts from this report of July 3, 1914 — this was while this matter was pending before the Com- mission, wasn't it? A. I don't remember the date where the hearings started. Q. Well it began on April, 1911, and the last hearing was August 4, 1914. A. Well, I will take your word for it. Mr. Whedon. — This was a memorandum prepared during the time this case was before the Commission : " Memorandum for Mr. Hopson. Referring to your recent question as to the theoretical aspects of capitalization based on earning power as opposed to capitalization based on cost, let me express my personal opinion as follows: There are both practical and theoretical objections to bas- ing capitalization solely or largely on earning power. The prac- tical objections are in essence that the tendency of such a theory is always toward a high capitalization, and therefore away from the principles of conservative business.. It usually takes a forced re- organization to bring about a reduction of capital securities upon which a plant is unable to earn a return; but it takes very little evidence of prospective high earnings to start a movement to in- crease capital securities once earning power is recognized as a generally correct basis for capitalization." On the second page of his memorandum, he says: "As long as this confusion of view- Final Eepoet op Joint Legislative Committee 2169 points exists, however, and the tendency remains as strong ,as it is to-day to make eveiy public service enterprise carry the utmost possible load of capital obligations, any theory of capitalization which encourages a tendency to over-statement of assets, the reverse of the whole practice of the conservative business world, is bad. But further, I believe that as a purely logical proposition or as a question of abstract economic theory there is absolutely no justification for any court or commission to hold that the amount of net earnings which any property may have been able to main- tain in the past is a fair measure of the amount upon which it is entitled to demand that the public shall pay a return in the future. The proposition thus stated is almost self-evident upon the funda- mental assumption that regailation by governmental bodies of pub- lic utilities has for one of its principal functions the securing of a fair rate to the consumer based upon a fair return to the investor." On the third page of his memorandum, he says : " If it is held that the principle of ' charging what the traffic will bear ' should govern in matters of rate regulation, then, indeed, it logi- cally follows that capitalization should be based on earnings, which in turn depend on rates. The rates will naturally adjust them- selves on such a supposition to the ' value of the service,' that is the maximum amount which any consumer is willing to pay rather than forego the service. But to adopt such a principle is to give up the whole position for governmental regulation of public utili- ties. Such a theory would in its practical applications be an aid to ' stock-watering ' and would certainly hasten, the inevitable day of government ownership of public utilities for which we still need a good deal of time to prepare." Then the last paragraph of his memorandum is as follows: " The whole theoretical objection to basing capitalization on earnings may be summed up by saying that it is founded on the practically discarded economic theory that a public service corporation should base its rates on ' what the traffic will bear.' Even if one believes that this has been a much abused phrase, and that, rightly interpreted, it indicates the best possible method in the long run of. adjusting rates (I am by no means one of those who so believe), it must still be plain that the public mind will never accept such a principle and that the attempt of any regulative commission to act upon it will mean the com- mission's early demise. H. C. Hasbrouck." 2170 Investigation of Pitblio Seevice Commissions Q. Did you read tHat report? A. I cannot recall the exact language; I know Mr. Hasbrouck expressed those views. I prob- ably read the report, and those views were considered by Judge Irvine and myself, and Mr. Hasbrouck, and very considerably agreed to, if you cut out certain portions of them; but we felt in certain particulars Mr. Hasbrouck was taking a restricted view of the case. Q. Do you agree, for instance, that capitalization ought not to be based on earning power ? A. Well, no, not — I don't accept that proposition unreservedly. Q. You couldn't have accepted it and rendered a decision in this language? A. No, I don't accept the proposition. I tell you, Mr. Whedon, I think I mentioned yesterday that when this case was decided, and we found that we were divided on the ques- tion, three being in favor of a certain figure, not the figure asked for, but another figure which we thought was fair under the cir- cumstances, and two being opposed, and then when it transpired that Mr. Decker had filed a memorandum expressing his views, I prepared, with the intention of filing a memorandum expressing my views, on the general fundamental question involved. I wrote it out, and on reading it over, I thought it was a little bit too gen- eral, and too discursive, perhaps too argumentative, and too aggres- sive, so I didn't file it. I have gone and looked it up and I am prepared to stand, generally speaking, upon the memorandum which I made at that time, and I would like to read my views from that memorandum in the record. Mr. Whedon. — Will you just permit me to go over this, Mr. Commissioner, and then you can read yours ? A. Yes, certainly. Mr. Whedon. — Now, annexed to this memorandum by Mr. Hasbrouck is a paper entitled " Memorandum for Commissioner Emmet, and signed by H. C. Hopson, Chief Division of Capitali- zation." In this he says, July 10, 1914: " Herewith please find a memorandum which was prepared at my request by Mr. Has- brouck, having to do with the theoretical aspects of capitalization based on earning power as opposed to capitalization based on cost. This memorandum is, to a considerable extent, the result of vari- ous discussions between myself and Mr. Hasbrouck on the subject, and with one or two exceptions I concur entirely with his con- Final Report of Joint Legislative Committee 21Y1 elusions. At the time we originally talked of this I thought such a memorandum might have decided pertinence in connection with the decision on the application in the above entitled matter, but since the report of the examination of the company's books has been completed it is quite apparent that a capitalization based on earning power of the Cattaraugus company would not warrant any increase over that whidh is now outstanding, and this memoran- dum, therefore, becomes, so far as that particular matter is con- cerned, of academic interest in connection with the argument of the attorney for the petitioner therein. As this question is con- tinually arising, however, I believe if you can find the time this memorandum would be well worth your reading. As this is the only available copy of this memorandum and Commissioner Decker, who has the case in charge, may be interested in it, it is requested that when you have finished with it, it be sent to Com- missioner Decker for his consideration. Respectfully, (Signed) H. C. Hopson." Q. In other words, Mr. Hopson says that even if you accepted the theory of capitalization is to be based on earning power, you cannot grant the petition of the petitioners in this case because the earning power does not justify — A. That was his view, as I remember it. Q. — the increased capitalization? A. That was his view of the evidence, as I remember it. Mr. Whedon. — Now, I want to read Commissioner Decker's dissenting opinion in this case. 'Commissioner Decker says : "I do not concur in the order entered by the Commission in this pro- ceeding on August 5, 1914, whereby the Cattaraugus County Lighting Company was permitted to purchase, and the Glean Light & Power Company was authorized to sell subject to all debts in- cluding its property right and franchises for $200,000' in stock of which $75,000 is 7 per cent, non-cumulative preferred and $125,000 is common. The Clean company has outstanding mort- gage bonds to the amount of $250,000. Its capital stock is $85,000. The petition prayed for an order permitting the sale of the equity at a price of $250,000 * * * nevertheless the earnings of the Clean company have not shown any such net re- turns as to indicate anything in excess of par value for the exist- 21T2 Investigation of Public Service 'Commissions ing stock issue of $85,000." In other words, 'Ms opinion was that the earnings of the company did not justify a greater issue of stock than the existing issue of $85,000. Then he says on the third page: "' Stripped of its ornamentation, the effort here has been to do by the process of sale what could not be done by stock or bond capitalization on the part of the Olean company itself, or by merger or consolidation of the two companies." Q. That statement is correct, isn't it; they couldn't have gone — A. They couldn't capitalize a franchise, if that is what you mean. Q. They couldn't increase the capital stock of the Olean com- pany without showing an increase of property, could they; that would be expressly prohibited by law ? A. Yes. Q. And they couldn't have combined the Cattaraugus company with the Olean company and issue stock more than the total out- standing stock of the two companies, could they? A. Wo. Q. That is expressly prohibited by section 69 of the law? A. Yes. Q. So in Commissioner Decker's opinion they were trying to do by indirection what they could not do directly ? A. That was his opinion apparently. Q. He expresses it by gross earnings, does he not ? A. Well, I didn't — my impression from the talk is — that is in his memo- randa. Q. Well, on page 23 of the minutes of testimony taken on April 15th in this ease Commissioner Decker says: " ISlow I am very frank to say, Governor — he was speaking to William F. Sheehan, who appeared as counsel for the applicants in this matter — " I am very frank to say. Governor, and I have been in all my experience suspicious here — in no invidious sense do I say that; I mean that I don't look with complete favor, that is what I mean, upon the purchase of physical properties, for this reason: The Olean company has its bonds and stock out. Unless it has put in some money from earnings for improvements for which it can demand reimbursement it cannot to-day increase its stock or its bonds on account of its property. It cannot do it. ISTow, the basic con- tention here is this property is worth more and that the Ciattarau- gus Company can afford to pay more and up to $250,000'. The result is that the Olean company by this method is doing by the combination, the sale and the, ownership of the Cattaraugus, is Final Report of Joint Legislative Committee 2173 doing just what it cannot do as a separate company, increasing capitalization on account of the property of the Olean company. ■Now, of course, the law is, very properly the law, that a company should not be adding to its stock or its bonded indebtedness unless it has something which is one of the purposes which the law pre- scribes. And I have always feared that we would be doing by indirection in this way what could not, of course, be done directly." Q. Of course, that is a very clear opinion they were attempting in this case to do by indirection what they could not do directly ? A. Yes, that is Mr. Decker's opinion. Mr. Whedon. — Now he says on next to the last page of this memorandum: "As the Olean property now stands the stock of that company by this order of the Commission has been inflated to the extent of the difference between $200,000 and $85,000 namely, $115,000. The fact that such increase is accomplished by property purchase instead of by stock increase touches only the form and does not alter the substantive character of the trans- action; and this conclusion and the real significance of the trans- action are emphasized by the further fact that since the order under discussion was entered and authority thereby granted to the Cattaraugus Company to purchase the property of the Olean Com- pany proceedings have been instituted to change the name of the Cattaraugus Company to Olean Light and Power Company. I think the majority of the Commission has fallen into serious error, in allowing $200,000 for the equity in the Olean Company's prop- erty and that if this action is to stand as a precedent, the great purpose of the capitalization sections of the law to prevent over- capitalization will be defeated in large measure. Under this ap- parent rule any company desiring to increase its capitalization may form a new company to stand as purchaser of its property and come before this Commission with a rosy showing of future earnings las the basis of a sale price greatly exceeding the present capitalization or the cost of its property, and without any con- trolling refrence to its earnings in the past. Such a practice would be without justification in regulation and therefore cannot be ex- pected to follow as a result of this decision. Using the language of section 69 of the Public Service Commissions Law, I cannot join in an order certifying that the money represented by the 2174 Investigation of Public Service Commissions allowed common and preferred stock is ' reasonably required for the purposes specified in the order,' namely, the acquisition, sub- ject to existing debts, of the property of the Olean Light and Power Company." Q. In other words, this Cattaraugus Company which was con- trolled by the same people who controlled the Olean Company, asked for permission to buy the property of the Olean Company, so that when you got all through you have got the Olean Company with $200,000 capital stock where they have had only $85,000', isn't that the result ? A. I suppose the Olean Company, you put in the Olean Company, that was the capitalization. Q. And the companies were controlled by the same people, weren't they, don't it so appear? A. I rather think they did. I wouldn't be perfectly certain about that. Q. I think the testimony shows that? A. Yes. Q. Then he says : " I think the majority of the Commission has fallen into serious error * * * j earmot join in an order certifying that the money represented by the allowed common and preferred stock is ' reasonably required for the purposes specified in the order,' namely, the acquisition subject to existing debts of the property of the Olean Light and Power Company." And yet you say in 'the order as was required, and sign a statement, saying that the money represented by the allowed common and preferred stock was reasonably required for the purposes specified in the order, did you not ? A. Yes, I believe so. Q. On the bottom of the order is this statement: " Chairman Van Santvoord and Commissioner Decker both know of this order. A. That is a fact. Q. Now, Commissioner, isn't one of the principal purposes, wasn't it one of the principle purposes of the Public Service Com- missions Law to guard the public against overcapitalization of cor- porations ? A. Undoubtedly it was. It was one of the most de- sirable for the purpose, and if you want my views on this Cat- taraugus situation — Q. Well, just a minute, and we will be ready for that. This case was assigned to Commissioner Decker, originally, wasn't it? A. That was my recollection, wasn't it? Q. How did you come to sit on the first hearing with Commis- sioner Decker ? A. I think Mr. Decker requested me, I met him Final Eepoet of Joint Legislative Committee 2175 in the hall outside and lie asked me if I would sit in the hearing, that he wished to have me sit with him and so I did. I didn't know the first thing about it. Q. Are you acquainted with the petitioner, Mr. William F. Sheehan, the attorney for the petitioner in this case, Governor Sheehan ? A. Personally ? Q. Yes. A. I have not much personal acquaintance with him. Q. How long have you known him ? A. I can't remember. Q. For some time, have you not? A. I think probably. The first time I met him, — if you want to get right down to it — the first I think was when I was up here as a delegate in the Constitu- tional Convention of 1894, and Mr. Sheehan at that time was Lieutenant-Governor of the State. Q. Did yen ever talk over about this case that was coming on for a hearing? A. Never. Q. Now you referred to your memorandum? A. Yes. Q. If you want to read it, do so. A. Yes, I would like to say previous to doing so, after I had prepared this I thought it was a little bit general 'and a little bit discursive and a little bit argu- mentative, and that was my reason for not finally using it at the time; but as long as the question is up, and as long as it sems to be very desirable, that I should state what my general views were on the fundamental proposition here. I thought to have this read, though if I were writing it to-day, I would write it a little different probably, and state the things more precisely, perhaps, but my purpose in reading it is to deal less with the exact state of facts in this case, as with my views upon the fundamental question involved. By Senator Mills: Q. "When was this written ? A. At the time I was deciding the case, and I put it aside, I felt it was enough — I didn't use it at the time. Q. Was it intended as an opinion ? A. It was intended as an opinion ; that was my purpose in writing it. Mr. Whedon: Q. Did you show it to the other Commissioners? A. No, I don't think so. I didn't file it. I didn't show it to anybody. 2176 IsTESTIGATIOIf OF PuBLIC SeEVICE COMMISSIONS What I done was in many other similar papers, I felt inclined at the moment to write an opinion in the case where I had squarely strong views perhaps, and write it or parti'ally write it and read it over and conclude it was not desirable for one purpose or another to file it and put it aside. I have got a stack of papers which I have not ever used, but which do represent my views or did repre- sent my views 'at the moment, on a large number of questions that have come up. Q. Did you use the opinion as a basis for the argument with the Commission ? A. Well, it expressed my views very positively. Secretary Mott. — It is simply a compilation of those you ex- pressed in the Commission ? The Witness. — Oh, yes. ISTow, I will read it. " I feel that in this case our Capitalization Bureau has taken too restricted a view of the values which it is desired to capitalize. On the other hand I think that the applicants are taking perhaps too rosy a view of these values. I am unwilling to adopt either of these extreme views, and have voted to allow a capitalization based upon values which from the evidence I think are fair, and which fall in some- where midway between the two extremes. I agree with what I understand to be the view of the Capitalization Department, that there should be a gradual approach by the State, and by the busi- ness world generally, toward the idea that only tangibles and actual physical property employed in privately owned public service en- terprises should be taken into account as a basis of capitalization. But I do not think it is safe or proper to lay this down as a fixed and immutable rule for the State to follow, until it has become more generally accepted than it is at present by the business world. Such a rule adopted now by the State would conflict sharply with the ideas upon this subject which prevail in all the markets of the world. The State ought not, in my opinion, move too far in ad- vance of popular thought on this or ^any other siibject. If it does, its rules and standards, which of course, are intended for present use, would be of as little value from a practical standpoint as though the error had been made in the other direction, and some old-fashioned theory of value which had gone into complete disuse were to be insisted upon by the State. In other words a modem State must keep fairly closely in line with contemporary thought, Final Repoet of Joint Legislative Committee 2177 unless it conceives its functions to be revolutionary rather than constructive. I do not conceive that to be the legitimate purpose of government. I should be unwilling to administer any public office on that theory. The State may very properly assist in mould- ing public opinion upon such questions as are involved in this case by taking from now on an increasingly conservative view as to the values of anything except tangibles ; but when the duty is put upon a regulatory body to say what a going privately-owned busi- ness employed in some public service work is worth at the present time for purposes of sale, it seems to me to be on its face absurd to say that no thought should be given to certain elements of value which responsible business men in their dealings with each other regard as absolutely legitimate. To adopt the policy of entirely disregarding values which the business world knows are real and genuine, would put the State so out of harmony with business as it is actually conducted that the whole regulatory system would suffer. The regulators and the regulated ought at least speak the same language if the system is to work at all. The present case seems to be a very proper one for me to assert these views in. This is an application made by certain pioneers in the development of an important public utility, who some years ago hit upon a hitherto undeveloped field for the establishment of their business in the western part of the State. They had the courage of their convic- tions, they invested their money, and opened this field up. Ap- parently they have been enlightened enough to keep their rates fairly low, to give good service, and as a result they seem to have the good will of the community they are serving. They have in- duced people, generally, to avail themselves of the modern conven- ience thus brought to their doors. Having done this, and having in an absolutely legitimate way built up a business of great poten- tialities they wish to bring in more capital for the purpose of en- larging their sphere of usefulness. As a necessary step in doing this they decide to reorganize their existing properties and greatly enlarge them. In working out the details of the new security is- sues for the reorganized company they have to be largely guided by what is favored by the money markets upon which they rely to get their new capital. Unless they are so guided, they will be un- able to get the money necessary to enlarge the plant. For instance, 69 21Y8 Investigation of Public Seevice Commissions if there is a prejudice against second mortgage bonds, even though the security behind them is intrinsically the same so far as value is concerned as that behind bonds which are technically first mort- gage bonds, they have to respect that prejudice. They have to arrange their reorganization in a way which will be naost attractive from the standpoint of the investing public. If they don't, the whole purpose of it fails. Now, I consider that so long as the institution of private ownership of public utilities exists at all, people in the position of these applicants should, when they come before a public service com'mission, be allowed a large latitude within which to arrange the precise details of the contemplated enlargement of their business, so that these will appeal to investors and not repel them. There are, of course, limits beyond which this liberal attitude on the part of the State must not be extended, but as I understand the plans presented by the present petitioners they are so entirely reasonable and businesslike as not to raise that question here. I also think that it is absolutely proper, under the circumstances of this case, that the present owners in reorganizing their properties by turning these over to another corporation should be allowed to receive something for what may be called the ' going concern value ' of their property, conservatively estimated. Actu- ally and practically it is a much more potent element of value than the mere bricks and mortar and wire and machinery which go to make up the present plant. And these potentialities have been discovered and developed by the present owners, at the risk of loss to themselves. So that now, when they are bringing new capital into a business which they have built up and established on a sound basis, they should, in my judgment, be allowed something as com- pensation for all that they have done in bringing the enterprise through its pioneer period. There is nothing, as I understand it, in the existing law governing our action in such a case which prevent a regulatory body taking this view of it. It is a mere question of public policy about which people may, I concede, honestly differ. In the case we are considering the questions presented are: (1) whetherthepetitionersshallbeallowed, in the capitalization of their reorganized company, to take into account as an element of value certain facts which have been demonstrated by past experience as to the profits which will be earned by such a plant as they propose to build ; and (2) whether they shall be allowed to select, as between Final Kepobt of Joint Legislative Committee 2179 several possible plans of consolidation, the one wliich oommends itself to their judgment rather th^an be compelled to accept one which a majority of this Commission may regard as ideally best." What I mean to indicate is, what I mean by that is, that my view is that w^here there are three or four different possible plans of a consolidation, that the original privilege is upon the applicants to present one and say " Here we present this for your consideration." Now, if it does not offend any rules or regulations which you must observe in passing on it, then we claim that we are entitled to have that particular one adopted, even if there are others which per- haps you think we might better have suggested in the first place; if you can find no criticism with one we do suggest, then the mere fact that there may be others whitih possibly the Commission them- selves would have suggested if you were asked, which you would submit, a different proposition, still that is no reason why the one which we suggest as being the one which is preferable to us, should not be accepted, if it is legal. That is what I meant there. Q. That seems to lead to another argument. Wonld you say that this company is entitled to use this plan, where they could not have accomplished the same purpose under the other two plans be- cause it was expressly prohibited by law ? A. If this plan is legal. Of course I am going on that assumption, that this plan is legal, as I believe it to be. Q. I agree with you. I say on the face of the law it is l^al. But the other sections of the statute regarding increase of capital stock of a corporation and the consolidation of two corporations absolutely prohibit the result which was accomplished under this section of the law. A. Well — Q. Commissioner Decker says that. A. That is what Mr, Decker says, yes. Q. Commissioner Decker has been at these oases for some eight years. A. What? Q. Commissioner Decker has been at these cases, working ovei- these actions for some eight years ? A. I guess he has. Q. He ought to know something about it. A. He ought to know something about it. That is his view of it. I do not know that he is a lawyer. Q. He ought to become a Public Service Commissioner by this time. A. Well, I will go on. (Continues reading from memor- 2180 Investigation of Public Seevice Commissions andum) : "As already indicated, my view as to both of these questions is that a reasonably liberal view should be taken of the situation — that the question of profits should in moderate meas- ure be taken into account, and that the privilege of original selec- tion as between several possible plans for effecting consolidation should be accorded the petitioners. I am, as I have said, a little disinclined to accept the figure of $250,000 as the value of the property to be transferred and against which it is desired to issue new securities, but the figure of $20'0'j000 in this connection does not strike me as unreasonable upon laJi the evidence which ih'as been presented in this case. The application seems to have been made in absolutely good faith, and the element of exploitation of the public seems to be entirely absent. If I thought otherwise I would take a different view of our duties, and might be willing to impose the rigid standard which Mr. Decker seems in this case to approve of. The present moment is not, in my judgment, a good one for the State in its dealings with bona fide applications of this kind to be too insistent upon asserting its sovereignty just for the purpose of asserting it, or too strict and niggardly in its recogni- tion of real elements of value. It is a time when, if ever, the hoTsetrading attitude of mind should be laid aside by State officiaJs in their dealings with legitimate business. The times are bad, and it is exceedingly difiicult to find money ready to go into new enterprises which will be beneficial to the public. It may soon be impossible to do so, without such encouragement as I speak of from the State. These considerations enter to a greater or less degree into the view I have come to as to what should be done in the present case. While present conditions of business last, I ex- pect that these views will to a considerable extent affect my action in aJl similar cases. I conceive it to be my duty, as a Public Service 'Commissioner, to help legitimate business in the public utility field all I can — for the reason that in so doing I believe that I am primarily helping the public. One easy and absolutely proper way of doing this, in cases where 'the element of good faith exists as I believe it does here, is to take what I have called a liberal view of such a state of facts as we are now considering — where a large value based on profits can be plainly demonstrated, and where the State is only asked to give some recognition to what Final Repoet of Joint Legislative Committee 2181 is r^arded in the markets of the world as the chief element in in- dustrial and commercial valuations. I consider that the present case should be looked at in that spirit. To deliberately reject at a time like this the application which these gentlemen have made — an application which, if granted, will secure the extension of a great public utility to many people, and to which there is abso- lutely no opposition from anyone excepting our o^vn Capitaliza- tion Bureau upon theoretical grounds — vi^ould seem to me to be the kind of action which, if persisted in by any regulatory body, will bring down upon it the deserved contempt of the people of the State." Q. There was no opposition from anyone except the Public Service Commission probably, because no one else knew about it. Isn't that the case ? A. I don't know how many knew about it. Q. You did not give general notice to the public that you pro- posed to permit this Olean Company to — or the Cattaraugus Company to issue $200,000 worth of stock ? A. Oh, no, I don't think so. Q. For capital that was worth, according to your own experts' reports about $60,000, didn't you ? A. We gave the usual notice in such cases. I don't know how much publicity it had. Q. So you do not agree with Commissioner Decker when he intimates at least that this was a subterfuge to get around the other sections of the statute ? A. No, I don't. I perfectly see — do you mind my standing up for a moment — I see perfectly that under certain circumstances this situation or this machinery which was used in this case might be employed to get around the law; I can conceive it possible. I did not believe it to be so in this case. I thought the bona fides of this case justified our taking a different view of it. But my answer to that proposition would be that if the law has that loophole in it now, and if it is definitely to be the policy of the State, if after mature consideration, the Legislature wishes to make it absolutely plain and certain that nothing but tan- gibles can be taken into account in the sale of properties of this kind from one company to another, or from one party or company to an individual, if that is the definite policy of the State, then the law can be easily changed. I do not think it should be the policy of the State, and with the law in its present condition, I should take, other things being equal, the same view in all such cases as 2182 Investigation of Public Seevioe Commissions they come up, as I have taken in this. That view I have tried to set forth here. It is not that we should stand stiff-necked in favor of anything that the business world says is valuable. I agree with Mr, Hopson to the extent of saying that we should move along in the direction cutting out everythiiiig excepting tangibles, but we cannot get too far in advance of popular thought on that subject and preserve the usefulness in dealing with modern problems. That is my view of it. Q. Do you think you are getting in advance of popular thought to compel the companies to stick to tangible assets in increasing their capital stock ? A. Well, if you increase — Q. Don't you think popular thought has pretty well arrived at that point ? A. Well, popular thought has crystallized itself very definitely in an existing statute. There is no escape from that proposition. Q. Except in this way, by this loophole ? A. If this furnishes a loophole from time to time, then the people, if they want to stop that loophole, they can very readily do it by legislation. Q. Don't yoTi think the Commissioners ought to have done it by the exercise of their own discretion in this case ?' A. No. I do not. I think with an exercise of discretion under all the circumstances which occurred in this case, and as I have tried to set forth some of them here, required the other point of view. Q. Then, if I understand you correctly, if 'another corporation should come here to-morrow with tangible assets of $60,000 or $85,000', you would be perfectly willing again to permit them to capitalize that at $200,000, and you would do it without any hesi- tation. Is that right ? A. My dear Mr. Whedon, I am certainly not going to say 'that offhand. Q. Well, either in your opinion or in your statement you have already said that you would act in this way in all similar cases ? A. I would, in all similar cases, that is, similar in respect to bona fides and similar in respect to conditions as they exist at the present time, and similar in respect to the evidence which has been introduced in this case 'and which in my opinion s.hould plainly be real value based on earnings. I mean, any case which comes in here in which all those things appear, I would decide as it was in this case. Final Repoet of Joint Legislative Committee 2183 Q. Don't you know as a m^atter of fact that the testimony in this case was not based upon earnings, but was based upon pros- pective eaimings, wfhat these men who owmed this oorporatiom came to you and said they expected to do in the future? A. Well, it was not what they came and said they expected to do. It was based upon the testimony as I remember it of conditions as they existed in that part of the State, and possibilities. Q. But it was not based on past earnings. The past earnings showed that they were not earning a reasonable return on their $85,000 capital? A. It was based on what I regarded demon- strated prospective earnings, demonstrated future earnings. Q. And you rejected absolutely the opinion of your own capi- talization expert 'and the opinion of Commissioner Decker, who had been handling these cases for eight years and who knew, if anyone in this Commission knows, what the policy of this Com- mission ought to be in order to protect the investing public and in order to protect the people who pay for gas and electricity ? A. Do you mean to say, Mr. Whedon, that it is my duty as a member of this Commission, to let Mr. Decker decide on all these things for me? Q. ISTo. A. Well, that is what you say in your question. Q. I mean you ought to have given consideration to what he had — A. How do you know I didn't give consideration. Q. From your opinion, from the order entered in this case. A. You mean by reason of the fact that I reached a different con- clusion, that therefore I did not give any consideration ? Q. I do not see how you could have. A. Well, do you assert that I did not give any consideration to Mr. Decker's views ? I did not £^ree with his views ? Q. Well then, we will take it that way. Now, isn't it true that when you permit a corporation to do this, you give them a loop- hole to .increase their rates, in order to permit them to earn addi- tional income on this additional stock ? In other words, you fore- closed the people of the community that ^this corporation is fur- nishing with gas and electricity, or electricity, from ever making an application for a reduction of price, because they can turn around and say that we have got this immense capitalization upon which we have got to pay a reasonable return, and the Commission 2184 Investigation of Public Service Commissions authorized us to make this ? A. On the other hand, the whole rate situation is in the hands of the Commission and there is a certain latitude within which discretion can be exercised ? Q. Yes, I know. But you are not going to say they can in- crease their capitalization and then they cannot earn a reasonable return on their capitalization? A. No. Q. If you once permit them to increase their capital stock, you are foreclosed from saying that tlhey cannot earn a fair return on that stock. Ifow, suppose that it tiims out, as it is very liable to do, that their estimates of future earnings is altogether too rosy, the only thing they can do in order to earn a reasonable return on that stock, is to increase their rates, isn't it? A. Well, no, I wouldn't say that positivelyk They might earn more by decreas- ing their rates. Q. Well, they do not very often take that position, do they ? A. I don't know. It is a matter of opinion. There is no — I agree with you to this extent, that the Public Service Commission, when a question of rates is put up to it, should be rather loath to take the view that a decrease in rates might mean greater profits. Q. Did you ever hear of a corporation coming in and stating " We are going to decrease our rates because we think we can earn more money ? " A. Haven't you ever heard of large businesses being built up to enormous proportions by selling things cheap? Q. I never heard of a public service corporation. A. The same rule applies to public service corporations. Q. As a practical matter ; I am talking as a practical matter — A. I am talking about it as a practical matter, too. Q. In other words, you took the view of the corporation at the time, made a great deal more impression upon you than the "^'iew of the consumer in this case ; in other words, you took the side of the conservative, what they call the conservative business man, didn't you? A. 'No, I would not characterize my action in that way. I took what I thoug'ht to be the right side, for the reasons that I have expressed there. Q. Commissioner Emmet, it has been suggested — it was sug- gested down in New York — that it might be well, it will assist the Commission in arriving at more definite and quick results, if the rights of review by certiorari were taken away from the courts. Final Repoet of Joint Legislative Committee 2185 What is your opinion on tlhat question? A. Pardon me just a moment. Let me think over the thing a little bit. Why, Mr. Whedon, it would undoubtedly assist in arriving at quick results, to take the right to review by certiorari away from the courts. But, on the whole, I do not think it would be — I would not feel at this time like recommending that as a change in the law. I do not think that the certiorari remedy has been sufficiently abused to make it desirable that any more absolute power should be given to the Commissions than they now have. Q. What would you think if a provision in the law giving the right to a citizen, or perhaps to the Attorney-General, to take an appeal from a, decision of the Commission in capitalization cases, for instance, in a case like this Glean case ? A. To take an appeal from — Q. From the decision of the Commission, to the courts — some- one who is not directly interested in the case ? A. Well, it would certainly open the door to abuses. It might at times produce good results. I would not recommend any change in the law in that respect, either, at this time. Q. Do you think the provisions of the law ought to be amended so as to prevent a corporation doing as was done in the Olean case, paying more for the property of another corporation than the out- standing capital stock of that corporation represents; in other words, do you think — A. I do not think that what they call the loophole that now exists should be taken away. Q. — should be taken away ? A. No, I do not. I believe that you must trust the judgment of the regulatory body in a matter of that kind. I think it is better that you should, rather than you should do what I have described in that paper — getting com- pletely out of step with the ideas which prevail in the business world on the question of valuation. Q. Then won't you say that this section of the statute ought to be repealed, the last paragraph of section 69 of the Public Serv- ive Commissions Law, .which says : " Provided, however, that the Commission shall have no power to authorize the capitalization of any franchise to be a corporation " — strike that out. Starting with : " Nor shall the capital stock of a corporation formed by the merger or consolidation of two or more other corporations, exceed 2186 IliTVESTIGATION OP PuBLIO SeEVICE COMMISSIONS tte sum of the capital stock of the corporations, so consolidated, at the par value thereof, or such sum and any additional sum actually paid in oashj nor shall any contract for consolidation or lease be capitalized in the stock of .any corporation whatever ; nor shall any corporation hereafter issue any bonds against or as a lien upon any contract for consolidation or merger." ITow, if you think that that loophole ought not to be closed, why not repeal that section of the statute and leave the whole matter to the discretion of the Com- mission in purchases of property as well as in consolidations, or rather, the reverse, in consolidations as well as purchases of property ? A. I will tell you, Mr. Whedon ; I would not take any backward step. I think that would be a backward step. I would prefer to leave the 'law as it is. I think that leaving your law as it is, the tendency should be in this direction. In other words, since this has been written into the law at tHs point I would leave it as it is. Although if it were taken away, I think that if you have decent regulatory bodies, they would afford the people of the State tihe same protection that that provision of the law does. Q. Don't you think, from the fact that the Legislature wrote this provision in with regard to consolidation, it was the intention of the Legislature before to prevent anything of that kind being done either by consolidation or in an indirect way ? A. Well, it was their intention in that question certainly to prevent it. They could have expressed their intention to cover such a case as this if it had been their intention. The fact tbat they did not express it indicates to my mind that there is still the discretionary power vested in the Public Service Commission upon a situation such as was presented by this Olean case. I am willing to be guided in my exercise of discretion to a very large extent by such evidence of general intent as may be found elsewhere in the law, but not entirely. Under circumstances such as exist now in business gen- erally and such circumstances as were presented to us in this case, I feel that the way in w^hicb I exercised my discretion was the right way. Q. Don't you know, as a matter of fact, tbat Commissioner Decker tried to get the Cattarau^s Company in this case to con- solidate with the Olean Company rather than to purchase the prop- erty of the Olean Company, and that they refused to do it ? A. Final Kepoet of Joint Legislativh CpM&nTTEE 2187 Well, I remember that Commissioner Decker presented certain alternative proposals to them. I cannot recall exactly what they were, but it was that fact which led me to refer to that point in my so-called memorandum. I do not remember just what the ailtema- tive propositions which Commissioner Decker presented to tlhem were ; I do not know that it is particularly material, but the point was that it struck me that the original privilege of selecting one of severally equally legal methods should be left with the appli- cants rather than with the Commission. Q. Well, as a matter of fact, they didn't have any choice in this case at all if they wanted to accomplish the object which they did accomplish; they could only do it in this one way, couldn't they? A. Well, as I understand it, the defect from their point of view, as I remember it, in the proposals which Mr. Decker made, was that it was absolutely impossible under any of his pro- posals to issue securities which could be marketed at this time, and part of their sc^heme, of course, was to get new money into the business. They had to get the money to build this transmission line. Q. Now, isn't it a fact, Mr. Commissioner, that they got the money to build the transmission line from a separate issue of bonds which was granted in this order and that there wasn't any provision in this order for using the money derived from the stock to build these lines ? A. Well, I don't remember that. Q. Don't you remember that by the provisions of this order this concern was also granted the right to sell a large amount of bonds ? A. Yes, I do remember the fact that there was a bond issue. Q. There was a bond issue to take care of the building of those new lines? A. Well, I remember that there was a bond issue; I don't remember the uses of the bond issue, to which the proceeds were to be devoted. Q. But you remember, do you not, that there is no provision in this order that money derived from that stock is to be used to improve the property ? A. I don't remember, Mr. Whedon, now. Q. Well, here is the order: Paragraph 9, that the Cattaraugus County Lighting Company be and it hereby is authorized, pursu- ant to the provisions of section 69 of the Public Service Commis- sions Law, to issue $200,000 par value of its capital stock, of 2188 Investigation of Public Seevice Commissions which $75,000 shall be dassified as 7 per cent, non-cumulative preferred stock amd $12.5,000 sihall' be classified as common stock, and such stock so authorized shall be used solely and exclusively for the acquisition of all the assets, property, rights and franchises of the Olean Light & Power Company subject only to the liabili- ties shown on the balance sheet of said company in paragraph 8 of its petition filed herein, verified the 10th of April, 1914." So that all of that stock was going to the owners of the stock of the Olean Light & Power Company who were Hatch, Sheehan & Mayer ? A. I don't know who they were. Q. Where is that list of stocldiolders ? A. Well, is it so very material who they were, or would you be kind enough to state why you think it is material who they were, in this connection ? Q. Because I want to show that Mr. Sheehan was — well, at any rate you have tried to give the impression, or at least you have impressed me that way, that the money to be derived from this stock was to be put back into this property. Now, that is not the case. Your order does not provide for it, and the money that was to go back into the property is provided for in an issue of bonds. Is that not true? A. I think that that is true, yes, and I have not tried to give any other impression. By Colonel Hayward (to witness) : Q. Why did you say then that it was necessary in some way to raise this money to get additional transmission lines and that that was the reason you let them have this additional stock? A. Well, Mr. Hayward, the reason I made that statement at all was that I was trying to recall what as I remember had been urged as a reason against some of the proposals which Mr. Decker had made, and that was my best recollection of what had been said at that time. My recollection is only a general one, but my recollec- tion is that some of the other proposals m'ade by Mr. Decker were objected to on the practical ground that they involved the issu- ance of securities which could not be marketed and that the money therefore would not be available for the purpose of enlarging the plant. Now, precisely what the status of this bond issue is I do not recall at the present moment. (At the request of Colonel Hayward the stenographer re- peated the answer of Commissioner Emmet as follows: "A. Final Eepoet of Joint Legislative Committee 2189 Well, as I understand it, tlie defect from their point of view, as I remember it, in the proposals which Mr. Decker made, "was that it was absolutely impossible under any of his pro- pos!als to issue securities which could be marketed at this time, and part of their scheme, of course, was to get new money into the business. They had to get the money to build this transmission line.") Q. iN'ow, the money that they had to get to build this transmis- sion line, what had that to do with the issue of this additional stock if the proceeds of this stock was not to build the transmission line ? A. Well, I don't believe it had anything to do with it. Q. Then why did you say anything about it as an excuse for issuing this stock ? A. I didn't say anything about it except in answer to a question as to some alternative proposals which Mr. Decker had made, and my answer was that, as I remember it, the objection was made by those gentlemen, the applicants, an objec- tion was made of the kind that I speak of. I was merely stating a fact and not assuming to discuss the merits of their objection. Q. And the fact that you were attempting to state was — A. That they objected to these — Q. No, that this increased amount of stock was to be used for the building of a new transmission line, when as a matter of fact that was not the fact at all ? A. 'No, I was not stating that fact on my own authority. I was stating it as a fact that that point had been raised as an objection to some of Mr. Decker's proposals. By Mr. Whedon (to witness) : Q. Wow, in paragraph 5 of this order it provides " That said bonds of the total value of $117,000 shall be sold for not less than 80 per cent." Paragraph 6 provides that " said bonds of the par value of $117,000 were authorized and that the proceeds thereof to the amount of $93,600 shall be used solely and exclusively for the following purposes " and then the order goes ahead and states a transmission line from petitioner's sub-station at Franklinville to Clean City line, $30,000; and then there -were provisions for other transmission lines, sub-stations, etc. So that that order provided that the proceeds from those bonds should be put into the building of transmission lines and sub-stations? A. Apparently that is so. That is so. 2190 Investigation of Public Service Commissions Q. Now, as a matter of fact, this stock was going to the owners of the stock of the Olean Power Company for their own private purposes, was it not ? A. The stock I should judge was going to them in payment of the property which they transferred. Q. And it was not to the interest of the corporation that that large increase of stock sihould be made, was it ? The corporation didn't have 'anything to do with it, neither the Glean corporation or the Cattaraugus corporation? A. Well, the figure which we fixed as a fair one for the value of the property was not fixed with reference to anything but real value as we saw it. Q. Then what objection was there to insisting that these people adopt Commissioner Decker's suggestion and consolidate ? What objection was there so far as the corporation was concerned and so far as the public was concerned ? Wouldn't it have protected the public in that it would have prevented this large increase of capital stock, because, under the consolidation section, they could only issue share for share? A. I don't recall exactly the nature of Mr. Decker's proposal there. I think he made two or three sug- gestions as being possible ones as alternatives. Q. I have read the testimony and I know that he suggested that they consolidate and they argued very strongly against it, and Ms suggestion for consolidation was evidently to put them in a posi- tion where they could not over-capitalize, under his opinion ? A. Well, my opinion was that justice was being done to everybody by the arrangement that was finally adopted. By Colonel Hayward (to witness) : Q. You did not think it was necessary to increase this capital stock in order to let them issue sufficient bonds to build this new transmission line, did you, Mr. Emmet? A. I don't recall now what connection — Q. I mean there was no connection — A. I don't recall ex- actly whether there was any connection between the bonds and the stock in that case. Q. I mean this, they could issue $400,000 worth of bonds, for instance, for the purpose of constructing this new transmission line just as well with a capital stock of $85,000 as they could with a capital stock of $2.O0,OO'O, couldn't they? A. Well, I think that there have been in the past certain theories at least, put Final Report of Joint Legislative Committee 2191 it that way, theories as to a proper proportion between stocks and bonds. Q. That was not your purpose, was it, in increasing the capital in this case, to make the capital proportionate in amount to the amount of the proposed bonds ? A. Oh, no. Q. That did not enter into it? A. Oh, no. Q. And you did not expect them to issue any of this capital stock to build any new lines or bring any tangible assets to the cor- poration ? A. I imagine not from the refresihment of my recol- lection that I now get. I had forgotten the facts pretty well, buti — Q. You could have limited it absolutely to that purpose if you had put it in the order, couldn't you ? A. Put what in the order ? Q. That provision that the increased stock should -be used solely for the acquisition of transmission lines or other tangible property — you can make that limitation just as well on stock as you can on bonds, can't you, Mr. Emmet? A. Weill, of course, the stock which was issued was issued in payment of the properties that was transferred to — ■ Q. Which didn't exist. A. I beg your pardon, what do you mean didn't exist? Mr. Whedon. — A large part of it didn't. By Colonel Bayward (to witness) : Q. Didn't exist in the form of tangible property, did it? A. Oh, we have gone into all that. Of course, the property, the busi- ness. The business that was transferred, put it that way. Q. I want to clear up just the proposition stated to me, an im- pression of it anyhow, that this increase was for the purpose either of acquiring new property or for the purpose of enabling an additional amount of bonds to be issued for acquiring new property, and it wasn't for either purpose. A. Oh, no, I didn't intend to give any erroneous impression at all as to the fact, Mr. Hayward. By Mr. Whedon (to witness) : Q. ISTow, isn't it a fact that if we assume, as Commissioner Decker assumed in this case, that this was a case of over- capitalization, that that was detrimental not only to the interests 2192 Investigation of Public Sebvice Commissions of the public but detrimental to tbe interests of the corporation ? A. Why, I think any case of over-capitalization is detrimentalj of course, to the interests of the public and corporation, but — Q. So that, under his theory, the corporation and the public would be damaged and the owners of the stock of the Olean Com- pany would be solely benefited ? A. Under Mr. Decker's theory as to values ? Q. Yes. A. Undoubtedly. Q. How, under your theory the corporation and the public would not be benefited by this increase of stock, would they ? A. Under my theory the owners of certain property were receiving their just dues. Q. Yes, but they were the only ones' who were benefited, these people who owned the stock in this Olean corporation ? A. Well, they were the only people who were benefited directly by that one transaction, but I would not call it a benefit, either, so much as they were receiving what I considered to be their just dues; that is, they were selling property for its fair value and as part and parcel of the entire transaction, Mr. Whedon, muny other people were being benefited. Q. In what way? A. Why, I viewed the transaction as a whole, of course, to some extent and this feature that we are now discussing was one item in a general result and the general result was going to be, as I have stated to you, that the electric light business was to be vastly enlarged in that part of the State and — Q. Yes, but that result accrued solely from the issuance of these bonds that are provided in the order ? A. The- proceeds of the bonds went for the purpose of building the transmission line. Q. Yes, it had nothing .to do with the stock. By Colonel Hay ward (to'' witness) : Q. Don't you think, viewing it now frankly and fairly, that it was just simply a plain case of allowing this corporation to water its stock? A. Why, Mr. Hay ward, of course I don't believe it. Why, it is an insult to ask me such a question. I wouldn't have voted for it if I had thought it, and it is not watering stock at all upon my theory of values. Q. I should say, Mr. Emmet, it was an insult to anyone's intel- ligence to come to any other conclusion on it. A. You would say ? Final Eepoet of Joint Legislative Committee 2193 Q. After the testimony, yes. A. That is where we differ. Q. We certainly do. By Mr. Whedon (to witness) : Q. It is true, isn't it, that even the Commission's subordinates were so concerned about this matter that they went ahead and pre- pared an elaborate memorandum and submitted it to you to pre- vent, as they thought, your going wrong, isn't that true? A. ^Yell, it is true that the — Q. They were all up in arms ? A. Now, will you allow me to answer ? Q. Yes. A. It is not true that they were all up in arms, what- ever you may mean by that. It is true that the subordinates of the Commission arrived at a certain view, which a majority of the Commission differ from them in. Q. Didn't you think from that memorandum of Mr. Has- brouck's that they thought that a very dangerous precedent was about to be established? A. Why, he says so in so many words That was his opinion. I did not think so. Q. You don't think so ? A. I certainly don't. Q. And you would do exactly the same thing under similar cir- cumstances? A. Under similar circumstances. If I have said that once I have said it a dozen times. There can't be any ques- tion about my attitude on it. Q. I don't think we can get that too often in ti^e record. A. Put it on as often as you please. I am proud of my connection with this Olean case. Q. You think that is your star performance on the Commission ? A. ISTo, not my star performance, it is one of a number of things that I am entirely satisfied with. Q. Mr. Emmet, do you think that the First District ought to have jurisdiction over Westchester county? A. No, I do not. Q. Why not ? A. Well — By Colonel Hayward (to witness) : Q. If they should take the jurisdiction over Westchester county, Mr. Emmet, you would have to be transferred down to the First District, wouldn't you ? A. I don't know ; I don't take that small view of the thing. I don't care what effect it has on me, and while 2194 I^'VESTIGATION OF PuBLIC SeHVICE COMMISSIONS that point of view may appeal to others it does not appeal to me. What I was trying to do was to give you my real reasons for say- ing that Westchester county should not be included in the First District. Q. All right. A. And the fundamental reason is that West- chester county is an absolutely separate and distinct proposition from New York City. There has to be a dividing line some- wheres between, if there are going to be two Commissions at all or two Districts at all, there has to be a dividing line somewhere and the natural line is the boundary line between Greater New York and Westchester county. It is true that in the lower por- tion of Westchester county there are large communities which are cities and which have a close affiliation with New York, but West- chester county as a whole has a local history and a local tradition and' a local pride and a local character which is separate and distinct in every way from New York City, and its needs are different, it is entirely different and distinct from New York; its interests lie with the rest of the State rather than with New York City, and that is my reason for thinking that if there is going to be any subdivision of the State at all, Westchester county should be with the Up-State raUher than the Dowm-State. By Mr. Whedon (to witness) : Q. What do you think of Long Island, should that be in the First Distriet? A. I feel the same way exactly about Long Island; the same thing applies absolutely to Long Island. Long Island has old traditions, local centers which lead their own life distinct and absolutely separate from New York City. I imagine that Mr. Scudder can confirm my general impression there as to such a community, we will say, as Huntington or Riverhead or Southampton! or a dozen othersi you might mention on Long Island, and the whole of Long Island, in fact, outside the Metropolitan District. By Colonel Hay ward (to witness) : Q. You think they would rather come to Albany than go into New York City to transact their business with the Commission? A. Why, they might like to come to the New York office occa- sionally. Final Report of Joint Legislative Committee 2195 Q. It would be a good plan to have the secretary tell them, about that, wouldn't it ? A. Well, it would, and the secretary — Q. Instead of saying " Nobody at home." A. And the secre- tary will tell them hereafter. I have thought he had, and I will explain, if you like, why he did not in that case. I will take this occasion for doing so, Mr. Hayward. I had last summer, after serving three years up here las Superintendent of Insurance and then coming into this thing without a break, I was absolutely' tired out and I thought I would take a rest, and intended to take a run over to Europe during the months of July and August, and as Mr. Mott has since reminded me, since our hearing of yesterday, I told him that general situation, that I expected to be away during August. As a matter of fact I found I could not and I did not get around to it and I changed my plans and instead of taking the kind of vacation I had intended to take, I continued to go down to New York and spend one day a week down there and the rest of the time up in the country at my place, and Mr. Mott apparently had — Q. Thought you were in Europe? A. — my original inten- tion and did not reply to the Anderson letter as he now would. Q. He thinking you were in Europe — A. Oh, no, not think- ing, no, Mr. Hayward, now that isn't fair. He didn't think I was in Europe and you know he didn't think I was in Europe. Q. You told him you had intended to go to Europe for the month of August and hadn't told him that you had changed your plan ? A. Oh, yes ; now, that isn't the situation at all ; now, you know that perfectly well. I told him, Mr. Mott was guided by the first impression he got and did not modify it by what he sub- sequently learned about my change of plans. He knew perfectly well I had changed my plans ; be knew perfectly well that I was doing just exactly what I said — that is, spending a day in the New York office; but he had written this Anderson letter under the original supposition and did not modify it in that case, but so far as people knowing that I am at the New York office is con- cerned, not only will it be generally known hereafter, if I stay here, that that is my practice, but it has been generally known. I imagine that this case which you brought up yesterday is a solitary one, because people down in New York generally have got, who 2196 Investigation of Public Seevioe Commissions have business with the Commission, have gotten to count on it pretty systematically 'and regularly. Q. Now, while Mr. Anderson was a New York lawyer, the mat- ter he referred to was in reference to a company or something out on Long Island ? A. Yes ; that is the real excuse and purpose of the New York office, to attend to such business. Q. Now, just let me ask you, how else would a person out on Long Island having business with the Commission of the Second District find out that you or any other Commissioner were in or were to be in the New York office, unless they wrote to the secre- tary of the Commission at Albany? A. That would be a very good way and the natural way, and I entirely undei'stand Mr. Anderson's doing it. Another way which is very largely employed is to look up the number of the Public Service Commission in the New York Telephone book and telephone up there, and that is being done constantly all the time, and the man down there is always — Q. Advised when you are to be there ? A. Oh, yes, he always knows when I am to be there, always advised, and usually makes appointments for me. Q. Now, don't you think 'as a matter of fact — I am not going to argue the question of Westchester and Long Island going into the First District ■ — but don't you think as a matter of fact, your testimony yesterday showing the ease with which you transferred your residence from Westchester to New York City and back again is a pretty good argument that Westchester is really more tributary to New York City than it is to the up-State District? A. Why no ; of course I don't. In the first place, my testimony did not show that I had done it with ease. I indulged in consider- able mental perturbation over the thing. I thought it out care- fully. It was not an easy transaction particularly. There was nothing in my testimony to warrant that characterization of it. Anyhow, the same transition, whatever it may be, whether it was easy or difficult, could have been made just as well from New York City to Cattaraugus county as from New York City to Westchester county. Q. Yes, as long as it was largely mental, I think it could. A. Well, mine was more than mental. Final Eepoht of Joint Legislative Committee 21,97 Q. It was a sort of psychological transfer of residence, wasn't it, Mr. Emmet ? A. JSTo, sir ; it was not. It was an actual put- ting into effect so far as one little thing goes — that is, after voting it wias an actual putting into effect of an existing state of affairs. Q. What was there that was not purely psychological, that changed your residence from the day you registered in New York in 1913 and the day you were appointed to the Public Service Commission for the Second District? A. You mean what defi- nite acts go to make up the legal situation? Q. What was. there except your own mental process ? A. First of all, there was the mental process and the two distinct acts that I think of at the moment which I did in pursuance of the mental process were first of all making an afiidavit in connection with personal taxes and in the second place filing income tax returns in Westchester county, or in Albany^ which is the headquarters for Westchester county. So those are the only two distinct acts that I think of, and of course the thing fundamentally — you are per- fectly right — the thing fundamentally was a matter of intention, in other words, a mental process. Q. What do you think, Mr. Emmet, about the telephone juris- diction? A. The jurisdiction over the telephone companies? Q. Yes. A. Why, I think, Mr. Hayward, that one Commission or the other ought to have entire jurisdiction over the entire tele- phone system of the State; I should be inclined to think so. I do not think it should be split. Q. I didn't hear what you said. A. I say I do not think that the jurisdiction over telephones should be subdivided; I am in- clined to think that one 'Commission or the other should have the sole jurisdiction over the telephone system, just as is the case at present. Q. Then if you made any change at all it would be to simply transfer the jurisdiction over the telephone company from the Second District Commission to the First District Commission? A. It would be simply shifting them from one Commission to the other. I have no very strong views on that point. I am perfectly willing that so long as I stay here, to continue to assume jurisdic- tion over telephone, or I am perfectly willing to see it taken away 2198 Investigation of Public Seevioe Commissions from us.. It makes no difference at all. I think on the whole it is just as well it should stay here. Q. NoWj you were on the Oonnnission when the Commission got the $100,000 to make the investigation of telephones? A. Well, I think I oame out immediately afterward; I was there just about that time. Q. And when you hired Mr. McClellan and he made this report of his, or rather testified as to hie conclusions, Mr. Van Santvoord calls them his guesses, on the values, and his total amounted to about $96,000,000, didn't it? A. Yes. Q. And you took, having hired him as an expert for the Com- mission, and they being the only alleged expert figures before the Commission, you took his figures practically, didn't you ? A. Me, personally, you mean? Q. Yes. A. Yes. Q. I mean you took his $6,000,000 depreciation and arrived at your conclusion? A. Yes, for the purposes of a tentative con- clusion I thought that that was a logical thing to do and a fair thing to do. Q. You did that on the theory that having hired this man as an expert and he having made this investigation, that that was the thing to, do, to follow his report and plan ? A. Why, that was the theory in my mind. I do not mean to say that it was absolutely necessary to take that view of it; I mean my associates are per- fectly entitled to their point of view that they could modify those figures, but my point of view was that Mr. McClellan was an excellent man so far as I could see, we had every reason to depend upon him. While it is true some of his items were what Mr. Van Santvoord characterizes as guess work, still that same objection applies in a greater or less degree to all expert testimony, and the decision we were coming to was only a tentative one, at any rate, that is, it was one which was to be put forward on the evidence now before us, and if it was not accepted by all hands then the case was to go on and more evidence to be put in, and I would, in that case, have been perfectly free to modify my views, but on the evi- dence before us I thought that the safe and sensible and logical stand to take was to deduct depreciation from — Q. From the actual figures that were before you? A. Yes. Final Repoet of Joint Legislative Committee 2199 Q. Do you know how his figures compared with the company's own figures ? A. No, I don't know exactly because the company never put any figures in in our case. I saw in the papers some figures they had put in in the proceedings before the Foley Com- mittee. Q. As a matter of fact, Mr. McOlellan's figures were a little higher than the company's figures, weren't they? A. I don't think so, no; that is not my understanding at all. I think they were lower. Q. I thought the company's figures were about $95,000,000 and Mr. McClellan's $96,000,000? A. Well, my impression is, Mr. Hayward, that the company's figures which were put in in the Foley Committee proceeding were about $100,000,000, but they didn't put in any figures — Q. So you based your opinion on the only testimony you had before you and saw no merit in deciding on a figure half way between your expert figures and the figures of Professor Bemis for the Foley Committee, which some of the other Commissioners arrived at, of $82,000,000? A. I certainly saw no merit in arriving at any decision by the process you mean, that is, the split- ting of the difference and taking simply a half way figure, but I do not think my associates followed that mental process — at least, that is not my understanding. Q. That is where they came out, isn't it? A. That may be where they came out, but I don't think that they did it by that method. Q. Well, did you think that it was proper to consider the Bemis report which the Foley Committee had gotten together? Was that taken into consideration by you at all ? A. Oh, I took, certainly I took judicial notice of the fact that Mr. Bemis had arrived at a certain conclusion, but it did not swerve me very much from my belief that Mr. McClellan's figures should be the basis of our attempted decision. Q. I think you were very much more consistent, Mr. Emmet — A. I thank you. Q. — in confining yourself to the figures of your own witness and your own expert. If they were of any value at all, they were 2200 Investigation of Public SeevicI; Commissions 3f value for the purpose tliat you put them to. That is true, isn't it? A. Well, that was my point of view, Mr. Hayward. Q. And if they were not of any value at all, they ought not to have been considered at all. That is all I want of Mr. Emmet, unless some of the Committee have some questions. By Assemblyman Knight (to witness) : Q. I haven't anything except one thing and 'that is, are lihere any changes in the statutes which you desire to suggest to this Committee? A. Well, will you excuse me one moment, sir, and I will get to that in a moment if I have anything to suggest. Q. Certainly. A. But I want to make a correction on the minutes if I might. This is done at Mr. Decker's request. I said yesterday here — you said, Mr. Hayward, to me " and one of the conclusions of that opinion by Commissioner Decker, con- curred in by the others, including yourself " — By Colonel Hayward (to witness) : Q. What case? A. This is the Westchester case. "A.. I con- curred, yes, in the order. Q. — ^was that you recommended that the Westchester Lighting Company sihould reduce the price of their gas from $1.50 to $1.25 in thickly settled communities, many of which were already buying their gas from this company at $1 and $1.10, that is a fact, isn't it, Mr. Emmet ? A. Yes, that is a fact." Well, I think I answered a little hurriedly. My attention had been called to the fact that that is not really a correct statement and Mr. Decker has asked me to correct the minutes in that respect by calling attention to the fact that New Kochelle, Mount Vernon and Yonkers, where this lower price of gas, $1, I think it is — Q. One dollar to $1.10, I think. A. One dollar to $1.10, is in force, were not included in this case and that the towns in the case, namely, Tarrytown, White Plains, Port Chester, and Eastchester, have not had their price lowered. Q. Why do you say they were not included in the case ? They were complainants? A. No, my understanding is that they were not. It was the theory upon which Mr. Decker acted. Anyhow, I am only putting this on the record for him. Q. Yes, I understand. A. There are pending cases now from Westchester county from several of these other communities and I Final Eepoet of Joint Legislative Committee 2201 believe that fact is being taken into consideration in connection with the possible reopening of the Westchester case. Q. When you said " in thickly settled communities," where you used that language in the case against this company, you certainly meant it to apply, did you not, to all the territory served by this company? A. Thickly settled communities, well, 1 simply said — Q. Would not that be a fair assumption, Mr. Emmet, that that is what you meant ? A. Will you say that again, Mr. Hayward ? Q. I say, it was the only company that was involved in this case. In the opinion of the Commission you make this recom- mendation as to thickly settled communities. Now, wouldn't it be a fair inference to say that the Commission intended that to apply to all thickly settled communities within the territory served by this particular company which was involved in the case? A. Why, possibly, excepting Mr. Decker's point was this, that there was no increase in the case of gas cost in any thickly settled com- munity. Q. Oh, no, I didn't understand at all that they had a rig'ht to raise any rates they had. But this case it took eight years to come to a determination in, was intended to cover that company, wasn't it? A. Yes. Q. It resolved itself into a general rate case covering these different communities ? A. Yes. Q. And all the communities served by the company, and the Mayor of Yonkers was one of the complainants, wasn't he? A. I don't remember whether the Mayor of Yonkers was one of the complainants or not. Q. I am sure of that. A. I don't think he was. Q. The Mayor of Yonkers made a complaint and that was in- cluded in the case and the opinion recommended a reduction to a rate not as good as they already had. A. I am told that New Eochelle, Mount Vernon and Yonkers were not involved in the case. That is my understanding. Mr. Mott. — In the decision ? The Witness. — In the decision. These Westchester people were all up here yesterday over across the street. 2202 Investigation of Public Seevicb Commissions By Colonel Hayward (to witness) : Q. Did they have the rehearing, did you grant a rehearing, Mr. Emmet ? A. I don't think there has been any decision in it yet, but both sides were there. Q. Both sides applied for a rehearing ? A. Yes. Q. And the Commission did not decide whether they would give them a rehearing or not ? A. I don't think so ; no. Q. What do you think of a section being put in the statute, Mr. Emmet, making that provision of the statute requiring this Com- mission, once it has started in a case, to either dismiss it or finally decide it more strictly in that it sets a time limit within which it must finally determine a case one way or the other? A. Well, there has been a law introduced to that effect, hasn't there ? Q. I don't know, I am not familiar with that. A. Or a pro- posed law or something of that sort was shown to me some time ago. Q. Do you think this, Mr. Emmet, that if you did fix a kind of statute of limitations in here or rather a limitation of time within which the Commission might retain jurisdiction over matters of that kind and that if you made that time sufficiently long to give real comprehensive study to, for instance, a big rate case, that there might be danger that the Commission would use that same period of time in cases of lesser importance requiring a shorter time for consideration ? A. Well, I tell you, Mr. Hayward. I thmk in the main that question of delays is one which had best not be attempted to be cured too much by legislation. I think it comes down in the end to the personnel of the Commissioners and to their methods of doing their work, and I can conceive of cases so vast that it might be unsafe to put a time limit on them. On the other hand, it might possibly be that a time limit would be taken advantage of, as you might suggest, in smaller cases. Q. You would say, Mr. Emmet, that eithei* the Commission in years past was inefficient and ineffective and dilatory or else a time limit fixed in the statute of eight years would be too short? A. Why, Mr. Hayward, I wouldn't say that. I feel about this regulatory situation in that respect that the thing is still in a sim- ply chaotic condition, that is to say, it has not as yet been reduced down to an absolutely fixed set of principles and standards. It Final Kepoet of Joint Legislative Committee 2203 started not very many years ago anywheres and in New York State it only started five or six or seven or eight years ago, and they have been feeling their way and there have undoubtedly been many things to criticize in reference to it. Special prob- lems have come up here in connection with the New York situ- ation from time to time which have made the Commission short- handed. All this is ancient history so far as I 'am concerned, but since I have been interested in the thing, I have seen what the situation was. The Commission was short-handed through causes for which it was not responsible ; whoever may have been respon- sible, it was not; and there was one time there, as I think Mr. Decker said, when only two men were doing the work of the Com- mission, and I would not feel like administering sharp criticism to any of the individual Commissioners of the old times for their results down to date. Q. You think something is wrong, don't you, with a condition that would allow a case as important as this Westchester Lighting case to the people of Westchester to jingle along here for eight years without a decision ? A. Well, did it last for eight years ? Q. Filed in 1907. A. Why, of course, it is wrong, Mr. Hay- ward, there can't be any possible question about that. Q. And Commissioner Decker had it under his personal super- vision from 1910? A. I do not say that Mr. Decker was wrong or that Mr. Decker was in the least degree responsible for it. In fact, it may well be that Mr. Decker's energy and activity and close research was the factor which pulled the thing through. Q. Pulled it through to a point where both sides asked for a new hearing? A. Well, sometimes neither party is pleased by a decision, of course. But I want to make myself plain on that point. Q. I see in the Thaw case the Judge made a ruling that both sides were satisfied with. That is even more rare, isn't it? A. Well, I personally prefer that kind of a decision, where both sides are satisfied, than a decision where both sides are not satisfied, where neither side is satisfied, but still you can't help it sometimes. You have to decide it where neither side is satisfied. Now, I wonder if I have made plain this business of the New York office which was very shamefully misrepresented in certain headlines of the newspapers, something of which I do not care personally — 2204 Investigation of Public Seevice Commissions Q. I am not responsible for the headlines of the newpapers. A. No, you are not. Mr. Mott. — Mr. Emmet, if he will permit me to state that that letter was written with respect to August only, the month of August only. The Witness. — Your letter ? Mr. Mott.— Yes. The Witness. — Yes. Colonel Hayward. — The inquiry was whether a Commissioner would be there in August ? Mr. Mott. — Yes. Colonel Hayward. — And the day the second answer of the sec- retary went back, Mr. Emmet was in the office, August 7 ? The Witness. — That was a very unfortunate mistake for which we are all sorry. Mr. Mott. — The secretary is responsible, I suppose. The Witness. — I mean the statement that I saw in some of the headlines to the effect that I was reported to be in New York ninety-eight days out of a certain number of days, was not war- ranted by anything that appeared in the evidence. By Colonel Hayward (to witness) : Q. Yes, I understood that. It said ninety-seven out of 108, but if you will read the record we put in yesterday, it was ninety- seven out of 183. A. Yes, but the ninety-seven is wrong. I mean from the point of view of being in New York, the record shows that I was not there in New York. Q. Well, you were there in New York or on your way there from Albany? A. No, I was either in New York or taking a holiday part of the time up in Westchester county. I was in New York on some one day perhaps out of five or six which was included in the computation of .ninety-seven. Q. And, of course, Mr. Mott did not write this letter on the same theory that the maid goes down to the front door and says her Final Eepoet of Joint Legislative Committee 2205 mistress isn't at home when she don't want to see the callers ; he didn't do it on that tJieory ? A. No, I am sure he didn't do that; Mr. Mott wouldn't do a thing of that sort. By Assemblyman Knight (to witness) : Q. Were yon up here at Albany during different times in the month of August ? A. Oh, yes ; I was every week in Albany and in New York City. Q. During that month of August? A. Yes, all through the year I have been here, in both places. Q. You spoke about your taking some vacation ? A. My vaca- tion consisted of three or four days at the week-ends in my country home. Now, do you want to hear anything about regulation from the point of view of one who has been in it for three or four years, insurance and otherwise ? By 'Colonel Hay ward (to ■witness) : Q. Yes, I would like to have your views on this, Mr. Emmet, anything you can give us. We are knowledge gleaners as much as we can be. If you men don't know about it after experience, I don't know how anybody else could. A. I will just run over a few ideas that I have, very briefly, and put them on the record. I have not prepared them in any written form. In a general way I believe that the present Public Service Law is about as good a public service law as can be drawn. With minor modifications from time to time I think that the regulatory structure is about likely to prove as efficient as any which can be devised and I think there should be an argument against changing it, there should be a natural presumption against changing it, rather than in favor of changing it. Q. You do not think then that this law is filled with jokers? A. No. Q. And ineffective? A. No, I don't. I think that there are some things in it which disclose themselves from time to time that might be changed, but I don't know of anything that I should characterize as a joker. Q. You do not think that this law could be changed so as to materially increase its effectiveness? A. Not materially. In certain cases it could be improved, I think. But as I was saying, 2206 Investigation of Public Service Commissions Mr. Hayward, I think that the presumption should be against changing the law rather than in favor of changing the law, because any change will necessarily throw things back a little bit to the experimental stage, whereas things are gradually reaching a basis which is not experimental under the present law. Now, my real criticism of the present law, however, is of a very fundamental character, and it is this : That the law vests such sweeping powers in the Commissioners, in the regulatory bodies, that those powers are really more consistent with the theory of ownership and oper- ation than they are consistent with the theory of mere regulation. As I understand it, regulation and operation are two entirely dif- ferent things. One is the alternative of the other. If the State adopts a policy of regulation, in the very nature of things it de- clared against governmental ownership. It is the alternative of governmental ownership; in other words, it commits itself to the proposition that private ownership and activity and investment should be encouraged in public utility fields and it commits itself in a way to the proposition that the State should do its part in making conditions in that field attractive to private capital and enterprise, because if you declare against governmental ownership and if you make it impossible for a private ownership to thrive in that field, you get nothing, and you must have one or the other. Now, the State of New York has declared itself in favor of the principle of regulation, and that was why this law was passed, and yet they have put powers into the law so sweeping in the regu- latory bodies that if those were at all times exercised, as some people seem to think we ought to exercise them at all times, it would amount to governmental ownership and operation and it would be utterly and absolutely impossible for a private enterprise to exist in the public utilities field. Now, there is where I say is a fundamental difficulty about the situation, that we have these rate powers given to us, yet if we exercise them in the way that the clamorous portion of the public want us to exercise them in, we would be running the properties. By Mr. Whedon (to witness) : Q. Might I ask a question ? .. Down in New York Chairman Shonts said that he did mot think it was the duty or the right of the Commission to fix schedules for their trains? A. Well now. Final Eeport op Joint Legislative Committee 2207 there is something to be said on that point and I will say what 1 think about it. Q. Yes, what do you think of that? Would you think that the Commission ought to exercise a right to establish a schedule for the trains or ought not to ? A. As a practical proposition I do not see how you can take away any of the powers that the Com- missions now have, including that power of sitting as judges in these innumerable complaints which involve train schedules and all manner of things. As a practical proposition I do not believe you can take it away, because I do not believe the public would stand for it. Q. Well, do you believe that they could successfully regulate those trains dow» there without having the right, as they have to regulate the schedules? A. But that authority in the act, and properly in it, I think, under all the circumstances, I think it must be very discreetly, if I may use that word, used. By Colonel Hayward (to witness) : Q. Don't you think it has always been very discreetly used by both the Commissions, to use your language ? A. Do you suggest that in a critical sense, Mr. Hayward ? Q. No, I wondered if you thought the Commission had gone too far in the exercise of any of the powers given it under this law in any case that you are aware of, say to the interfering point? A. I am inclined to think that • — no, I don't know that I would say that I think that they have, but I think it is greatly to be hoped that they won't, because just as soon as they do they will create conditions w'here business prostration -will ensue and then governmental' ownership is the only alternative. Now, if the State of New York wants to go into governmental ownership, let them say so, but if they are going to go on the basis of regulation rather than ownership and operation, then let them be very careful not to go across the border line between regulation and actual opera- tion of the properties. Q. When basing your opinion on the experience of the two Com- missions im the past, would you say that there would result a greater danger from restricting the powers of the Commissioners by leaving off paTts of this law, than there would be of too radical a use of the powers already given ? A. I think on the whole that 2208 Investigation of Public Service Commissions you have to leave the law as it is so far as the powers go amd trust the Commissioners to use those powers in the right way, and then — Q. With discretion. A. So that brings' you down to the propo- sition of getting the right kind of men in as Commissioners and keeping them in. And in my judgment the qualities that are needed mainly are the qualities of common sense and courage, of course, intel'ligenee, courage to stand out against the clamors of un- reasonable people at times, courage to disregard the outrageous assaults which are sometimes made in the headlines of irre- sponsible newspapers upon officials who are trying to do their duty, and intelligence, of course, and knowledge of large affairs. I think that those general qualifications are nfore needed than what you might call purely technical qualifications. It has been frequently said that technical men should be appointed to these Commissions. I do. not think that that is true any more than a technical man need sit on the bench to decide patent cases or other technical matters that come before our judges, and in fact, I think that the fact that the man is a technical man sometimes, by that fact alone, lessens his grasp in other ways. Q. Don't you think the quality of courage might come in some- times in withstanding influences and the attempts of the corpora- tions — A. Oh surely, yes. Q. To reap undue profits from inadequate service? A. Oh, just as much. Q. As to withstand the public clamor? A. Yes, courage must be shown on that side, of course. The scales must be held abso- lutely even, and the corporations, any corporation that seeks to put anything over on the Commission or on the people should be brought up with a very round turn, and my judgment about the corporations, taking them by and large, is that they have pretty well accepted the regulatory principle, that there are comparatively few stiff-necked ones among them, and absolute reactionaries among them. You occasionally run across one which seems to forget that the world has rn'oved and thinlcs that it is all a private business and they can do just exactly as they please, and the public be damned ; but there are very few of them left, and for the most part — I speak now not only from the point of view of my experi- FrNAL Report of Joint Legislative Committee 2209 ence here in tliis Comniission but for three years I was in the Insurance Department where the general problem was exactly the same thing, that is, only applied to the one field of insurance, but the general problem is this : How can you square the workings of free institutions, democratic institutions working freely with all the disturbance which that creates and which necessitates all the time going on, changes in conditions, how can you square that state of affairs with commercial prosperity ? The chief thing that commercial people want is stability, and that is the one thing they can't get undecr democratic institutions operating without check or hindrance, and, as I look at it broadly, one of th« great func- tions of this regulatory system is to serve as a kind of a, you might say, balance wheel, a sort of a buffer, and therefore, in the very nature of things, it to a large extent is a compromising job that we have. They have to work the best they can at the extreme arguments on both sides and they are liable to all sorts of mis- interpretation as to their motives in doing so, but it is one of the most useful functions that they can perform. I do not think that regulation has had a fair trial yet in ISTew York, as I have said, and I think it is gradually working out and that the public is gradually becoming aware of the needs of the situation. I think an investigation of this sort, if it is conducted in the spirit which I sincerely hope and am entirely willing to believe that this in- vestigation is conducted in, namely, one of endeavoring to get at the exact truth about this thing, is going to be of infinite help, be of great benefit. I do feel, though, that all responsible people of both political parties should do their very best, should stand together to protect officials who are trying to make the best of a difiicult job. I don't say that we are or are not, but I don't think that anybody of any political party, for any political motive, should take advantage of any momentary unpopularity which the regulatory system may fall under, for party ends, but so far as I am concerned I don't think that anybody is doing that in this case, and therefore I think that the investigation ought to do great good. But you must in the end keep politics out of these Commis- sions just as you must keep it out of the Courts, as there is no reason for its existing here than in the Courts. 70 2210 Investigation of Public Service Commissions Q. What do you think of a provision in the law, Mr. Emmet, requiring the two boards of Public Service Commissioners to be bi-partisan ; don't you think that would be a safeguard ? A. Well, I question it very much, Mr. Hayward, and for this reason, that the bi-partisan idea, the compulsory bi-partisan idea, if I am right, is an exploded theory; I think it has been tried out in many cases. I cannot quote you chapter and verse, but I know that it has been tried in N^ew York State from time to time, in the city particularly, in various boards, and my general understanding is that it has tended in the end to increase the political character of the body rather than to lessen politics in the body. It might have this one, that is to say, the offices finally become mere spoils to be parceled out between the two political parties and they come to be regarded irom that point of view. Q. If you don't have that, isn't there the danger of their be- coming political spoils, to be parceled out by one political party, the one that happens to be in power, to the same extent that they would become the spoils of two political parties if they are bi- partisan ? A. Yes, there is a danger, of course, but you have got the protection in the present law as to that, that is, a reasonably adequate protection, I think, in this provision that one of the Com- missionerships drops in each year. You might determine a greater frequency of vacancies, but I think that is a fairly adequate one. It means that there is a constant coming on and off, and that any change which takes place in the political character of the State is immediately reflected in part at least in the Commission, l^ow then, as to this matter of politics on the Commission, and as to the necessity of guarding against it. As a matter of fact, it doesn't make so much difference if all the men on the Public Service Commission happen to be one political party as it might in the Court of Appeals, for instance, where purely political questions come up before that Court, partisan questions, questions involving the party, and yet there is nothing there, no provision there for minority representation or anything of that sort, and yet there you might make quite an argument in favor of having always men of both political parties on a Court ; but none of the questions that come before the Public Service Commission have anything right- fully to do with politics as no political question comes up. Final Eepoet of Joint Legislative Committee 2211 Q. Of course, as you ar& aware, there has been in the last ten years a very great agitation in the northern States for a bi-partisan judiciary? A. Yes. Q. "Which has not been agitated in the slightest degree in any of the southern States. A. Well, I did not know that fact, but I suppose it is worth considering, but, broadly speaking, I take the view that a man's politics don't affect his ability to serve the public in any capacity merely by virtue of the fact that he is a Democrat or a Republican; it doesn't make a particle of difference. The question is whether he is the right kind of a man, and it is un- fortunate in my judgment that the Public Service Commissions should have gotten to have all members of one party on them ; I think it is too bad; I do not think that it was in accord with Governor Hughes' notion as to what probably would result, and yet Grovernor Hughes gave very careful consideration to this ques- tion of compulsory bi-partisanship and he decided not to put it in. Q. I know he did. Did you ever hear it said — I am not say- ing this as a fact, that the reason he finally decided not to put it in was — not to have it put in, because he was not primarily mak- ing the law — was that he said, in his opinion, no Governor would ever dare to change the bi-partisan character of the BoaTd with which he started out? I have heard that; I don't know. A. I don't doubt but what he did think that, and I think it is too bad that the Boards have not always had some representatives of both parties, but I question whether it is desirable to put a compulsory bi-partisanship principle provision in the law. Mr. Mott calls my attention to the fact — I say it simply as a fact, the fact that our Commission here happens at the present moment to be nominally all Democratic, as I understand it, although I guess most of the members are not what you might call the rock-ribbed extreme type, but they are nominally all Democratic, and yet it has made abso- lutely no difference whatever 'a the political complexion of the subordinates; our counsel is a Republican and how many of the division chiefs? Mr. Mott. — Seven of the eight. The Witness. Seven of the eight are Republicans ; there never has been a single removal from office by reason of the fact that a man was a Republican since the Democrats were nominally in 2212 Investigation of Public Sbevice Commissions control over there, and there never has been any appointment for that reason. By Colonel Hayward (to witness) : Q. I think that is substantially so in the First District too, Mr. Emmet ? A. Well, I understand it to be so. Q. I think they absolutely disregarded that, and when the Democrats came along and took the control of the Boards they found efficient men and kept them, notwithstanding the fact that they were or -were not members of their own political party. A. Yes, that was my understanding. Well, gentlemen, I don't know that I have anything more to say. Q. Well, we asked Judge Irvine to come over thinking — A. I am sorry I took up so much time. Q. We thought we would finish with Mr. Emmet. Chairman Thompson had two or three questions he wanted to ask Mr. Emmet, perhaps covering some of these questions of the law that we have gone into inadvertently, and could you come back after the adjournment, Mr. Emmet, for that reason? A. Yes, sir, all right. Q. And if you want to go ahead fifteen or twenty minutes, we can use Mr. Irvine now, and then -adjoum until 2. Feaniv Ievine, called as a witness 'and sworn, testified as follows : Direct examination by Colonel Hayward: Q. When did you come on the Commission, Judge? A. The 1st of April, 1914, I took the oath. Q. About the same time Mr. Emmet did ? A. Mr. Emmet I think took the oath the following day. Q. Where is your residence. Judge Irvine ? A. Ithaca. Q. Ithaca, New York ? A. Yes, sir. Q. You were not on the Commission when the 'Canadian- American Power case was decided, were you. Judge? A. I was not. Q. Well, you are familiar with that case? A. I wouldn't say that I was familiar with the case. I have heard the case discussed a good deal, and after I came on the Commission there was an FiwAL Report of Joint Legislative Committee 2213 application made to reopen it by someone "who did not seem to have any particular interest in it; but I heard — it was brought to my attention that way ; and then, more recently it has come to my attention again. I cannot say that I am familiar with the case. Q. Have you any view as to the prevailing opinion in that case ? A. I have not, none that I want to express, Colonel Hayward, un- less the Committee insists on it. Q. -No, I would not insist. A. It is reopened now. Q. ISTow, when you came on the Commission, did you go into the organization of the Commission any — I mean, make an in- vestigation of the system of handling complaints and keeping track of orders and their enforcement and all that ? A. I did to a certain extent, that is, I talked to the other Commissioners; I talked to Mr. Mott, and obtained a good deal of information from docu- ments. I won't say I made a thorough examination into the or- ganization ; I did not do that ; because I knew the condition of the work, and the problem was to get out from under the load as fast as we could ; that was the first thing. Q. Did you find, when you first came on, a lot of cases that had accumulated that required attention ? A. Yes, sir. Q. I suppose you did. And was there any effort made, after you came on the Commission, by Chairman Van Santvoord or any- one else, to parcel those cases out amongst the Commissioners ? A. Oh, yes. Q. Did you take them up in the order of their seniority? A. Not entirely so. Q. Eather in the order of their importance or — A. I am not able to say in -what order they were taken up. Colonel Hayward. Mr. Emmet was a new member of the Commission ; I was a new member of the Commission, and they were assigned to us at once, a group of those old cases, whether because they were the oldest, or because they were of special urgency, or -whether they might prove easy for a new man to take hold of, I do not know. Q. Well, the biggest case that has been on the Commission since you have been on it, was the Telephone case ? A. Yes, I so regard it. Q. Yes, might be fairly said to be. You went through all those hearings on the Telephone case, didn't you ? A. No. 2214 Investigation of Public Service Commissions Q. What hearings did you attend ? A. I have attended I think two or three hearings here before we got into the evidence, and I have attended I think four in New York. Q. Well, there was but one prior to October, I think. A. Well, there were conferences then ; there were two or three occasions the parties were up here; I won't say how many; perhaps not more than twice. But there was no evidence taken. Q. You did not know this man McOlellan when he previously worked for the Commission, did you ? A. No, sir. Q. You were not here? A. ISTo, I never met Mr. McClellan until after I came on the Commission. Q. Did you concur in selecting him as the expert for the Com- mission? A. I did. Q. You knew at that time that when he was working for the Commission he had never done any work of this kind, had never been assigned to this kind of work ? A. I didn't suppose he had ever done anything of this magnitude, but from what I learned of Mr. McClellan, I considered him entirely competent to take charge of this work. Q. Did you know that when he was here he was Chief of the Division of Heat, Light and Power? A. Yes. Q. Did you find out any qualifications for this telephone in- vestigation that he had acquired after leaving the Commission in the fall of 1913 ? A. I didn't think that any special familiarity with the telephone business was essential. Others can supply that. But what we did need was an engineer of calibre to undertake a job of this kind. Q. And you thought he filled the bill in that respect? A. I thought he would, yes. I knew him somewhat by that time, and I inquired about him, and it is my judgment upon my inquiries. Q. Well now, I have asked some of the other Commissioners these same questions about the telephone business, but of course that has been necessary because of the fact that we could not put three or four of you on the witness stand at the same time, Judge Irvine. It may become monotonous by this time. A. Well, I hadn't been here before, so it is not monotonous to me, although it may become so to you. Q. I was thinking of some of the other gentlemen on the Com- mittee and my associates; but you are more fortunate than we are Final Eepoet of Joint Legislative Committee 2215 in that respect. Having this confidence in Mr. McOlellan, you accepted his evidence when it went into the record, as being authentic and predicated on thorough and a fair investigation and being sound, didn't you ? A. I thought so. I thought we were getting his honest judgment, where it was a, matter of judgment, and the truth, where it was a matter of fact. Q. You knew the Legislature hiad given you a hundred thou- sand dollars to get just that kind of evidence, before that, didn't you? A. Yes. Q. On which you based an opinion? A. Yes. Q. And you 'had confined yourself to his evidence and the evi- dence of his assistants? A. Yes. Q. And had spent not to exceed $40,000' of the $100,000 ? A. That is true. Q. Now, he makes a report here and gave testimony before you on a valuation basis of the telepbone property, $96,000,000: A. Eeproduction cost new. Q. And Mr. Emmet took his figures and allowed $6,000,0'0O for depreciation. ISTow, bow did you arrive at your $82,000,000 figure. Judge? A. That case is not closed yet. I would rather, unless the Committee insists, not go into details there. But I will say this, that I took the evidence of Mr. McClellan, and the other evidence from the Commission's engineers; I took it an entirely different way than the way Mr. Emmet did, and I built up from that and reached the figure which I thought was proper, — more or less of an estimate, to be true, and it happened that it came so near what two other — ^ three other members of the Commission reached, that we found not very much difiiculty in getting together on a round sum. But I prefer not to go into the items unless the Committee ask it. Q. I won't ask for that. Did you have in mind the report of Professor Bemis, made for the Foley Committee? A. I knew such a report had been made, but I did not use it myself. Q. Didn't take judicial notice of it at all? A. I knew such a report had been made, and I knew the result that he had reached, but I did not consider that in reaching my conclusion. Q. Then there wasn't anything in the proposition of you three Commissioners striking — ■ four of you, but three I think at first, practically the same — striking a happy medium between Bemis 2216 Investigation of Public Seevicb Commissions and McOlellan? A. Absolutely none. As a matter of fact, Colonel Haywardj it never occurred to me that the result was of that character until this week when it began to be bruited around here. Q. Bruited around ? A. For the first time then it occurred to me that we did happen to come in about half way between Mr. McClellan's figures — no. Between Mr. McClellan's reproduc- tion cost new — Q. Between what, Judge? A. His figures as to reproduction cost new, and Professor Bemis' figures. Q. Well then, it was also half way between Professor Bemis' figures and the telephone company's figures, wasn't it ? A. I only know the telephone company's figures from newspaper reports, and that is a few thousand dollars less than a hundred millions. Q. Well, I am reading from this typewritten page, but we have here somewhere Mr. McClellan's original sheet which he made up in his own handwriting, figures of which I may say this is an exact copy. It is here so^mewhere I think. (Producing original sheet.) Yes, those are McClellan's figures. That is Exhibit 6, was a tax statement of the company which Mr. McClellan has rather classified as cost to reproduce new derived from plant meas- urement records as of June 30, 1914. He starts ofP with $65,961,- 661. JSTow, he adds there the round figures $725,000 right-of- way. ISTow, that is undoubtedly an arbitrary conclusion. What do you suppose that was predicated on ? A. I will have to ask the Committee I think not to go into that, because I do not think I should go into these different estimates in the present state of the case. A week or two later, if a final order is made, I would be glad to. I would prefer not to go into that now. Colonel Hay ward. — What do you say about this, Mr. Chair- man ? Judge Irvine says he does not care to go into the items here on Mr. McClellan's telephone report because the matter is not closed yet and he does not care to make public his views on these several iteins. I do not insist on it. Chairman Thompson. — ■ What is your idea about it ? 'Colonel Hayward. — I do not think we ought to require him to, if the case is pending. I do not think we ought to. Final Repokt of Joint Legislative Committee 2217 Chairman Tbompson. — Will the items be furnished us pri- vately if we desire them ? A. I will submit that to the Commis- sion. I would not on my own responsibility. It is a pending matter, Senator Thompson, and it is just about to a conclusion, and I hope to the reasonable satisfaction of everybody, and I do not think it is now the time to go into a discussion of the con- siderations which have brought it to this point. Chairman Thompson. — Well, Judge, in ISTew York in a matter now pending, a question of reduction of rates in the New York Edison Company, in which an opinion had been written but no decision be«n given out, but which was a pending matter, we asked for and received the opinion, but did not extend it into the record ; we asked for and received Commissioner Maltbie's opinion. The decision was only made, as I understand, day before yesterday. We did that in that case, and they were simply handed to the Chairman for the benefit of the Committee and counsel. A. I submit myself entirely to the ruling of the Commission. Chairman Thompson. — We will defer that until afternoon, and if there is any reason — we won't be in session only a minute longer — in fact, it is 1 o'clock now. We will adjourn until 2 o'clock, which will mean 2:15. Kecess until 2 :15. AFTEKIvTOOl^r PROCEEDINGS Feane: Irvine, recalled, testified as follows : Mr. Whedon: Q. Judge Irvine, we were discussing the case of the application of the Cattaraugus County Lighting Company for leave to pur- chase the franchise and 'the property and assets of the Glean Elec- tric Light & Power Company, this morning with Commissioner Emmet. I understand you voted in favor of the order that was entered in that case ? A. I did. Q. I assume you having voted in that way of course considered that that was not a case of " stock watering" ? Ai. I did not. Q. Did you file an opinion in that case ? A. I did not. 2218 Intestigation of Public Service Commissions Q. But you voted for the order ? A. I voted. Q. Will you explain your idea of tliat case I A. My idea was this: That the statute confers authority with the consent of the 'Commission for an electric light company to buy the franchise, works and system of another ; that is, it confers authority for an electric company to transfer its franchises, works and system to another company^ and in my idea that was meant to be operative and permit the purchase and sale. I think if it was lawful to buy and sell, it was lawful to fix the price according to the standard used in fixing prices generally, considering the elements men con- sider in fixing prices. Q. No one, I don't think anyone disputes but what the action of the Commission was lawful in that case, it was authorized by the statute? A. Yes. Q. The only question that seems to be raised is whether or not the Commission properly exercised its jurisdiction? A. I was reaching that. I say as the law contemplated the purchase and sale I believe it contemplated consideration of the judgment that men do consider in fixing values in buying and selling, that among those things were earning power, and, if not prohibited, future earning power. Q. Well now, right there. Had there been any decisions of the Commission prior to this one holding that a company by purchas- ing the assets of another company in issuing stock for those assets could take into consideration earning power ? A. No, I don't think there had been. Q. In other words, this was a new case on that subject? A. As far as I know. I don't speak positively about that, because liiat case came up in the great rush of business before the summer vacation, and I didn't have time to examine into it as closely as I would like. Q. It seems from the opinion of Comimissioner Decker that the Court of Appeals had authorized, in rate cases, the taking into con- sideration of earning power, going values ? A. Well, that is dif- ferent, I think, Q. That is a different case ? A. I think it is. My opinion was not based at all on any dividend going value as in the King; County cases ; that was my theory that the law permitted the pur- Final Repoet of Joint Legislative Committee 2219 chase and permitted therefore consideration of those elements that men use in fixing values. Suppose, for example, there were two shops, haberdasheries, if you will, with stocks of goods that would inventory perhaps at precisely the same sum ; one of these was in a good location and been doing a good business, the goods were sold out, all the stock was good, fashionable goods, with lots of cus- tomers, and the other one was a run down old shop with dead stock. Anyone buying a haberdashery store would pay a good deal more for the profitable one than the unprofitable one, and it seemed to me not to recognize that principle in such a transaction would be to say that the purchaser if they could be found, could be made practically junk prices ; that is one feature. Q. But not that particular one you haven't in mind the good will of the concern? A. No, the good will, that is rather an in- definite term. Q. Can you apply it in your opinion to public corporations which have a practical monopoly as you could in a case of private industry where there is competition? A. ISTo, I think you have to look out for the public interests in considering other lines; but I think you must in dealing with the purchase and sale consider that then there is another fact; suppose such a matter as a pur- chase of stock instead of property, that is, that it went to the stock, if it is to be purchased can only be purchased at a valuation it would have if on a par value of the actual contingent assets of the company as junk or it must be purchased on the valuation that it is a going concern. I may be wrong in my conclusions there. Then when Mr. Decker's opinion came in, although we had dis- cussed it very much before the opinion, Mr. Decker's opinion came in and I began to have my doubts as to whether I was correct. I am giving you the views I entertained at the time, and my reasons for believing as I did in that case. Q. Had Mr. Decker's opinion came in before you voted, or afterwards ? A. Mr. Decker's formal opinion came in after. Q. Did you read Mr. Hasbrouck's memoranda which was fur- nished for Commissioner Emmet and Commissioner Decker ? A. I think I did. Q. Well, I suppose that you agree with his general principle expressed in that opinion, that as a general rule the earning value 2220 Investigation of Public Service Commissions ought not to be — A. I agree entirely that the earning value ought not to be capitalized as such; but simply the state of the law authorizing purchases and sales that it seems to me it natu- rally follows consideration of earning power when you come to deal with sales of property. If it were direct capitalization of earning power^ franchises or something of that kind, I wouldn't agree to it for a minute. Q. I assume you read over the testimony that was given in the case ? A. I did not read the testimony ; my opinion is that mine was based upon the arguments on the hearing of the case and a conference with Mr. Hopson on the subject. Q. Did Hopson agree that $200,000 was a fair capitalization ? A. 'No, because he thought — Q. He was very much opposed? A. He was very much op- posed to it, because all the time we were considering it, I didn't understand Mr. Hopson as believing that it ought to be as much as $200,000. Q. Mr. Hopson said in his memoranda submitted to Commis- sioner Emmet, that he fonnd upon the theory that the Commission should take into account the earning power as reported at least, and should not, in his opinion say that the earning power would jus- tify any capitalization over the amount that the Olean Company was already capitalized at. A. I have forgotten Mr. Hopson's memoranda ; but that is my inference from my conversation I had with Mr. Hopson on the subject. Now I will not say Mr. Hopson said that it would be a fair valuation. I will say my conclusion after we got down to it, down to the $200,000, it would be fair to say in part at least my conclusion resulted from the talk with Mr. Hopson. Q. I assume you did not consider as Commissioner Decker did consider, that this was an attempt on the part of the Cattaraugus Company to accomplish by indirection what under the statute it could not accomplish directly? A. I don't think I considered motives, Mr. Whedon. Q. You didn't take that into consideration at all ? A. I didn't consider motives. I took the case as it was presented, as I under- stood it to be before the Commission without any consideration of ulterior motives. Final Eepoet of Joint Legislative Committee 2231 Q. You wouldn't think then it would be a good plan to amend this law so as to prevent a corporation from purchasing the assets of another corporation for more stock than the second corporation was already capitalized at ? A. I think that would be dangerous, although where it is proper upon consolidation, the consolidated company can issue more stock — Q. More stock than the sum total of the capitalization of the two companies ? A. Yes. I think the problem presented is some- what different. Q. In what way? A. On the consolidation they are simply valuing the two things together. Q. Isn't that in effect what they did in this case? A. Xo, I don't think they did. They bought the physical property, the franchise of tlie Olean Company, and they put the properties together, put these corporations together. Q. That left the Olean Company simply an empty shell? A. That is about it. Q. So far as the contingent — A. It became a single concern after that as far as the contingent assets were concerned. Q. Well, did the fact that the Cattaraugus Company had already changed its name to the Olean Company before this order was made, have any influence upon you in leading you to believe this was simply a subterfuge ? A. I don't know but the fact that I voted — Q. The franchises were transferred ? A. Yes, they were. Q. So that the Olean Company had nothing left? A. The Olean Company had nothing left except what it got of the capital stock. Q. The capital stock which was probably distributed among the stockholders ? A. I don't know what they did with it ; they had a right to, I suppose. Q. N'one of that stock, as I understand it, went to purchase the property of the Cattaraugus Company, as least the order didn't provide for it ? A. ISTo, it provided for its application for the pur- chase of tlie franchise of the Cattaraugus System, and the Cat- taraugus Company as it was then, or the Olean Company as it then existed, there was a provision in the order for the issuance of bonds to take care of further extensions of the Cattaraugus-Olean property; as I recall it; that was it. 2222 Investigation of Public Sebvice Commissions Q. But you didn't read over the testimony at tie time you voted ? A. I did not. Q. You simply relied on the argument pro and con that was pre- sented at the time of the hearing ? A. And conversation with my colleagues at the vote, and conversation with Mr. Hopson. Q. Did you read Mr. Emmet's memorandum which he pre- sented this morning, which he did not file with the Commission; did he submit that to you ? A. I don't think I ever saw any mem- orandum from Mr. Emmet. Q. You saw Commissioner Decker's memorandum which was submitted after the decision was made? A. Yes. Q. And the order was signed? A. Yes, sir. I think, Mr. Whedon, though I am not sure about this, but I think the minutes will show, that in voting I stated that I did not want to have my vote to be considered as an indication, an opinion in favor of the direct capitalization of earning power. Q. Isn't that what it amounted to ? A. 'No, I don't think so. Q. Indirectly in that way ? A. I think that is something you cannot avoid unless you are going to confine the rig'ht to purchase, to the right to purchase junk. Q. Don't you think that the capitalization expert of the Com- mission in valuing this property, valued it as a going concern ? A. I do not believe they did in the sense of the term which I have been speaking now. Remember, don't get mixed. Perhaps my distinction is not right. I would consider going concern values, as defined by the Court 'of Appeals in the Kings County case, as something entirely different from good will, earning power of the concern if it is going. Q. Had you seen Mr. Hopson's report which indicated that in his opinion the assets of this corporation, the tangible assets of this corporation, after deducting everything that he thought was not proper to be admitted in the way of amortized debts, said the same thing were only worth isomething between $6,000' and $7,0'00 ? A. I did not examine Mr. Hopson's report. Q. Did you confer with Commissioner Emmet on this matter? A. Not prior to the vote; at least I have no recollection of con- ferring with him prior to the vote ; I may have done so, but I have no recollection. Final Kepoet of Joint Legislative Committee 2223 Q. Did Mr. Hopson tell you what in his opinion was the value of these 'properties'^ A. I have no such recollection. I do not remember the details of my conversation with Mr. Hopson at all. We were handling a good many cases just at that time. Q. So you did not take into consideration the question of good faith, upon which Commissioner Emmet seems to have relied? A. I did not. At least, I did not question the motive, and knew of no basis for questioning the motives. Q. There was no substantial opposition in this cajse except such as was furnished by the Commission's own expert? A. I don't think so. Q. Don't you think it would be of benefit to the Commission if there could be established some way in which both sides of a case, that is, I mean could be presented by argument, after it had been assigned to have counsel look into the other side and present that side of the argument? A. That is that the Commission should have a sort of a devil's advocate to see that both sides were always skillfully presented. Q. In other words, this case seems to be, just one side, for in- stance, an attorney come and argue before you — there was just one side argued of the case, and you don't have the other side pre- sented? A. Yes. Q. Don't you think it would be a good scheme for the Law De- partment of the Commission authorized to go into the other side of it, for instance, in the case, those men were the Commission's own experts that seemed to be opposed to this matter ? A. I think it would be desirable if it appeared to be practicable. Under present conditions I don't believe it is practicable. Q. Down in the First District tjiere, they seem to have had a sort of a system, at least in regard to regulatory matters, I don't know about this in rate and capitalization cases. A. Their report down there was capitalization and rate cases, and regulatory mat- ters, usually in regulatory matters. I don't know if both sides of the report were squarely presented. Q. Do you think that there are any jokers, so-called jokers, in this law? A. I don't know what a joker is. It is a vague, in- definite term. There is some things in it I would rather were not here, were not in it. 2224: I^TESTIGATIo:i^ of Public Service Commissio>-s Q. A joker is a term, as it has been recently used means some- tting which permits a corporation, for instance, to do something which it was not intended that thej should be permitted to do bv the law? A. Xo. I don't believe, as far as I know, there is noth- ing I ever saw gives evidence of having been inserted for the pur- pose of evasion of the act; but there are some provisions there which I think shouldn't be there. Q. Will you explain what provisions you have reference to? A. Why, for example, when the telephone companies were put under control of the Commission, they were put there with the express provisions of saving existing contracts from the operation of the law against discrimination, and then even providing that the Commission might only exercise its discretion after the con- tracts became, according to their terms, terminable directly with the termination of those contracts. In aU the other eases where there is that sort of thing existing if the contract is discriminating in itself, then it goes overboard. Q, You would have — A. I would have the telephone law like the other provisions of the statute in which the existing — Q. Are there any other provisions you have in mind that ought to be changed, in your opinion I A. I cant answer that without a detailed examination of the statute, ^Ir. Whedon. Tou might run across something I would like to see amended ; but I can't say offhand what those things are. Q. Judge Irvine, what do you think of the proposition to take away from the Courts the right to review the Commission's de- cisions upon a writ of certiorari, leaving the situation about what it is between the Interstate Commerce Commission and the Su- preme Court of the United S.tates ? A. Yes. Q. You think it might be desirable to take it away from the Courts? A. Yes. Q. You have been a Judge and you can look at this matter from both sides and reviewing it both as a Judge and as a Commis- sioner, your opinion is the right to review the Commission's de- cisions should be taken away from the Courts ? A. Practically so, and in recent cases it comes to the consideration of whether in the opinion of the Court the decision of the Commission was proper; for whether we disguise it as we may, in reality, that- is what it comes to on review. Final Keport of Joint Legislative Committee 2225 Q. It makes the Commission an inferior Court, practically ? A. Whei^as if we stood in the same relation to the Courts of the State as the Interstate Commerce Commission stands to the United States Supreme Court, the only question presented for judicial review would be whether the Commission had authority to make the order and whether we had invaded constitutional or statutory rights. In other words, the Courts could not review the discre- tion of the Commission pure and simple when its determination, the Public Service Commission, where there is evidence support- ing that determination. Q. Just as the Court of Appeals reviews the decision of the' Appellate Division in this State ? A. In most cases, — that is not the correct analogy, because they reviewed the determination of the Appellate Division on matters of law generally. Q. But not upon matters of fact ? A. ISTot on matters of fact. Mr. Whedon. — Will you kindly step aside, Judge Irvine, the Chairman desires to ask Mr. Emmet some questions. William Temple Emmet, recalled as a witness, testified as follows : By Chairman Thompson: Q. Did you have any experience with any rate case ? A. Which one. Senator? Q. In the rate cases, telephone rate, gas, telephone and electric light cases ? A. Well, I have been sitting in all of them that have been pending since I have been upon the Commission. Q. Well now, in relation to handling those oases, what is your experience as to whether or not the Commission ought to have the power of fixing temporary rates? A. Well, Senator, as a broad proposition, I am opposed to any further increase in the powers of Commissions, and I think the general feeling I have would cover the question you ask. I can see how under certain circumstances it might be desirable to change the power that should be dis- charged, but on the whole, I think th« public is well enough pro- tected in the law as it stands; that would be my best judgment Q. You don't believe in increasing the power of Public Service Commissions ? A. I do not, no, sir. 2226 Investigation of Public Service Commissions Q. Do you mean by that that you also advise against giving Public Service Commissions any further jurisdiction ? A. No, no, not necessarily; although I cannot at the moment think of anything that I would advocate, from memory. Q. What about water companies? A. Well, water companies, yes, oh, yes, I think they should come under. Q. What about water transportation? A. Water transporta- tion I should think would come — should logically come under it, yes. I see no reason why they should not be under the jurisdic- tion of the 'Commission. Q. What about motor bus lines? A. Well, motor bus lines, that is now under the jurisdiction of the Commission. There is a proposal in the Legislature to take it out ; and the reason for it is, that practically speaking, the public would be very indignant if we denied any applicant for a motor bus line the right to use the public highways; and yet, logically, while it is in the law, we ought to exclude more people from enjoying that right if som^e- body 'else has already got the right, under the general principles which is in the law of protecting vested interests that are already in the field; somebody who has already enjoyed the privilege of running motor bus over certain of the highways of this State, ho is legally there, and then he can come in and oppose any subse- quent applicant, and there is no particular reason why we should not exclude the subsequent applicant just as we exclude people from entering into the electric light business in a field already occupied. But practically speaking, I think if we denied the right of anybody to run a motor bus over the State' highways, there would be serious objection raised; but I don't think the motor bus question taking it 'all together is entirely of such pro- portion, is 'a sufficiently vital public question as to require much supervision las yet. Q. That is, you don't think they require supervision as to the stops they shall make, the prices they shall charge or the service they shall give? A. I should hardly think so. Senator. Q. In your telephone investigation you took considerable, you spent considerable time with that, I take it ? A. Yes, I did, con- siderable. Q. Did you find that it would have been of any benefit from your investigation had you had access to the books, say, of tte Final Eepoet of Joint Legislative Committee 2227 American Telephone & Telegraph Company ? A. I presume it might have expedited things a little bit. Q. You, I understand, were unable to get access to these books. A. I never made any personal effort to, but I believe there was some difficulty. Q. The reason being that they were a corporation that were not confined in their activities to 'New York State ? A. Yes. Q. And their books were not within the State? A. I believe that was the case, yes. Q. What would you say as to amending the law requiring every public service corporation doing business in the State to keep an office in the State where the books will be made accessible to the officers of the State? A. I think that would be all right. I see no objection offhand to that. Q. That would give you the power of inspection of the books of every corporation that had any interest in any public service corporation here ? A. Yes, sir, I think that is perfectly proper. Q. Do you find in your investigation of these rate cases from the experience you have in these towns, some of the up-State towns, anyway, and smaller cities, there is a disposition to, of some people in the cities and towns to establish municipal lighting systems ? A. Yes, I have had several instances of that sort come before me. Q. Have you had occasion to study the result of the investiga- tions made by the National Civic Federation of this subject ? A. Not very carefully, no. I read some things, but not a great many. Q. In there they have a suggestion in reference to the munici- pal lighting companies, that they might be established under the guidance of the Public Service Commission; the Public Service Commission being given ample jurisdiction over the new lighting concerns; and also as to the manner in which the old concerns shall either be permitted to run or be disposed of. A. I know that to be so, that that suggestion has been made. Of course, the Public Service Commission now, as I understand it, has some jur- isdiction over municipal lighting plants. At least, they have to come before us to get permission to exist in the first instance. Q. What do you say as to the suggestion that the Public Service Commission be given jurisdiction over municipal lighting plants and municipal water plants ? A. I think it would be a good thing. 2228 Investigation of Public Service Commissions Q. So that they could have jurisdiction over the whole field? A. Yes, I would think so. I would make that exception to the general idea that I had the power should not be extended, Q. And also the question comes up in reference to the tei'ritory of the First District and territory of tlie Second, and in the light of the testimony here yesterday as to your residence, perhaps in both Districts, you might be peculiarly tilted to give us an idea as to what territory each District should comprise ? A. Well, Colonel Hayward did ask me some questions about that this morning and I expressed my views then. T will very briefly state that I don't myself believe in any change being made. The Colonel seemed to think that I might have some motives of self-interest in having that view, but as a matter of fact it is not due to that 'at all. I would entertain the view without regard to what consequences it might have on me. I think Westchester county, the county line is a natural line, if there is going to be any line at all. ■Colonel Hayward. — You mean the south line ? A. The south line. I think WestclicrfsT county is a section of the State sepa- rate and distinct from New York City and its interests and its social and home life av.d all its traditions and character. And the same thing I think ai:)plies to Long Island. I think that a road like the Long Island Railroad, for instance, which runs entirely on Long Island, something might be said for and against the propo- sition of putting such a road under the jurisdiction of the First District Commission, but in my opinion it ought not to be treated any differently from any of the other railroads. It ought to be under this Commission, I think. By Chairman Thompson (to witness) : Q. I assume you are not actuated there by 'anything personal in the fact that if Westchester county were added to the First Dis- trict that you might thereupon cease to be eligible to the Second District Commission? A. No, not a bit. That was tihe point I spoke of as having been appaiently in Colonel Hayward's mind, too. No, I see that it might have that effect on me, but that is not my reason for thinking that. Q. The suggestion was made by Commissioner Van Santvoord, the chairman, I think it was he that made it, that the Oommis- Final Repoet of Joint Legislative Committee 2229 sioners themselves should be given a more permanent tenure of ofiBce? A. Yes. Q. What are your ideas there? A. Well, I think as a general proposition that is as to almost all public offices. I don't think the situation is materially different with regard to the Public Service Commission than it is with regard to most of the public offices where the general problem in all public life is to get good men in them. And whether it is in the Governorship or in the Legislature or the court or the Public Service Commission or in any branch of the public service the same general principles apply. That is to say, that you can make the position attractive if the salary is adequate, if the term of office is long, if they are not sub- ject to constant interference and possibility of being thrown out before your term of office expires, it makes it more attractive undoubtedly and presum'ably draws a better lot of men who other- wise would be more apt to cut out the public service entirely as a field and would prefer to go into private life with the larger re- wards and the attractions which it has. So that I don't think the situation is materially different with regard to the Public Service Commission than any other. I think one of the things that I heartily approve of about Governor Hughes' law there in the first place, long before I had any notion that I was ever going to be a Public Service Commissioner, was the fact that he had the fore- sight and vision, as I take it, to stand for a salary of $15,000 a year for that office. It was out of line with most of the State salaries that were being paid. It is absurdly out of line with the salary that the Governor receives, for instance. Q. Or a Senator. A. Or a Senator. Absolutely absurd. But the defect is, in my judgment, not in the $15,000 paid to the Public Service Commissioners but in the absurdly low salary paid to the Governor and to the Senator. So that I think that the situ- ation with regard to salary is all right. I think $15,000 is an ade- quate salary and a m'an who receives that ought to give his time to the work and be quite content to stay in the public service. If he is not, if he can do better outside, why let him then attend to out- side work. Q. The constitution makers in this State in creating the judi- cial article provided long terms for judges of the Supreme Court, 2230 Investigation of Public Seevice Commissions as also large salaries, I assume because they felt that there was so much of importance that came before them for decision^ A. Yes. Q. Which involved all things of lifej not only monetary oon- sideration but things of more value. jSIow, can you think of any- thing — you are a lawyer, I assume ^ A. Yes, sir. Q. Can you think of anything that comes before the Supreme Court of this State that is of more importance than matters that oome before the Public Service Commission in this State 'i A. So, I don't think, broadly speaking, that anything does. My view of the Public Service Commission is that it is the most important arm of government in some ways. It deals with the most vital problem we have to deal with; that is, as to thie moral business prosperity in this' country, and it com-es directly in contact with that. And I don't know of any position that 1 think has more essential and inherent dignity about it than the Public Service Commissionership. And I think the salary of $15,000 is all right. I think that the term of office might perfectly properly be increased, and yet I think a five years' term is not out of the way either. I tell you, if you don't mind my rambling on in this way, Senator. Q. No, go right on. A. If you wind me up on these govern- mental problems I sometimes talk longer than I ought. I feel that it is not a bad plan every now and then to recruit public offi- cers from the ranks of the people again and bring in a fresh point of view. I am not altogether a believer in very long terms of office. I think that after a man has been in a position for five or six or seven years he is apt to get into a rut. I don't care what kind of a position it is, whether it is judicial or administrative. And while he may become very well versed in all the technique of his business, he loses a certain freshness of point of view which you only get by bringing in new blood from the outside. And therefore, I think that the five-year term is not out of the way. I would just as soon see it a little longer, but not so very much longer. And I think the provision in the law which provides for the constant refreshment of the Commission by new men coming in each year is an admirable one and keeps the Commission more in line with the people. I feel about the courts, the Appellate Courts oftentimes particularly, that they get after awhile a little bit out of touch with popular thought on things, because the judges Final Repoet of Joint Legislative Committee 2231 are there practically for life. Of course, I think that Mr. Van Santvoord spoke something about making the tenure of office more secure. I suppose he meant by that, in fact, I think he said it should be recognized in the Constitution and that the Constitu- tion should, I suppose that he meant that the Legislature should join with the Governor in possessing this power of removal. But while I see no objection to that and under certain circumstances it might be a good thing, I am perfectly content personally to see the power of removal left just as it is, with the Governor, I don't think we are likely ever in this State to elect a Governor who will abuse the power of removal grossly. My notion is about that that the power of removal as exercised by a Governor ought to be exercised with just exactly as much discrimination and careful thought as the power of impeachment by the Senate. I don't think that a man who has been appointed to office for a definite time ought to be thrown out before his time has expired through a free use of the power of removal by the Grovernor any more than that the Governor elected by the people should be thrown out brashly and by the free use of the power pi impeachment by the Legislature. So I am a believer in general, in vesting powers in the Governor. I think that on the whole by centralizing respon- sibility we know exactly who to look to for results and I am per- fectly content to see the power of removal by the Governor left just as it is in the law. Q. In New York we found five Public Service Commissioners drawing $15,000 a year, and we found that they came in contact with very large aggregations of capital in the way of public service corporations ? A. Yes. Q. And they had to stand between them and the people whom the Public Service Commissioners were supposed originally de- signed to represent? A. Yes. Q. We found those fifteen thousand Commissioners up against the heads of these corporations, some of whom drew forty thou- sand, some fifty thousaind, some as high as a hundred thousand dollars a year? A. Yes. Q. And with those things before them, why, the question of the tenure of office and the question of the salary becomes an im- portant one for us to consider, as to how much protection of ordi- nary people who haven't got money to pay anybody a salary gets 2232 Investigation of Public Service Commissions looked after. A. Weli, of courae, that very situation that you de- pict is the situation wihich makes this position one of great im- portance and you have to get the right kind of men in it. I don't think I would pay more than $15,000 a year, though. Q. The idea I have already expressed to you is this. I am going to give a case of the chairman of the up-State Oommission, the chairman of the up-State Commission for five years, and since that I understand he has gone into the employ of one of the public service corpoTations that he regulated for five years ? A. Yes. Q. Now, should a condition be permitted to continue that any Public Service Commissioner might while he is Public Service Commissioner get into his heart an ambition to be employed by a public service corporation after his term, expires ? A. It is ex- tremely unfortunate if he does. I don't know whether it is unavoidable or not. I don't know any way you can avoid it except by making the term practically a life term, and that I am not in favor of. And otherwise, I think you simply have to trust to the man that you get in there, getting the right man, and to a gen- eral feeling on the part of the community that that sort of thing is bad. Q. Commissioner, did you have any experience in this Cana- dian-American Power Company capitalization ? A. No, I haven't had any, excepting as I have heard of the case since it has come up for a reargument and rehearing. There is a motion for a re- argument now on, but it was decided before I came on the Com- mission. Chairman Thompson. — Here is a statement that really ought to go into the record, I think from what I know of it; handed to me by a member of the Committee. I will read this here and if you have any comment to make on it I will be glad to have you make it: " The Canadian-American Power Company will be capi- talized at approximately $5,000,000. " The carrying charges on that sum at 5 per cent, is $250,000. " It is proposed to bring from Canada 50,000 horsepower. Thus the permanent charge for interest "alone would amount to $5 per horsepower. Final Eepoet of Joint Legislative Committee 2233 " The Hydro-Electric Commission of Ontario buys elec- tric power at the switchboard from the Ontario Power Com- pany at $9 a horsepower. " General Greene gives testimony on page 83 of the hear- ings that it costs about $2 to transmit the power to the boundary. " The contract of the Canadian-American Power Company provides that power shall be sold at the border at $12.50 per horsepower, for distribution in the United States. Thus it will be seen that American consumers will have to pay $1.50 more per horsepower than would be paid the Hydro-Electric Commission, before the power crosses the United States line. " Instead of paying $9 at the switchboard and $2 more for the transmission to the American line the contract pro- vides for $12.50 per horsepower, instead of $11. '■ How much would the Canadian-Niagara Power Company charge for power in order to make a profit? To start with the cost is $12.50' at border plus carrying charges for $5,000,- 000 of $5 more, making $1Y.50. The cost of transmission to a market will be $5 more, making $22.50'. This does not reckon the cost of maintenance of equipment and other expenses. " The whole point to the matter is that the Public Service Commission failed to go into any of this information in pass- ing upon the application of the Canadian-A'merican Power Company. " Instead of insisting that if the power were to come from Canada it must be sold on something near the basis that it was sold for in Canada, under like circumstances, the Com- mission paid little or no attention to the question of protect- ing power consumers in Western ISTew York. "A village of the size of Arcade, at the same distance from the falls in Canada, is being lighted and its industries are being run by electricity from Niagara Falls. The Public Service Commission may be free from blame for anything that has happened in the past. It has no excuse for con- 2234 Investigation of Public Seevice Commissions tinuing the situation when it was created for the specific pur- pose of standing between the people and these evild." The Witness. — I think that is all very germane to the general question now pending before the Commission as to whether this case shiould not be reopened, and I would be very glad to get a transcript of the record and bring that matter up when we take the case up. Chairman Thompson. — That is all. The Witness. — You understand, do you, Mr. Senator, that this particular case was over and settled before I became a member of the Commission ? 'Chairman Thompson. — I appreciate that. The Witness. — But it now comes up again on a motion to be reargued. Chairman Thompson. — Is there anything further, Mr. Com- missioner, that you desire to say ? The Witness. — I don't think so, Senator. 'Chairman Thompson. — If there is 'anything before we adjourn we will be very glad to hear you. The Witness. — Thank you very much. I am very much obliged to you for the opportunity. Fean^k Ievine, recalled as a witness, testified as follows: Chairman Thompson. — Really, while it hasn't anything to do with the results of this Committee, it is so much in line with some experience of some of the members of the Legislative Investigating Committee in certifying to expenses, and getting along with the Comptroller, I am going to put in evidence a couple of the bills of Commissioner Van Santvoord ; he makes a bill that he went to New York on June 11th and 12th, and he gets in his bill as f oll'OWH : Final Eepoet of Joint Legislative Committee 2235 1914 June 11. 300 miles of danger at 2c a mile — Albany to ¥ew York and return $6 OO 12. The price of luxury in a Pullman car going and coming (exclusive of whisk broom and other uninvited attentions) 1 50 Having inadvertently neglected to preserve tangible proof that the below affidavit is not a perjury in respect to said Pullman car charge out of deference to the Comp- troller's views (in which I heartily concur) the claim for this particular item is not pressed. (See rule 6 on back hereof.) 2/3 of charge for one night's lodging at what I once heard defined by a zealous Presby- terian clergyman as " that Palace of G-ilded Sin " — The Waldorf-Astoria 4 00 Paid to satisfy the modest but insistent de- mands of the intercostal and subdiaphra- matic vacuities 2 00' Newspapers, Salvation Army contribution, fees, tips and other promiscuous entertain- ment, disbursements for al'l of which are disallowed by the hard-hearted Cerberus of the Comptroller's office — the equivalent of all of the foregoing disbursements multi- plied by X amounting to a considerable sum but extended at $13 50 Less Pullman charge above stated 1 50 $12 00 That the occasion of deponent's going to ISTew York was to con- tribute judicial calm to a formal hearing in the so-called ISTew York Telephone Case — pending before the 'Commission and set for hearing June 11th, and that the occasion of deponent's return 2236 Investigation of Public Service Commissions to Albany was to avoid tlie burden of further hotel and incidental expenses of the sort which cannot be recovered from the State. 1914 July 1. Railroad transportation, Albany to Harmon. . $2 39 Parlor' car (voucher attached, ISTo. 1) 60 Railroad transportation, Irvington to Harmon. 24 Railroad transportation, Harmon to Albany. . 2 39 Parlor car, Poughkeepsie to Albany (voucher attached, 'Ng. 2) 35 Dinner at Mount Vernon 1 25 Chicken pie and sundries trifled with at the Cafe Franoaise, Poughkeepsie railroad sta- tion 80 Paid for trained nurse and medical attendance at my house from 12 a. m. until 7 a. m. July 2, made necessary by the last above men- tioned alimentary indulgence — including amount given to charity in expiation of the sin of excessive use of language during said painful experience — $50. Because timidity is the better part of graft, no claim for reimbursement is made for this last mentioned item, but if the Honorable 'Comptroller can stretch his conscience to the extent of allowing the claim deponeait will not scruple to receive the amount. $8 02 This inspection trip was necessary to gather the required infor- mation for hearing to be held in the matter of the petition of The l^ew York Central & Hudson River Railroad Company as to elimi- nation of the Hartsdale avenue grade crossing of the New York & Harlem Railroad in towns of Scarsdale and Greenburgh. By Mr. Whedon : Q. Judge Irvine, do you know of the Westchester Lighting Company case? A. Yes, sir. Final Eepoet of Joint Legislative Committee 2237 Q. It was pending before the Commission -when you came into office ? A. Yes, and a long time before. Q. Had been for some seven or eight years before ? A. Seven years or more I believe; I know long before I came into office it started; October, 1907, I think. Q. And it had been pending a long — A. Why, I don't remem- ber just how long. Colonel Hayward. — That case started before some of us left the West, or I did. Judge. Q. What do you think about that case as a sample of quickness of — A. Decision ? Well, of course, it wias unfortunate that the case, and those cases, group of cases should have hung fire so long. To him, in a certain way that was familiar with conditions for two or three years in the Commission, a good many cases were hanging fire, if it hadn't, other things would, so you see the delay was inevitable under the circumstances. It is a complex ques- tion ; I can't answer it categorically. Q. That was a very important matter ? A. It was an import- ant matter. Q. Don't you think that it ought to have been wound up in one-third of the time? A. I don't know; I am not prepared to say what it was — ■ would have been possible to do with that case under existing conditions. Q. What do you say of the proposition to amend the law so as to provide for reparation, that is, to provide where a rate case continues over a period of years, that when a decision is finally made, it should go back to the time when the petition was filed ? A|. I thiiik that might be a desirable thing. Q. Do you see any objection to it? A. Nothing occurs to me now. Of course, it might not be possible to collect, get the back rates that have been paid; but personally I can see another objec- tion to such a provision of the statute; and I can see difficulties in administering it; but I don't see any objection in principle. Q. The only difficulty would be in not finding perhaps the sub- scribers who had overpaid ? A. Yes. Q. Of course, that wouldn't worry the company any, that would be the misfortune of the person and wouldn't be to the detriment of the company ? A. Except the difficulty might increase ; I can 2238. Investigation of Public Service Commissions see the company might have its administrative troubles, bookkeep- ing troubles in connection with it; but I imagine they could be met. Q. You could provide, for instance, that after the case had been started, every consumer should receive a receipt ? A. Yes. Q. A sort of n check which might be a rebate check ? A. I think it could be handled easy, Mr. Whedon. I can't see any objection to the principle. I think it would be a good thing. Q. Wouldn't it tend to induce the company to proceed a little more rapidly with the production of testimony? A. I think it might. Q. Now, it seems that was 'a case, another rate case down iu New York, and they found at least in this -case I have in mind in New York, they found when they got all through, after the case had been pending along some three or four years, that the com- panies didn't so keep their books that they could get at the values of the property. Don't you think it would be a good scheme for the law to provide or the Commission to provide a law that the companies of the kind, electric light companies, should keep their books in a certain way so that it would be easy to .arrive at the valuation of their property ? A. It certainly would be very desir- able if that could be done. Under the present system of account- ing, the difficulty is to get it right where there is no basis because the books were not formerly kept in that way, as, for example, the telephone company. Q. What did you find there? A. Well, I didn't find anytJiing; but I didn't know — I imagined their books were in a great deal better shape than those of most any company; but I don't think the companies know from future operation, that the different cor- porations, organizations, that they have been through that the rate goes back to a time prior to any regulation of the subject. Q. What would you think of extending the order to include telephones in New York City, having them within the jurisdiction of the First District Commission ? A. It has been my opinion, Mr. Whedon, that uniformity of a system would be a good system for supervision, and might very well be handled where actual supervision gave some basis. Q. That is the First District? A. In the First District, the supervision of intra-State telephone companies. Final Eepoet of Joint Legislative Committee 2239 Q. How about including Westchester county and Long Island within the jurisdiction of the First Commission; what is your opinion about that ? A. I have no very pronounced opinion upon it; but really I cannot see any very good reason for it. I think the conditions generally in Westchester county and Nassau and Suffolk are more nearly like those up-State than they are within the Greater City. Q. Take the railroad companies, for instance, they touch down through Westdhester county and through Long Island, I would much rather have the jurisdiction placed in the First District so that they could regulate the commutation rates which are charged from those counties into New York City? A. I don't know; I don't know what they have. I would rather be in favor of staying in this Commission. Q. You would be rather glad if you were living in Westchester county, for instance? A. I don't know. Q. If you were taking a ride from Port Chester to New York, wouldn't you rather have the regulation of the rate charge placed in the First District? A. I don't know. whether I would or not. , I have not given any special thought to that. I don't know what my prejudices would be if I was a commuter down there. Q. I am a commuter, a Long Island commuter, and I would rather it would be in the First District? A. I think you are a man of good judgment, Mr. Whedon. Q. What do you think about including the water companies within the jurisdiction of the Public Service Commission? A. I have been in doubt about it ; if they are not in one way, I think they certainly ought to be included. Though as water plants are much more generally municipally owned than any other public utility, and there is such a large proportion of municipally owned water plants, that I am not sure how they should be treated. Q. Don't you think municipal water plants ought to be under the jurisdiction of the Commission? A. I don't know that there is any particular objection. I don't think any more duty ought to be imposed on the Commission unless there is a primitive reason for doing it. Q. Well, there seems to be a considerable sentiment in favor of including water companies in the jurisdiction of the Commis'- 2240 Investigation of Public Seevice Commissions sion upon the ground tbat as at present constituted they pennit a person to overciharge, there is no restriction on them ? A. Very well, if there is grounds for that belief, they ought to come within the jurisdiction of the Commission as a public utility. There is no logical reason for their not being so only except I can see in the one I have stated that generally now they are municipally owned. Q. What do you think of the salary of the Commission, do you think it is adequate or inadequate, or too large ? A. I am inclined to think it is not too large, and yet it might be ; I think there are reasons to be given on both sides. Q. Do you think there is an argument in favor of reducing the salary? A. I think there is, yes. By Colonel Hayward : Q. Other than economy to the State, Judge; other than the argument of economy to the State ? A. Well, in order to avoid a certain kind of criticism. The higher salary paid by the State, of course I don't think — there is Supreme Court justice down the State have more, but not from the State, while the Governor has a salary of less than that of a Public Service Commissioner. I would adjust these matters if I were the autocrat by raising the salary of the Governor very considerable; I think it ought to be raised. By Assemblyman Knight: Q. It is larger than the salary in any other State, isn't it ? A I think it is ; but with ISTew York the salaries are larger than those of any other State. Q. It is ten thousand in Illinois, ten thousand in Pennsylvania, and they run from three to six thousand, don't they? A. Very well, I should say that with what I know of salaries, public sal- aries, ten thousand in Illinois would be about commensurate with fifteen thousand in l^ew York. Q. In Vermont $1,700', I see? A. I don't know. I don't imagine the Vermont Commission devote their w'hole time to the work, do they? Q. I don't believe they do, those Commissions. I imagine not, I don't know. Final Eepoet of Joint Legislative Committee 2241 By Mr. Whedon: Q. We found some instances the New York Commissioners didn't. What would you say of the term of office, is it long enough ? A. I think it ought to be longer. Q. How much longer ? A. I don't know. By Colonel Hayward : Q. The longer the better? A. No, I don't think so; but although the office — for when I came here I didn't realize really how much there was to learn. I knew it was a great big job, but I didn't realize the variety of the work, and it is my now firm con- viction that there isn't any man who has not had years of experi- ence has a right on such a Commission, who is really qualified for the office to take up the work ; he might be a lawyer, he might be a banker, he might be a financier, but the variety of the work is such that anyone coming in will have a great deal to learn after he takes the office. I am free to say if I had realized how much there was to learn I wouldn't have taken it for a two-year term ; if I should be permitted to serve out my term I know I shall leave it feeling that I 'am still in the learning stage. Q. What do you think, a Commissioner serves four or five years and he has just arrived at a stage of his greatest usefulness? A. I think so, as the result of my own experience. Now, perhaps other men can grasp a problem a good deal more rapidly than I can, but I have been working on them faithfully, using my best efforts to master these problems here, and so I wouldn't have undertaken it if I had realized how much new business there was for me to learn, and how long it would take to master it. Q. You held most of your hearings here in Albany, did you not ? A. I won't say most of them. I have — yes, I think most of them were held here. Q. You have no particular place where you repair iat the end of the week to hold a hearing? A. Not to hold a hearing; but I have occasionally assigned outside hearings, some as a matter of convenience, and as a result of it, I am up in the northern part of the State or the central part of the State or perhaps the western part of the State at the end of the week. I like to get home to 71 2242 iNVESTreATiosr of Public Sbevicb CoMmssiONS Itbaca over Sunday "when I can, for that reason if I have hearings in that part of the State I usually hold them Thursday or Friday, Chairman Thompson. — When you get home under those cir- cumstances, you don't charge your fare there and back, do you? A. Of course ndt, not to the office on no account; when I make trips to Ithaca to hold hearings I charge it to Ithaca, but I do not charge my personal expenses to the State. Assemblyman McQuistion : Q. Mr. Chairman, it was intimated by one of the witnesses down in !N"ew York that a Commissioner should have some prelimi- nary training in order to cope with these problems. Can you state any kind of preliminary training that would be valuable to the Commission? A. I can't imagine any better than taking a m^an who is a lawyer, am engineer, and two or three other things, and then putting him in as an understudy on the Commission for a few years. That is practically so if he happened to be without business experience, and new to his — Q. The idea has been advanced several times, possibly not in connection with this Examination here, but in different places, the personnel of the Commission should include along different lines. Do you think that a Commission composed of all lawyers is a desirable thing, for instance? A. I wouldn't say so; but after all I think the personality of the Commission, their training, their breadth of training, breadth of experience, is more important than: the question as to what particular profession he may be. Q. A bill was introduced in the Legislature some time ago providing for an engineer or some other technical man. I just wondered if that is necessarily a good thing ? A. K'ot necessarily, no; it might be a good thing with proper surroundings, but the usual outcome of anything of that kind is that instead of getting five men of somewhat broad training and experience you are likely to get five men of rather narrow training. Q. Five narrow men don't make five broad men; that is what you say? A. I think so. Q. Then your idea would be to leave it entirely to the executive, the appointing power? A. I think so. I don't believe in tying the Governor's hands in such matters. Final Eepoet of Joint Legislative Committee 2243 Colonel Hayward : Q. Judge, do you think an engineer even of years of experience, if they be appointed on this Commission, do you think that a man with a technical engineering education would have any particular advantage over you, for instance, in cases that came before the Commission ? A. Oh, in certain class of oases he would. Q. Rate cases? A. Yes. Well, to some extent rate cases are not an engineering problem. At the same time — Q. They are to some extent? A. They are to some extent. Matters of valuation, that is not exclusively an engineering prob- lem, and I rather think that a man who hadn't been confined en- tirely to one technical pursuit, who had had sufficient general training and experience is better than an engineer provided he has an engineer to assist him. Q. I don't know, the average lawyer who tried a lawsuit in which engineering problems were involved in which he relied on expert testimony, you don't think the average lawyer would prob- ably want to have any civil engineer on the jury, do you? A. I would rather think not. Chairman Thompson. — Or a minister ? A. Now, Senator, don't let's get started on that. You and I will talk about that quietly some day. 'Colonel Hayward. — I don't think of anything more. Chairman Thompson.- — ■ Does any gentleman on the Committee desire to ask any questions of the Commissioner ? Chairman Thompson: Q. What have you been specially occupied with, Judge, with transit problems or with rate-making problems? A. Why, I think the larger part of my time with complaints as to service in addition to rate cases. I have been engaged a little bit on rates, but I am not an expert on them and I prefer to have the Comm.is- sion handle those cases in the first instance. Q. I didn't get your answer ? A. I should say that the greater number of cases I have handled directly have been matters of service complaints. 2244: Investigation of Public Service Commissions Q. You have paid particular attention to that? A. The greater number of cases I have handled have been of that character. Q. What do you say as to whether or not, in your judgment, a Public Service 'Commissioner ought to have remedial powers in some of those cases, where, for instance, an overcharge for trans- portation, either passenger or freight, to have the right to order a refund ? A. Well, it has now. Q. You don't make the original order to refund. Yoa simply approve the application on the part of the railroad for a refund ? A. Yes. Q. You have no original power to order them to make that refund in cases where they don't agree to it, do you ? A. Why, I suppose it is by a mandatory suit. Q. Take the case in New York where a girl only had five cents, she went to work in the morning with twenty-five cents, paid her carfare, five cents, fifteen cents for lunch, and she had five cents to get home with ? A. She had twenty-five cents ? Q. She had twenty-five cents when she left home in the morn- ing and she spent five to get down town and fifteen cents for lunch and she had five cents to get home with^ and she went to the ele- vated station and bought a ticket, and dropped it in the box and they chopped it up. She went out on the platform, and after she stood on the platform for an hour and a half, no train comes along; she couldn't get any information as to when there probably would be a train, and she didn't have five cents to pay her fare, the com- pany had her five cents, and she had to walk seven miles in order to get home. My judgment of that transaction is that the rail- road stole that nickel and they didn't give her anything for it. Do you think the Public Service Commission ought to have the power to order her nickel paid back; do you think they should have that power? A. The case is so extraordinary I think I would have to take it home with me. I see a very grave injustice there to their method of handling tickets. Chairman Thompson. — Of course, it is a bigger question than that. The question came up on some hearing which called my attention to it. The reason for the establishment of a Public Service Commission was not to put into effect more law, but to Final Kepokt of Joint Legislative Committee 2245 serve the rights of the public against public service corporations ; there was law aplenty; the object of the establishment of public service commissions was to give the people aid to a speedy adjust- ment of their difEculties with public service corporations, was it not? A. Chiefly, I think. Q. That was the chief reason ? A. Chiefly ; yes, sir. Q. 'So that it is quite important for the Public Service Com- missioners who retain the confldence of the public, that little com- plaint, those little amounts involved be given careful consideration by the Public Service Commission ? A. I don't think the import- ance of the case depends upon the amount involved. Q. Do you agree with me that if the Public Service Commission is worth preserving, it should be preserved for the quick and proper adjustment of little complaints? A. Of all complaints and of all other matters before the Commission, as speedily as practicable. Q. Expedition is ixaportant? A. Expedition is important. Q. I think that speed is very important. A. It is also import- ant to have a proper disposition of the case; but to refer to this little girl's case again — Colonel Hayward. — Well, that might be an extraordinary case in other parts of the State, Mr. • Chairman, but I don't think it is particularly extraordinary in New York. I think that happens very often, where the margin of livelihood is so narrow, and where there is such a vast number of working girls who reside great dis- tances from their places of employment, and there are frequently blockades of the traffic; I think that happens very often in the greater cities. The Witness. — The point I was making is this emphasizes my remark that it is not so much the particular little girl gets her nickel back, as it is that that the Commission should take such measures as to make it impossible for the company to take nickels in the future under these circumstances. I was looking to the future rather than to remedy individual grievances. Chairman Thompson. — When a railroad company establishes a system by which that girl gets a ticket which would enable her to ride on the road at some other time instead of getting back her money, that didn't meet the situation, did it ? 2246 Intestigation of Public Sbevice Commissions The Witness. — It hardly seems to me she would want to ride upon the road again. I wouldn't. Q. They should not give the girl a rain check in place of her money, and it is my opinion the Public Service Commission ought to have the power to enforce that situation, not particularly on this one nickel, or this one girl, but for every person who might be in a similar situation? A. Certainly. Q. Wow, Judge, is there any reason you can conceive of why the Public Service Commission ought to take longer to decide a rate case than they do to decide a capitalization case? A. Yes, it is not always necessary to go into the clause requiring us to value capitalization cases, as it is in rate cases ; it is generally rate cases where it becomes necess-ary to go into valuation. Q. Why not? A. Why, the value of its capitalization cases can be handled generally by the system of showing it is a proper step without the minute examination of valuation of the company's property. Q. But it is not the valuation that the company is entitled to give, the object is to give protection to the stockholders, isn't it? A. One of them. Q. In one case or another? A. Yes. Q. The stockholder gets the protection, is entitled to the protec- tion, if there is anything in the way of protection ? A. After all, the capitalization cases have protection for the stockholder and protection to the public. Colonel Hayward. — The prospective stockholder might get a receivership, and in passenger rates, the whole public is interested, and capitalization affects the rates, and therefore the very same people are concerned with it, as to whether it is considered. Chairman Thompson: Q. The further you go the further they are benefited in other cases? A. Yes, in differing degrees, perhaps. Q. So that one ought to have as much deliberation as the other, hadn't it ? A. You don't get my point. Senator. In some cases of capitalization you go in far enough to see what is being asked for, if entirely proper, probably necessajy for the development of the company, and that the company affairs are in such shape Final Eepoet of Joint Legislative Committee 2247 as to warrant it without a minute valuation of its property; but when it comes to a rate case, if the company insists upon it, you have to go into that valuation; it is sometimes necessary' in capi- talization cases, but not always. Q. I can't imagine why it shouldn't be as necessary in capitali- zation cases ? A. Because in rate cases the compiany is there op- posing any action which would reduce the rate, and in capitaliza- tion cases ordinarily the public is not there, not being aware of what is going on, opposing capitalization, which it might oppose ultimately if the public be allowed, 'Senator. Sometimes on these applications for capitalization it is of such a character that you can get at it and allow it 'and not determine the rate absolutely, and be on the safe side as far as the public are concerned, without a complete valuation of the property. Q. "What I want to explain, in case 'of reduction of the rate, of course, the company is interested in all these things, because the company will not desire you to reduce their rates ; that is natural ; in capitalization cases the company desires to issue a capitalization that they request? A. Yes. Q. And that might disadvantageously affect the rates if it was unduly permitted? A. Exactly. Q. Now shouldn't the Public Service Commission on its own motion, give equally as much time and thought or deliberation on an investigation in a capitalization case as they would on a rate proposition? A. The investigation should be sufficient for their requirements, my answer would be yes ; but suppose you could see at once a hundred thousand dollars of property, at least there must be that, and there is $10,000 of stock outstanding, and the appli- cation is for ten thousand dollar mortgage, 'and from the exami- nation you are satisfied at once that that ten thousand can be authorized, and there is still a wide margin to keep on working with, even if it was a hundred thousand or a hundred and one thousand or a hundred and one thousand five hundred. I don't mean that all capitalization cases can be treated in that way, but some can be. Q. It comes to a question of permitting you to make a tempo- raxy rate during the investigation. I can very readily see now from what you say that there is a certain point you can go to with safety, 2248 Investigation of Public Seevicb Commissions but beyond that you must make a minute investigation. Well now, on starting an investigation as to a rate to be arrived at, couldn't you make some reduction, couldn't some reduction be made there at that time ? A. Might. Q. In that case ought not you to be given the power to fix a temporary rate pending the investigation as to the reduction ? A. I think it might be a good idea. That result was accomplished in the Telephone case by the company consenting to it. Q. Of course they did, after that, didn't they? A. Oh, they did, after that, of course. Q. I assume there will be a decision in this matter by your Public Service Commission, the Telephone matter, before long? A. It is earnestly hoped that there will be one before next week is over, or before. Q. Have you had any experience that it would be worth while to give us in relation to the duplication of functions by the Public Service Commission of the State and the Interstate Commerce Commission of the United States ? A. I came upon the Commis- sion' with the impression that there was a good deal of that, but I think there is very little now outside of boiler inspections, loco- motives. Q. What about that? A. Those inspections are made by the Interstate Commerce Commission and by the Public Service Com- mission, Second District, boilers and locomotives; both inspect boilers. Q. Both inspect boilers, you have an original inspection? A. Yes, both inspect boilers. Q. Is it necessary to have both inspections? A. I don't think it would be, if the Interstate Commerce Commission made as thorough an inspection as we do. Q. You think that one inspection would be sufficient? A. Under those conditions if they inspected as great a proportion of boilers every year as we do, and their inspection was as thorough as ours, I don't see why it should be duplicated. Q. Is there anything else that occurs to you in the way of clash- ing of the two Commissions? A. I wouldn't say they clashed except the practical clashing which existed back in 1789 on the question as to the relative powers of the State and Federal Grovem- ment ; that is becoming less, I think. There is no clash now, there Final Eepoet of Joint Legislative Committee 2249 are some duplications of accidents on railroads, accidents on rail- roads have to be reported to the Interstate Commerce Commission, and they are reported to us ; but in a general way the objects are the same. Now an effort is being made, and I think it will be successful, by the co-operation of the Association of Eailroad Commissioners with the Interstate Commerce Commission to get the railroads themselves to adopt a uniform system of accident account, so that the same reports would go in to both the State Commission and the Interstate Commerce Commission and relieve the railroads from what is now an unnecessary burden of making out different forms of reports for the same thing. Q. Take the New York Central railroad, you have jurisdiction over the transportation between two different points in the State of New York on that road ? A. Yes. Q. The Interstate Commeroe Commission takes jurisdiction between points in New York and points in some other State ? A. Yes. Q. Do you find your results of investigation in respect to that differ ? A. In what respects, Senator ? Q. For instance, you might require mileage, 'a thousand-mile ticket to be sold and used in New York State for $20, and they might require one to be used and pay $25. There is an opportu- nity for a good deal of diiEculty there ? A. We have but very little difiicxilty as to that naatter, if it occurs. Q. The Public Service Commissions Law permits a Public Service Commission of the State of New York to have a confer- ence with the Interstate Commerce Commission ? A. Yes. Q. Have you ever had any of those ? A. Yes, sir. Q. Since you have been on? A. Not any formal conferences between the two Commissions ; but individual Commissioners have conferred with the Interstate Commerce Commission on certain matters. Q. Well now, in matters of judicial procedure, affecting ques- tions that arise in this State, of course are settled in the courts having jurisdiction, unless it becomes what we call a Federal question ? A. Yes. Q. That might affect the application of the Constitution of the United States which would permit an appeal from the Court of Appeals to the United States Supreme Court, which seems to be i26() IlfViSST'IGATtOif OF PuBLIO SeEVIOE COMMISSIONS the great leveller. Now, would you think that the time had ar- rived where anything of that sort ought to be arranged with refer- ence to the Public Service Connnissions of the State, and the Interstate Commerce Commission to allow them the right of review of your proceedings in every case where the question might be an interstate question? A. If it is really an interstate ques- tion, it doesn't come within our jurisdiction. Q. When it is on an interstate question you wouldn't take it up ? A. Certainly not, we have no jurisdiction to do so. Q. But with the other procedure, when you make an original inspection, an original investigation, and decide it, don't you think from a legal, logical standpoint if it affected any other State, or with two States, that it might be a clearing house with the Inter- state Commerce Commission, and the clearing house could settle it where it would be fair as between the State? A. It pretty nearly works out that way, anyway, and in case of intrastate rates, would have to be necessarily adjusted largely with reference to interstate rates, I think it would be a very dangerous thing for the State to surrender such of its powers as are left, or any part of them, to the Fedenal Government merely for the purpose of meet- ing a situation that is largely iacademic to meet difficulties that never or very seldom oocur, and when they do occur, each presents a judicial question to be heard by the courts. Q. Your idea is then that the Public Service Commission meets very little difficulty, very little difficulty is experienced on a ques- tion of duplication now, in actual practice, excepting on the ques- tion of inspection of steam boilers ? A. That is my opinion, yes. By Colonel Hayward: Q. In order to relieve the Commissioners of the burden of trav- eling around over the State, or here in Albany, taking testimony on complaints, what would you think of amending the law to permit the Commissioners, or Commissions, to designate ex- aminers to take the testimony and make findings of fact, report findings of fact, would it relieve them considerably? A. I think it would relieve them, but I think we would have to retain the burden and do a little traveling where the case begins. I think it a very important function of the Commission, is the hearing of these complaints that we call service complaints. Final Eepoet of Joint Legislative Committee 2251 Q. Around in different places ? A. Around through this State. It was the intention of the law that they should be heard as far as possible in the localities without the expense to most of them of coming to Albany. I think that the relations between the public and the public service corporations are much benefited by the feel- ing that they can have their complaints heard and the Commis- sioner go into the locality where the condition exists without any trouble to them, regardless of any other results I think it is very beneficial, and more than compensates the State for any expense it puts upon it of traveling around the State. Q. I agree with you heartily about that, but the condition of affairs we have had seem to call for overwork on the part of the Commission and an impossibility possibly in a good many' oases of coming to some decision. For instance, some of the big cases particularly down in New York where the travel fee doesn't come in? A. I agree with you that it might relieve the Commission. Q. To have examiners to take this testimony? A. Tt would relieve the Commission undoubtedly; but I don't think that there is now 'any such burden if you take the condition of the calendar of this Commission now and the condition a year ago and I think you will see that there is — that the Commission keeps up with present conditions pretty well. Q. I agree that will be the case, but the peculiar circum- stances of particular cases in which it wouldn't be arranged — A. It either wouldn't be arranged, or — for example, suppose you had the Telephone case where there was to be a complete and detailed valuation, a contested case right through that the com- pany is going to fight, and under the best possible circumstances it would take a long time to reach the end of that case. Q. Do you think if the Commission had authority to do that, it would be very apt to be confused because the Commission would send out some lawyer to act as examiner rather than the Commis- sioner go himself; do you think if it was left to the discretion of the Commission, that could be done? A. It might be left to the discretion of the Commission. Q. I don't mean to leave it exclusively to them, taking the testimony and still leave it to the discretion of the Commission? A. Oh, assuredly. I have spoken of one feature, of the effect 2252 Investigation of Public Seevicb Commissions on the community. Now I include other things. Often a Com- mdssioner can get an idea if he is on the ground and can see the place and talk to the men than he might from any testimony there, and talk with the people and find out what is going on out there and get their views of things, and I think with a brief training, he can get at the right result. By Chairman Thompson (to witness) : Q. Judge, I want to ask you one question, brought up by what the Colonel said. You take these rate cases. Of course, the Bell Telephone Company ease is stubbornly contested. If the concern has got a profit of a million dollars a year that carries with it that there are a great many men interested in it, and they can employ a good m^any people for a million dollars a year ? A. Yes. Q. All of us would work for them for less than that. Why, when the rate case, say, of the New York Telephone Company, the New York Edison Company, the Buffalo General Electric, the Rochester Light & Power Company, and the matters that come up where the big concerns ^are in the heavy populated community, if you put one mian at that and make him work day after day and day after day until that was decided, wouldn't that be better than the way it has been gone along with ? A. I don't believe, Sena- tor, that it is possible to handle one of those cases in that way, because there come stopping points in the case where you would naturally have to wait for something or somebody for something. Q. You people here — I don't mean any reflection on the man's memory, he is dead — you employed Mr. Murphy of Buffalo. Now, he didn't come in your employ with the expectation of giving his whole time to that day after day and day 'after day until it was done; and another associate counsel that you employed after he died, he intended to carry on the rest of his business too ; wasn't that so ? A. I suppose he thought he could carry on a certain amount of practice aside from that. Q. So there didn't either of those gentlemen who acted as coun- sel, who were the guide of the Commission in this case, they didn't oome in your employ with the expectation of working every day. If they had, this work would have gone along faster, don't you think so? A. I dou't believe it would. No, I don't think it would. Of course, Mr. Murphy was taken ill very soon 'after he Final Eepoet of JomT Legislattoe Committee 2253 came -witli us, and certainly things iiave moved very rapidly since Mr. Littleton took charge. My point was this, that there are necessary delays. You cannot sit down with one of your lawsuits and devote your entire attention to that without some gaps. There comes a time when you have to wait for something and then you want to get at something else. Q. You see the point I get at. It was in the testimony in New York about the Edison case, where Commissioner Maltbie testi- fied it should be reduced, I think he said $3,000,000 a year. Well now, every year until last gave that company $3,000,000 that they were not entitled to. That is true, isn't it ? A. Yes. Q. And the Public Service Commission takes the responsibility for that and leave themselves wide op^en to a lot of criticism to which .probably they are not entitled. A. I entirely agree with you that not only rate oases but all others should be prosecuted with as much despatch as possible, and perhaps rate cases more vigorously than others for that reason. But I am not altogether certain what is the most expeditious way to dispose of it. If you will say one Commissioner will take charge of a big rate case and pay no attention to anything else, the result of it is that part of the time he is doing nothing and other cases are suffering. If he handles other cases that, of course, may interfere more or less with his rate case. I haven't made up my mind as to what is the proper division of business in order to get the best results. We have been too busy trying to get the load off the wagon and haven't considered very much just what would be the best system to keep the wagon unloaded. Q. You take, for instance, a case I have with the Public Service Commission that started in the fall of 1908, a case to make or re- quire the New York Central Eailroad at Lockport to take cars which were presented to them, that is, carload lot shipments pre- sented to them at their tracks from off the tracks of the Interna- tional Railway Company, an electrically propelled road. Now, that complaint was made in the fall of 1908 and was tried in the spring of 1909 and briefs submitted in July, 1909, and there has never been a decision yet. Do you blame me for getting it in my head that the Public Service Commission believed that under the law as it existed that if they decided that case they would have to decide it in favor of the complainant, and that so as to allow the 2254 Investigation of Public Seetioe Commissions railroad to iiave its way they allowed it to delay ? A. Oh, no, I wouldn't draw that inference from it. Q. After five years ? Are you aware through whose hands the case had passed? A. I don't know the case. I have in my hands now quite an old case came to me that had been in the hands of two Commissioners before me. Q. Can you conceive of any reason why the New York Central Railroad should not hook onto a car that was in proper order, proper mechanical order, delivered to them at their own tracks, wherever it came from? A. If there are interchange tracks and it is practical, — • Q. Whether there are interchange tracks or not? A. I mean if it is physically practical. Q. If it is physically possible for them to take it ? A. I think so. But I don't agree — I mean that was an abstract answer and not as an answer pertinent to your case. Q. Well, that was the case. What I was getting at is, not so much my case — I am not trying to appeal from the case, because it has been adjusted in another way; I assume it has. In fact, it got adjusted in this way: The company for whom I appear is located at Burt, New York; they were shipping on bo'th roads; got the materials on one road and shipped out products on the other ; they found they had to ship from Burt backwards around, because the New York Central wouldn't take the cars. But the Public Service Commission delayed so long in reference to the matter that the people of Burt took the matter in their own hands and burnt up our factory so we didn't need it any longer and haven't been interested in the decision. I say the people burnt it up; I don't know who burnt it up. I don't want to accuse the people at Burt of it. It was burnt up anyhow. But what I was getting at is as to whether or not such delays as that were reason- able; whether or not it should not be, the first proposition should not be to do the just thing between the people and the public service corporation, taking them both into account, and the next proposition important with you was expedition. A. I think so. I think the first thing is a proper disposition of matters and the next thing is to dispose of them as expeditiously as can be done with justice. Final Eepoet of Joint Legislative Committee ^256 Ohairman Thompson. — That is all, Judge. Anybody else any questions ? Mr. Mott. — Colonel Hayward, "will you just peimit me to make a correction of my testimony in regard to Mr. MciClellan, that he received $5,000' from the beginning of his employment with the Commission as an employee of the Commission. I think I stated it was $3,000 but it was increased. Colonel Hayward. — You say he started out with three and was drawing five when he quit, and you want to say now that he drew five all the time he was with the Commission ? Mr. Mott. — Yes, sir. Colonel Hayward. — All right. Chairman Thompson. — Is he an employee of the Telephone Company now ? Mr. Mott. — That is a mere error, that is all. This is in con- nection with his employment with the Commission before the telephone investigation, while he was an employee of the Com- mission. Chairman Thompson. — He is an employee of the Telephone Company now? Mr. Mott. — Oh, no. No, he is employed by the Commission in connection with the telephone valuation. Chairman Thompson. — When was he employed by the Tele- phone Company? Mr. Mott. — I didn't know that he was employed by the Tele- phone Company. Colonel Hayward.— He just asked to be and the Commission wouldn't allow him to be. Mr. Mott. — The only point I want to correct is the statement I made that his first employment with the Commission was $3,000, and it should have been $5,000. Cplonel Hayward,— For how long ? 2256 Investigation of Public Seevtoe Commissions Mr. Mott. — That was permanent employment. Colonel Hayward. — Per year? Mr. Mott.— Per yeai-. Colonel Hayward. — Then the Commission educated him into an expert. Mr. Mott.— Well, it assisted. Ledyaed p. Hale, called as a witness, testified as follows : Direct examination by Colonel Hayward : Q. Judge, how long have you been counsel for this up-State Commission ? A. I think I took the oath of office on the 20th of April, 1908. Q. What is your salary with the Commission ? A. Ten thou- sand dollars. Q. You know in a general way what questions of amendment of the law, and so forth, we have been asking the other Commis- sioners, I imagine? A. No, I do not. Q. From the fact that you have been here some of the time ? A. I heard Mr. Van Santvoord's testimony, but not much of the others. Q. You read the resolution of the Legislature as to the purposes of the inquiry, that it was to inquire among other things into the duplication of functions by the two Commissions of this State? A. Yes. Q. And also any duplication by either or both of the !N^ew York State Commissions with the Interstate? A. Yes, I am familiar with that, Colonel. Q. I would like very much to have in the record before we close our hearings your ideas on those matters ? A. Well now, so far as the two Commissions are concerned, there has been, I think, but a single instance of anything like conflict, 'and that was the one that was adequately described by Mr. Van Santvoord in re- gard to a railroad running into and out of New York City. I know nothing more about that case than that there was such a case. There have been to my knowledge two other cases where there was doubt and to resolve the doubt the two Commissions sat Final Eepoet of Joint Legislative Committee 2257 together. I don't remember what the cases were now, but I could ascertain, of course. In one of those cases it became evident im- mediately after the hearing commenced that the jurisdiction was in the up-State Commission and the other gentlemen retired from the hearing. In the other case they sat through the hearing, and as I remember it participated in the order. Now, that is the ex- perience of nearly eight years. So I would say that there has been no overlapping and there have been no gaps, practically none, between the two Commissions. The conflict between the two Commissions in the matter of rulings and decisions has been very much less than that between any two of the Appellate Divisions of the Supreme Court. And so far as I can see, if there should be conflict a Court decision would straighten it out without any more trouble than the Appellate Division organization leads to in the Supreme Court. Q. Well now, how about duplications with the Interstate Com- merce Commission? Judge Irvine said he didn't know of any except duplication of locomotive boiler inspections. A. There is a little duplication, because it seems to me the federal govern- ment insists on inspecting boilers that really ought to be left to this State. ISTow, I can illustrate. On the Empire State there would be one locomotive from ~Sew York to Albany, another one over to Syracuse, and another one to Buffalo; those locomotives especially in hauling the Empire State do not go out of the State at :all. ISTow, there may be just one or two or three passengers — I don't know what the statitstics are, I am sure — but certainly there could be only a very small percentage of the passengers on the Empire that are going to points outside of New York as a part of thiat journey. They may ride to Buffialo and get off the train and get their dinner in a leisurely way and get in a sleeper and go on to 'Chicago or to Cleveland, of course. Now, on the theory that there may be one or two or three or a half dozen passengers on that train that is not wholly devoted to intrastate traffic, the federal commission insists on inspecting those boilers. Now, I think they are getting out of their proper bailiwick instead of we being out of ours in inspecting them. If a locomotive should start from Buffalo to go to Pittsburgh I don't think it ought to be in- spected in New York and Pennsylvania when one inspection by 2258 Investigation of Public Seevice Commissions the Interstate Commerce CommissioiL inspector will do the whole thing. But where the entire journey of the locomotive every day is within the State it does not seem to me that we ought to sur- render that to the federal government. Now, apart from that I don't know of any real duplication. The accounts that are re^ quired to be filed at Washington we followed just as nearly as we can and there are some items of domestic information that we are entirely entitled to get. I suppose it is easier for the companies to furnish that because of a carbon copy or a mechanically pro- duced copy or printed copy than it would be to separate it entirely. Q. Of course. Judge, the ianswer of the Interstate Commerce Commission on your locomotive proposition might be that any time the ISTew York Central system saw fit they could run one of those locomotives out on the Lake Shore somewhere and have it pulling trains out there, in which case it would not have had any inspec- tion except by New York. A. If they do that in practice why then I would concede the propriety of that inspection. We have to let them' do it anyway, because whatever the United States Grov- ernment sets out to do it will do in spite of the State of New York. Q. What do you think about the telephone business, Judge? Do you think — A. I drew — I think -Senator Thompson will remember — I don't know whether it was two or three years ago, I drew an amendment which embodies my idea, but it did not pass, and that was to divide or to put in- the First District juris- diction over the city business; leave in the up-State Commission all other jurisdiction; putting it practically on the basis of the steam railroads. As to the telegraph, I never have heard that there was any special local situation in the city of New York. And while logically they ought to be treated alike, practically there is less need of it in the telegraph than in the telephone. Q. Do you think water companies ought to go into the jurisdic- tion of the Commission ? A. I have thought about that. Simply a question of whether the feeling has got to that point. Nearly all the water companies are municipal. Q. What do you think, Judge, about the proposition of allowing the Commission to appoint, for instance, members of its own legal staff or other lawyers as examiners to take the testimony ? A. I haven't any legal staff. Final Eepoet of Joint Legislative Committee 2259 Q. I know you iiaven't up here. A. I am the legal staff. I wouldn't want to be appointed. I do helieve that something along that line might be useful. Q. They have a $71,000' legal department down in ISTew York, you know. A. Well, they have a great deal more work, Colonel, than we do. The work in the First District is not distinguished between the Commission work proper and the subway work, so far as I know. That is to say lawyers are not assigned especially to one department or the other. If the work there was simply the same corresponding work as we have, why they would not need any such legal staff. There is an immense amount of the work of Mr. Coleman's office that is devoted necessarily to the subway con- struction. We haven't any of that sort of thing. Q. I guess they got kind of discouraged on the other work on the penalties after the famous Whitridge case was decided? A. That penalty action is liable to be seriously misunderstood, I think, in practice. Of course, the penalty is not $5,000, but it is whatever you can get a jury to award, or if there was not a jury, a Court. Q. Up to that amount? A. Up to that amount. That is the maximum. Now, I think the Court was in error — I don't want to criticise the Court at all, but I think the Court was a little over- technical, assuming that it was going to cost $300,000 instead of going on and taking the proof of the actual dereliction, if any, and superintending the assessment at that time by a jury the case was thrown out of the Courts. Chairman Thompson. — Do you think it would do any harm. Judge, to investigate the Courts a little ? The Witness. — I think 'Eoosevelt has done that for us enough. I have been hammering away on two or three of these. I don't know whether the Westchester capital case, for instance, where the 'New Haven interests bought and paid something like a million dollars for a property which the Commission found to be worth only $400,000, the Appellate Division unanimously overruled the Commission in the limit which it had fixed at $34,000, making a total stock allowance of $434,000. Now, that was reviewed by the Westchester Street Railroad Company in the Appellate Division 2260 Investigation of Pitblic Service Commissions EEd the Court unanimously held that the actual purchase price, because it was ascertained at a public auction where the bidding was perfectly genuine and spirited, became controlling not only upon the Commission but upon the people of the State. And I got that decision late in my summer vacation and it spoiled all the rest of it, because I thought that was the worst decision that either Commission has had since the law was enacted. And so I recom- mended that I be authorized to appeal immediately to the Court of Appeals, which I did, and I had the great gratification of over- turning that decision unanimously in the Court of Appeals, but, of course, that was an extreme case. But we finally have the principle laid down that where through foolish rivalry or any other cause people run the cost price of the property up beyond lall reason that it is not binding on the people. In his last work, Professor Ripley, on Railroads, the volume devoted to finance and organization, speaks of that decision as a step decidedly forward in corporate finance. Now, those commutation cases that have been argued and submitted, were submitted on the second, it seems to me are going to give an opportunity to the Court of Appeals. I know they will give the 'opportunity to determine just how far the Court, the Appellate Division can go under the writ of cer- tiorari and review all orders which are especially legislative in character. The Courts have insisted on a broad review, and in my judgment under section 23 of the Public Service Commissions Law, and especially in view of the history of the adoption of the Public Service Commissions Law in 190T the Courts are not en- titled to that broad view. The Interstate Commerce Commission had the same experience with the Federal Courts, and the Court of Appeals sustained the Appellate Division. I would then think that it was the duty of the Legislature to do what Congress did. Colonel Hayward. — Expressly remove that right? The Witness. — Yes. ITot that right to review by certiorari, no, because I think the method of review by certiorari is prefer- able to any other, but to restrain the Court under the writ to the proper function of reviewing as to confiscation and as to whether the Commission has kept within the jurisdiction that the Legisla- ture has given it. For instance — Final Eepokt of Joint Legislative Committee 2261 Chairman Thompson. — And not to review the facts ? The Witness. — And not to review the facts. Why, review the facts if the Commission has gone wrong enough to confiscate, yes. Yes. But not to review as to the fair discretion of the Commis- sion. That has been the trouble that we have had to encounter not only with review on the questions of law which we ought to be willing to encounter, but also a review on the substance of the discretion of the Commission. And that I think is wrong, because the Commission represents the Legislature. 'Colonel Hayward. — Have you got any suggestions for amend- ment to the law. Judge ? The Witness. — I will hand you. Colonel, a little memorandum which I had accidentally dictated and finished and my stenog- rapher is writing it up, one I got up for an entirely different pur- pose, but I will be very glad to hand it to you. Colonel Hayward. — I will be glad to put it in the record. By Chairman Thompson (to witness) : Q. Have you read this result of the investigation by the Na- tional Civic Federation of the Public Service matters ? A. IsTo, I have not. Q. Has that ever come to you ? Judge, will you take this copy over Sunday and at our meeting next Monday afternoon will you give us your ideas on some things that are in there ? There are a lot of things that are new. A. I will do so, so far as I can formu- late my ideas. Q. And it presents a draft bill which rectifies this Public Service Commissions Law. There are a good many new features in there that you v^ill discover if you read that carefully that are worthy of consideration. Whether or not they are worthy of leg- islation, that is something that we have to determine. A. I really think that the Public Service Comnnissions Law of this State is a pretty good law. Now, the things that I have felt in regard to it would be almost wholly remedied if the Courts would restrain their views, as I think they ought to, to a determination first and primarily whether the order of the Commission leads to confisca- tion ; secondly, whether the parties have had the substance instead 2262 Investigation of Public Seevioe Commissions of the mere shell of the hearing. Because nobody ought to be sub- ject to an arbitrary hearing without any sort of a chance to be heard on the merits. Q. Judge, you are in a position to answer for me another ques- tion that has disturbed me a little bit. I am of the opinion that in the various departments of the State whenever they need law- yers in that department that they should be furnished by the At- torney-General. In other words, if they need legal advice they should go to the Attorney-General's office for it. If they need the whole time of a mian that he should send a Deputy Attorney-Gen- eral to them for their assistance. Now, I would like your idea on that because you are counsel for this Commission, and your ap- pointment was made by the Commission. A. By the Commission, yes. Q. Now, in the case of the New York Telephone Company why they require special counsel and they go outside of you. Why shouldn't you, if you had to have special- counsel, why shouldn't you employ the special counsel yourself and not the Commission ? And if you should have the Commission employ tht> special counsel why shouldn't the Commission, and they have the right to employ special counsel, why shouldn't they take the Attorney-General's advice and not have special counsel of their own, and why not turn these cases over to the Attorney-General's office to be prose- cuted in the Courts, or defended, as the case may be ? A. I think where a department does not require constant attention and attend- ance of counsel that it is wise to make the Attorney-General the legal representative, the legal advocate for the Commission or body, whatever it may be. But there isn't any question whatever that even the up-State District does require the full time of one man, and there are quite obvious advantages in having the man that the Commission may choose. The relations between counsel and Commissioners are of the most confidential nature, and if I were a Commissioner, which I am not, and haven't the slightest ambition to be or slightest fitness to be, I wouMn't want anybody to send me counsel from the Attorney-'General's office or any other office. Now, as to the special counsel in the telephone case, it was a question whether I should take on that work and learn how to get ready for a rate case, because I didn't know from Final Repoet of Joint Legislative Committee 2263 any experience I tad ever had amd would have to go to scliool -with it, or whether I would stay where I was, because if I were to give up the work I was doing and take on the other I would have to teach my successor how to do my work; not as a matter of law, but as a matter of fact, because the hundred irons in the fire he would know nothing about. And I had had no assistance. There- fore, he could not get any information except from me. Q. Then why shouldn't they have taken a Deputy Attorney- General to prosecute the rate case ? A. Well, I don't know, I am sure. I assume that they did what they thought would be most helpful and best. Chairman Thompson. — That is all. Judge, that I have. Any questions ? Colonel Hayward. — That is all. ■Chairman Thompson. — Will it be too much trouble to ask you to come in Monday afternoon and let us talk to you about what is in there? Judge Hale. — ISTo. I will be here Monday. ■Chairman Thompson. — Is there anything further to-day ? JSTow, I want to announce as loud as possible — I don't know whether it will reach all over the State or not — in New York City we extended an invitation to anybody that had anything they wanted to give this Committee, either in criticism or praise of the Public Service Commission, to come forward, and we will be glad to hear them, either in writing or come and give their testimony. Now, we are going to meet next Monday afternoon at 2 o'clock, and if there is anybody anywhere that has got anything against the Public Service Commission that they think we ought to hear we will be glad to hear them, or if they have got anything in favor of the Public Service Commission we will hear them, too. And if there is anything further that occurs to any one that has been on the stand, we would like to hear that. 'Colonel Hayward.- — -Will you also ask Mr. Decker to come Monday afternoon ? Mr. Mott.— Yes. 2264 Investigation of Public Seevioe Commissions Ohainnan Thompson. — We will meet here Monday afternoon at 2 o'clock. If there is nothing further to-day, we will suspend now until 2 o'clock Monday. The Committee then adjourned to meet in the Assembly Parlor, Capitol, Albany, New York, Monday, March 15, 1915, 2 p. m. MARCH 15, 1915 Committee met at the Assembly Parlor, in the City of Albany, New York, on Monday March 15, at 2 p. m., pursuant to adjourn- ment taken from Friday, March 12, 1915. Present : A quorum of the Committee being present. Appearance : Mr. Buchner for the Committee. Adjournment duly taken to 4 p. m. Proceedings at 4 p. m. Chairman Thompson. — This 'Committee gave notice the other day that they will be glad to hear anything that anybody has to offer wherever he came from, on this subject. Is there anybody present who has got anything to offer; we will be glad to hear it. Mr. Buchner. — Mr. Chairman, I believe Mr. Collins has some- thing additional to offer. Mr. Collins. — ■ I thought I would wait for somebody else first, and see what transpired. Chairman Thompson. — Is there anybody else here besides Mr. Collins ? I got a communication from Granville saying that there are people from there who desire to come down here and offer some- thing to the Committee; but they couldn't come to-day, and they have an election to-morrow. I told them that we would probably take it up at a session Wednesday morning, at which they could be heard. Judge Hale went to the Appellate Division at 2 o'clock, and I advised him the Committee would wait until he returned. Final Repokt of Joint Legislative Committee 2265 Mr. Buclmer. — I understand Judge Hale will be finished very shortly and will be right up here. 'Chairman Thompson. — Mr. Collins, if you have anything further to offer we will be glad to hear from you now, if you would like to. Chakles H. Collins, recalled, testified as follows: The Witness. — I just got what you might call a brief, or some document I would like to file. iChairman Thompson. — Exhibit A seems to be a complaint made by yourself for the Colonie Improvement Association, filed December 4, 1914. Exhibit B seems to be an argument by your- self for the same association before the Public Service Commission on ISTovember 24, 1914. Exhibit C seems to be — is a letter writ- ten by you for the Colonie Improvement Association, and ad- dressed to the Public Service Commission, Second District, on January 20, 1915. Is there any objection to receiving it? Mr. Buehner. — None at all. Chairman Thompson. — All right, it may be received and spread upon the record. EXHIBIT A Albany, N. Y., Dec. 4, 1914. Frank H. Mott, Secretary Public Service Commission^ Second District, New Yorh State: Dear Sie. — Under date of August 5, 1914, you sent me a letter, a part of the first paragraph informing me that the con- ditions dn relation to the operation of the Schenectady Eailroad Company were being investigated for the Commission. I am desirous of obtaining certain information in regard to the above, and have been very reliably informed that if I would write you a letter containing the inquiries I desire to have answered, that they would be turned over to your experts for their consid- eration. Assuming this to be true, I hereby submit the following ques- tions and hope they will be answered in the plainest of language : 2266 Investigation of Public Service Commissions First. How many watts are consunned, as registered by a watt- meter or any other instrument used for that purpose in operating the limited or local cars used on the Albany division of the Sche- nectady Railroad Company between the two end zones, traveling in either direction ? Second. "What is the actual cost in cents for the power so used. Third. If the controller lever is set at a point which will make the car travel on the level at the rate of forty miles per hour, how fast would it travel climbing a 10 per cent, grade without changing the controller lever ? Fourth. What is the approximate cost per mile for operating said oars, including overhead expenses ? Fifth. What is tihe approximate cost per mile for constructing an electric railroad where there is no blasting or excavating to do, ■and where the contonr of the public highway is followed ? What is meant by the word " stands " when speaking of the road equipment? How many cars of the 600' type are in operation, and what was paid for them when they were bought about fourteen years ago ? 'Hoping you will excuse mistakes, and trusting to hear from you within a week, as I must have this information before December 15, 1914, I beg to remain, Yours truly, CHAS. H. COLLINS, For Golonie Improvement Ass'n. EXHIBIT B The Colonic Improvement Association held the first of a num- ber of meetings over eighteen months ago and took up the matter of reducing the fare on the Schenectady Railway. At a meeting held previous to June 14, 1914, a Committee was named to call upon 'General Manager Hamilton of the Schenectady Railway and to present to him the proposition of the association and the matter was discussed at a long conference. General Manager Hamilton suggested that the demands of the association be reduced to writing. This was done and the following letter was sent to Mr. Hamilton : FiNAX Eepoet of JonsTT Legislative Committee 2267 (Copy) June 6, 1914. Me. James F. Hamilton, Mgr. : Dear Sir. — At a meeting of the Colonie Improvement Asso- ciation held Wednesday, June 4tli, the following was adopted : " That a Committee ask or demand a book of thirty tickets, each ticket to represent a five-cent fare for each zone, not less than two tickets nor more than three tickets to be taken from the book for one person at a time. Price of book to be $1.00 and to be good until used." The above is in response to your request that we put our request in writing in regard to the mileage book, as acknowledged to our Committee you thought favorably of this proposition. I don't think it is necessary to point out the advantages of the book system for commuters, as this has been done for years and has been of mutual benefit to patrons and railroad companies alike. This won't interfere with the zones, as far as changing same is concerned, neither will it interfere with your through fare for transients or occasional riders. These are the two points you objected to so forcibly, and which is our original demand. This arrangement will make it possible for the purchasers of these books to ride at the rate of twenty cents through fare, and will afford the relief we seek. If there is any- thing else you want to consult our Committee about before you take final action, please notify me in writing and we will meet you. We most earnestly request that you bring this matter before your Board of Directors, if you intend to bring same before them, at their next meeting, which I understand is to be on or about the 15 th of this month. CHAELES H. COLLINS, Sec. (Questions to Mr. Hamilton.) Do you remember receiving this letter ? In paragraph 2, second page of your letter dated July 2, in answer to the above letter, you state : " the question of fares on the Albany Division was taken up before the Public Service Commis- sion last year and at that time the company agreed to put into effect the same ticket in use on the Troy and Saratoga divisions, by which patrons of the road living in the middle zone on the Albany Division could secure a round-trip ticket to Albany or Schenectady for twenty-five cents." 2268 Investigation of Public Seevioe Commissions Do you remember tliis part of that letter ? On eighth line, page 3', of same letter you quote from the de- cision of the Public Service Commission, made May 20', 1914, of which the following is a part : " Where the rate that is complained of is after all merely the well-known and widely prevalent charge of five cents for each passenger." The case before the Public Service Commission was when the city of Schenectady wanted six tickets for a quarter, wasn't it ? Do you remember receiving a reply to your letter of July 2d, of which the following is a copy? (Copy) Me. James F. Hamilton: Dear Sie. — -We received your letter in answer to the request or demand made on you by the Colonie Improveonent Association for a book of thirty tickets for $1, book to be good until used, and while said answer is very lengthy and voluminous, it doesn't say anything germane to the subject. The Schenectady six-for-quarter proposition does not meet the situation that we presented to you because it is an entirely different proposition. We note what you say in reference to the following quotation from the decision of the Public Service Commission: " Where the rate complained of is after all merely the well- known and widely prevalent charge of five cents for each passenger." What we are asking for is the " widely prevalent " reduction granted to commuters by other so-called interurban lines. There is no specific proposition in your letter to relieve the situation complained of. What we ask and still desire is a specific proposition which would give us something to work on, and we ask that same be made on or before July 25, 1914. We won't consider any round-trip ticket in the middle zone, if we have to go to any certain place to purchase same, as we don't consider it necessary to walk a mile to save a nickel. If we don't hear from you, on or before July 25, 1914, we will take the matter before the Public Service Commission for redress. Respectfully, CHAELES H. COLLINS, Sec. Final Report of Joint Legislative Committee 2269 You didn't answer the letter just read, did you? In due time complaint was made to tiie Public Service Com- mission against the Schenectady Railway by the Colonie Improve- ment Association. Is this correct? In your answer to the complaint you say the distance from the Schenectady terminal to stop six, first zone, is: Schenectady terminal to stop six, 4.25 miles — average fare per mile 1.11c. Schenectady terminal, second zone, 2.45 miles. Schenectady terminal, third zone, 3.33 miles. Schenectady ter- minal, fourth zone, 2.03 miles — average fare per mile 2.35e. Schenectady terminal, fifth zone, 3.49 miles. Is this a fact? If Schenectady patrons receive a 4.25 mile ride for five cents why aren't the Albany patrons entitled to ride the same distance for the same fare? If the distances in the first and fifth zones (which are the five- cent fare limits on each end) were added together the total would be 7.74 miles. Is this correct? If the distances in the remaining three zones were added together the total would be 7.81' miles. Is this correct ? These figures show that the total distance in the three center zones is approximately the same as the two end zones. Isn't this discriminating against the residents in the middle zones when you make them pay fifteen cents for riding the same distance you charge ten cents for to the patrons of the end zones ? You say in folio 4 in your answer to our complaint " that the only change in the zones during that period (13 years) was the dividing line between the zone on the Albany end and the next zone westerly, which was moved about 1,000 feet westerly^ by an order of the Public Service Commission made in a proceeding be- fore the Commission several years ago, and which accounts for this zone being somewhat shorter than the other zones." The fourth zone is 2.03, or approximately 2 miles long, being 2.22 or approximately 2% miles shorter than the first zone. That is somewhat shorter, isn't it? Why should the people in any middle zone pay twice as much per mile as those in any end zone ? What reason did the Public Service Commission give for order- ing the Albany end zone extended? 2270 Investigation of Public Seevioe Commissions You say in folio 5 in your answer that " several of tlie IsTew York State interurban railroads have recently increased their rate of fare to approximately two cents per mile owing to the increase in operating costs." Will you name some of the roads ? What is the population of the cities or towns on each end of said roads? What is the population between said cities or towns ? Do you know the number of houses along the main line of the Albany Division of the Schenectady Railway, between stops 6 and 321/2, which comprise the three middle zones ? Would you be surprised if I told you there were 250 houses in those three zones as against eighty houses between the five-cent fare zones of the F., J. & Gr. Electric Road between Schenectady and Amsterdam, the distance and fare being the same as between Albany and Schenectady ? In folio 6 in your answer you state " that the zone system es- tablished by defendant is one of universal use, and defendant be- lieves the best system so far devised of operating interurban divi- sions, although under certain conditions inequalities exist." Are you aware that tallow candles were in universal u&e before the oil lamp was invented? Also that the oil lamp had to give way to gas and electricity for light when it was found they were more efficient? Are you aware that the stage coach was in universal use until the steam railroad put it out of business? Do you know of any steam railroad in the State that operates under the zone system ? How long do you think the public in general would stand for a zone system on steam railroads? The general practice is to charge a certain amount for each mile traveled, isn't it? If the zone system was established and Fort Plain and Little Falls were in the same zones, don't you think there would be an awful kick if a passenger had to pay the same amount to ride to Fort Plain that he would have to pay to ride to Little Falls, if he was traveling from the east ? Don't you think that on account of the interurban electric rail- way running through farm lands and rural communities when they are first built, make it easier for said electric railways to work or " palm off " the zone system, than it would be if they had Final Eepoet of Joii^t Legislative Committee 2271 to deal with people who had made a practice of riding on roads where they paid for the actual distance traveled? Do you know of any fairer or equitable system than that of making a passenger pay so much per mile for the actual distance traveled ? In folio 6, second paragraph of your answer to our complaint you state " that upon defendant's Troy Division a round-trip ticket for twenty-five cents, from a point in the middle zone to Schenectady and Troy, and on the Ballston Division from a point in ithe middle zone to Schenectady and return for the same rate, is now issued and sold. That defendant has oft'ered in this case to give the same rate to its patrons of the Albany Division tliat it now gives patrons on its other divisions." I presume those points are located in the center of the middle zones. Is this correct? If a patron should live on either end of said middle zone he would have to walk over 1% miles to save five cents, wouldn't he ? Do you think this is a desirable thing to do if his time is valu- able ? or if shoe leather is high ? or if it is stormy weathier ? Would you walk a mile or more to save a nickel ? In folio 7, in answer to our complaint, you state: "that the adoption of any of the plans proposed by complainants, would re- sult in a reduction of fare not only on the Albany Division of de- fendant's railway, but upon all of its divisions." Assuming the above to be so, do you think thai should make any difference as to the merits of our complaint? If you were personally inclined to give us the redress we de- mand, could you do so without the consent of your Board of Director's ? In the second paragraph of folio 7, in your answer to our com- plaint, yon state: " That the rate of fare now charged by the defendant is insufficient to produce a fair and adequate return upon its investment, and in view of the present condition in the city of Schenectady, where defendant receives the greater portion of its traffic, any reduction in the rates of fare would be con- fiscatory." In order to show that this statement is inconsistent insofar as facts and figures are concerned, I beg to submit the following taken from the quarterly reports of : " Operating steam and elec- 2272 Investigation, of Public Seevice Commissions trie railroad corporations, three months ended June 30, 1914, to the Public Service Commission, Second District, State of New York." According to this report the Schenectady Railway has a track- age of 58.64 miles. I have selected the only other roads that have substantially the same mileage in order to make a fair comparison : The Buffalo, Lockport & Eochester Railway, has a trackage of 58.19; the P., J. & G., 57.30; the Otsego & Herkimer, 78.44; the Schenectady Railway, 58.64; the United Traction Company, 62.75; Western New York and Pennsylvania, 92.27; and the Yonkers Railway, 42.12 miles. The Buffalo, Lockport and Rochester made no appropriations for dividends, the P., J. & G. appropriated $30,000, the Otsego and Herkimer, nothing, the Schenectady Railway, $246,000, the United Traction Company, $500,000, and the other two lines, nothing. The Buffalo, Lockport and Rochester, shows a net increase in corporate surplus of $17,205, the P., J. & G, $61,422; the Otsego and Herkimer, $9,227; the Schenectady Railway, $111,000; the United Traction, $96,701; the W. N. Y. & P., $16,943, and the Yonkers Railway, $85,146. The Schenectady Railway took in during the year ending June 30, 1914, for passenger traffic $1,315,948. The cost of its equip- ment is given as $7,000,440. In the second paragraph, page 5, in letter dated July 2, 1914, you state: " It may be interesting in this connection to refer to a notice from the State Board of Tax Commissioners, which I have just received advising the Schenectady Railway Company that the valuation placed upon its franchises in the town of Colonic, for the current year, is four hundred thousand dollars ($400,000). Below you will find the special franchise valuations placed upon the property of the company in the town of Colonie during the past ten years, the trackage heing substantially the same during the entire period: 1903 — $155,000; 1904 — $180,000; 1905 — $205,000; 1906 — $220,000; 1907— $235,- 000; 1908 — $346,000 ; 190^9 — $346,000; 1910 — $360,000; 1911 — $360,000; 1912— $360,000; 1913 — $378,000 ; 1914 — $400,000. Final Report of Joint Legislative Committee 2213 When your franciiise was worth $155,000' in 1903 you ran one limited and three locals per hour from each city, didn't you ? And sold a round-trip ticket for forty cents '( The round-trip tickets could be bought on the cars, couldn't they? ]^ow when your franchise is worth $400,000 in 1914, you run one limited and two locals per hour, don't you ? And it costs fifty cents a round-trip now as against forty cents in 190'3? If the trackage is substantially the same in 1914 as it was in 1903, on what grounds do you think the tax commissioners raised your tax i Isn't it because your company has been doing a greater ^'olume of business from year to year since the road opened ? Don't you think the tax commissioners l-now the State is en- titled to this increase on account of the increase of your business on the Troy and Albany divisions ? The tax commissioners have shown how the State gets what is coming to it. Can you show us how your patrons and the public in general can get what rightfully belongs to them on account of the increased volume of business ? Your franchise in the town of Colonic was taxed by the local authorities for a much greater sum than $400,000 in 1914, wasn't it? Your franchise was taxed dn 1914 by the Colonie authorities for $600,000, wasn't it ? If not $600,000, how much ? What is the approximate expense per trip per car on your Al- bany Division ? How much electric current in dollars and cents do you per trip, per car? How much for conductor and motor- man ? What is the average number of passengers carried jyev trip, per car ? What is the approximate amount of your gross receipts, per trip, per ear ( EXHIBIT C January 20, 1915, Public Servic,e Commission, Second District, State of New York: Dear Sirs. — After carefully reading the decision rendered by your honorable body in the case~ numbers 4545 and 4587 wherein the Schenectady Railroad Company is the respondent, we fail to see where this decision is of any material benefit to anybody, with the possible exception of a few residents living near Stop' 19. 72 2274 Investigation of Public Service CoiiiiissroKS This order discriminates sioke than evee against the patrons living on either end of the third or middle zone. We still claim we are entitled to a commutation book that will allow the residents of the second, third and fourth zones to travel in either direction for the same rate that the residents of the first and fifth zones are getting. They can buy a book containing 54 tickets for $10.40' which will make the through fare at the rate of twenty cents. Why aren't the residents of the second, third and fourth zones entitled to the same consideration ? We wish to state most emphatically that we are not satisfied with this ruling. On account of the Compulsory Education Law some children have got to walk over two miles to attend school, because their parents can't afford to pay the exorbitant car fare for them. Almost every male resident living in the middle zones (not zone) work in the cities of Schenectady or Albany. If we understand your ruling correctly, the residents of Stop 21 would have to walk to Stop 19 (over a mile) if they wanted to ride to Schenectady in order to get the benefit of the round-trip ticket. The same would apply if they wanted to come from Stop 15 to ride to Albany. Isn't this discriminating against these residents in favor of those in the center of the zone ? Before we made our complaint the residents of the three middle zones were discriminated against in favor of the first and fifth zone residents. ■Manager Hamilton was very particular not to have the zone system interfered with, claiming it was the better plan of any proposed. He isn't so particular when it suits his convenience to mutilate the zones. We claim that we submitted evidence at the public hearings held November 24th, and December 15th proving first: dis- crimination. Second. That no commutation books, or tickets of any kind were sold to the residents and working people in the three middle zones, not even a monthly commutation book. Final Report of Joint Legislative Cojimittee 22Y5 Third. That school children do not have any reduced rates of any kind, making it a great hardship on their parents on account of the Compulsory Education Law. Fourth. That the 'Schenectady Railroad Company can well afford to grant every concession asked for as the figures presented showed the company to be in better financial condition than any other railroad with the same amount of trackage, with the single exception of its Gold Dust Twin, the UWITED TRACTION COMPANY. Fifth. That the signs were too small and not sufficiently lighted to enable the motormen, conductors or passengers to see them after dark. Sixth. That the cars run at the rate of fifty miles per hour at times, endangering life and limb. The Schenectady Railroad Company did not put in any defense that amounted to anything in our opinion, although it was repre- sented by capable attorneys. We claim your decision was not in accordance with the evidence submitted, and ask for a reconsideration, with a view to modifying the order, as we believe the custom or practice now in operation on the Troy and Saratoga Divisions should not justify you in applying it to the Albany Division. If you were justified in applying it to the Albany Division why hasn't it been done long ago — without compelling the public and individuals to go to much trouble and expense in fighting for that which the Public Service Commission should have given them at the start? TWO wrongs does not make one right. If the Public Service Commission had ordered, or on reconsid- ation WILL order, the Schenectady Railroad Company to sell round-trip tickets — preferably in the form of $1 or $5 commu- tation books — to be bought in Albany or Schenectady and in the most convenient place in the center of the middle zone, and such tickets to be good at ANY point in said zone, traveling in either direction, we would not have so much cause for complaint. We are very thankful for the order regarding signs, lights, etc., and hope you will modify the order in such a way that it will enable patrons to leave tiieir residence and board a car at the nearest 2276 Investigation of Public Service Commissions stop, without compelling them to walk a mil© or more in order to save a nickel. THis is a case of " blindfolding the devil in the dark." Manager Hamilton was asked at the hearing if he would walk a mile to save a nickel ? He answered " No, I would not." We furthermore wish to inform you that Stop 19 is jSfOT the nearest stop' to the center of the zone, and ask that you have your expert measure the distance in this zone. Although Stop IT is not the nearest to the center of the zone, still the company's sub-station and two grocery stores are very near this stop and convenient for selling' tickets. It is exactly 7% miles to Albany and 7% miles to Schenectady. Hoping to receive an answer to this communication on or be- fore January 27, 1915', I beg to remain, Yours truly, CHAS. H. COLLINS. (Signed) For Colonie Improvement Association. The Witness. — I understood this meeting was called for the purpose of criticizing the Public Sen^ice Commission. Chairman Thompson. — Well, it was not; the meeting was not called for that purpose, Mr. Collins ; but it was for the purpose of hearing anyone who wanted to criticize them. The Witness. — Well, I want to criticize them; that is what I am here for. Chairman Thompson. — Go ahead. The Witness. — I wish to state I was here the other morning when Mr. Van Santvoord was on the stand and he brought out the fact that the Commissioners had to sit at the end of a table for hours, listening three or four hours to argument ; and that they were expected to give the under dog as much show as the other fellow, as much consideration. His argument was, the way I understood it, that it coBflum.ed much valuable time, that is^ if the Gommiseion gets paid $50 a day for sitting at the end of a table listening to statements and arguments, which is all taken down by the stenographers, and put in book form, and passed on later by Final Eepoet of Joint Legislative Committee 2'2T7 somebody else; that their time was takea up too much that way. In other words, they couldn't give attention to the office that the public demanded if they spent all their time sitting at the tead of this table listening to what is going on. These hearings — there is no — there is no set rules, court rules to go by, they are informal, all of them, as near as I can find out ; and most anybody with ordinary intelligence could sit at the end of this table and perform the duties these Public Service Commissioners perform at those hearings ; so long as it is all taken down, there is nothing lost and can be gone over later on. Now, I claim Mr. Van Sant- voord was right in that contention, which if these men are paid this large sum of money for serving the public, they don't begin to serve on account of the time they lose at iiiese hearings, I claim. Mr. Van Santvoord, he is right. That some man or party could do the same work at a much smaller salary, and would give these Commissioners more time to digest the matter that is brougit forth by these hearings and have the public have a fair shake in the decisions. Chairman Thompson. — What do you think of the idea to have the Public Service Commission appoint referees to go out and take this testimony and after they have taken it, let them decide it on his report? The Witness.- — Let the Public Service dommissioners decide ? Chairman Thompson. — Have referees go out and take these hearings and testimony and bring it in and have the Public Service Commission decide it on this report ; that is, have the Public Serv- ice Commission give their attention to the matter after it is brought in. The Witness. — If the way that this thing has been done, the trouble that we experienced — I have had with certain Commis- sioners, whereas certain cases it is gotten down by the stenogra- phers — I may be wrong, that is what I think — it is gotten by them and turned over to an inspector; he goes itiirough the evi- dence and makes recommendations to ihe Comm.issioner who heard the ease; the Commissioner that heard the case files his opinion — only one — there is only two men so far that have any- thing to say about this. He files his opinion and then in over a 2278 Investigation of Public Seevice Commission's week or so, or over two weeks, tie Commission have a meeting, an executive meeting. The opinion of so and so, sucb and such a Commissioner is read, I think and believe, that that opinion is invariably concurred in by the other Commissioners, when they don't know what it is about. My contention is that they don't go into those matters as they should in the interest of the public; I know that they don't do — I know that somebody must have been very lax, must have had a very small sense of justice when they render such decisions as they rendered in this case. I am talking about the — what the newspapers say, it is a case of minor import- ance. It may be of minor importance to certain people, but it is of very major importance to people that they have got to spend money every day; and I claim that a small association of 111 members is entitled to as much consideration as ten civic societies of Albany are. Chairman Thompson. — That is so. What is this association, this Colonic Improvement Association, what is it for ? The Witness. — It is an association formed to keep — for the purpose of bettering their conditions, not only for the railroads but anything else that may — Chairman Thompson. — That is, the people living on this line ? The Witness. — Yes, sir; those people that live between Albany and Schenectady, in what we call interurban territory. Chairman Thompson. — They are the people affected by the rate charged by this railroad ? The Witness. — Yes, that is they are the people that 'had to, got to pay this exorbitant fare that this corporation charges. I said before we are entitled to as much consideration as these ten civic leagues here in Albany. Because we went to work and we proved our case, spent our money and proved our case before the Com- mission and then didn't get justice on it, that is what we claim; that is my contention ; that they didn't render their verdict accord- ing to the evidence that was produced at those hearings. Chairman Thompson. — Why don't you get a jitney bus down there ? Final Kepoet of Joint Legislative Committee 2279 The Witness. — I don't know whether the Public Service Com- mission would allow us one. Chairman Thompson. — They don't have anything to do about that now. The Witness. — I want to say this, there was one came up like a mushroom, there was a bus started, Stanley Steamers, that ran between the two cities ; no signs on them ; nothing to tell the pub- lic what they were for; but if a fellow wanted to guess at it he could say they might be a bus and he could ride on it if he paid for it. They ran those and one morning I said to myself I think I will patronize this busi and see what there is to it. I hailed the fellow ; he stopped, and we were going towards Schenectady, and I says " Seems to me I have seen you before, your face is ^'ery familiar," and he says, well he says, " I tell you " — he says, " I was conductor on the Schenectady Railway for twelve years and that is probably where you have seen me." " That is it," I says, " you have not got your uniform on now, I didn't recognize you at first." We went along a little further and I says: '' How much is the fare ? " and he says " Fifteen cents." Exactly what the railroad company charges, charged; and of course it is very evi- dent, obvious that they wouldn't be, since they charged the same price the railway charged for years, that they wouldn't be a suc- cess, for this conductor that was a conductor on the Schenectady Railway and was put in charge of these Stanley buses and when they had proven to the satisfaction of themselves and the public that the bus wouldn't be a paying proposition, they were taken off and put back on the street car again. Chairman Thompson. — The jitney bus, the idea is the jitney bus is very likely to be owned by the street railway ? The Witness. — There is no way of ever telling, I have got ideas, yes. I think that the jitney bus if it — if the Public Service Commission — or legislation was made, or some other kind of a bus other than a jitney bus would be a mighty good thing and would be patronized if they were not interfered with by these cor- porations. Chairman Thompson. — If the jitney bus lines in the same way on the short haul for the busy part of the day charged the same as 2280 Investi&ati'OK of P.ublic Seevice Commissions the railroad oliargies — from the busy part of the place charged the same as the railroad charges for the same service, you don't see any particular improvement in the 'amounts which these folks pay ? The Witness. — Only in this way, that whatever money should be paid, the railroad company wouldn't get it and those people would be satisfied to give it to the jitney bus instead of the railroad. Chairman Thompson. — Assuming that the jitney bus were owned by the railroad, then what? The Witness. — Well, that is the same old story again ; and the corporations, they have got a strangle hold now and you can't get away from it. Chairman Thompson. — If the jitney bus turns out. to be owned by the railroad, then it would be the same, just as. tbe electric ears are owned by the steam railroad-s now ? The Witness. — Not if I owned it it wouldn't. Chairman Thompson. — Have you any other criticism of the fellows ? We will hear it if you have. The Witness. — Well, that will be enough for to-day, I guess. Chairman Thompson. — Does anybody desire to ask Mr. Collins any questions? Mr. Buchner: Q. Would you feel perfectly satisfied, Mr. Collins, if your case were heard before a referee rather than before a Commissioner personally ? A. Well, that would depend on who the referee was. Q. Well, a referee appointed by the Commission? A. If he was on the level, yes. Q. That is, you wouldn't feel dissatisfied because a Commis- sioner hadn't heard your case personally ? A. Xo, sir. By Chairman Thompson : ■Q. How long did the Commission take 3'our case before they finally denied it ? A. The first hearing we were there about four hours ; three hours ; about three hours, the first day and the second day about an hour and a half; and in order to show how much FixAL Repoet of JonsTT Legislative Cosimittee 2281 interest, how closely tlxe Commission followed these eases, the firat day Mr. Hamilton, the- manager of the Schenectady Eailroad, was on the stand two hours, and they took about thirty-eight pages in the stenographer's, report, his testimony ; he was on the stand at least an hour and a half or two hours \\'ith the continuation of the case, was adjourned for another hearing to take ])lace three weeks later; they asked for the adjournment before they started, the lawyers did. The same case was held three weeks later and I wish to ask Mr. Hamilton a few more questions to get some more infor- mation that I thought germane to the subject, that would be of benefit to the Commission, and I asked the (Commission if I could ask Mr. Hamilton some more questions. He asked Mr. Hamilton if he had been on the stand the last time — Commissioner Emmet asiked Mr. Hamilton if he had been on the stand and he was on the stand two hours there and Commissioner Emmet didn't know it. Q. Was Emmet there the day before? A. Yes, and heard it; it is all in the record here about that case. Secretary Mott. — I would like to ask Mr. Collins one or two questions, if the chairman please. By Secretary Mott : Q. Who called Mr. Hamilton as a witness in that proceeding ? A. Why, he came there as a defendant on the complaint. He came there with a couple of D. & H. lawyers. Q. Yes, but who called him after he came there? A. As a witness? I told Commissioner Emmet I had got my argument pFepared in the form of questions for Mr. Hamiiton. Q. You asked that he be sworn, didn't you ? A. Yes, sir. Q. And he was sworn ? A. Yes, sir. Q. And the examination went finally two or three hours? A. Yes, sir. By Chairman Thompson: Q. How long after that last hearing did the Commission indi- cate their decision to you ? A. I can't tell you the last date — let's see. It was December 15, and the decision was on January 6th ; it wasn't very long. I wish to say that the last hearing — the first hearing, that two lawyers besides Mr. Hamilton appeared 2282 Investigation of Public Service Commissions for the D. & H., and the last time three, and the record will show- that there, that they didn't put in any defense there, practically no defense; and yet the Commission decides and decides to give the complainants just what that railroad company offered to give them at the second hearing. Chairman Thompson. — I have sent for this record, and the vice-chairman and Assemblyman Kincaid and I are going to be a Court of Appeals on that case and we will decide whether they decided it right or not for you, over night, between now and to- morrow; we will give you an appeal. Mr. Collins.— All right. Is that all ? Chairman Thompson. — That is all. Mr. Collins. — Thank you. Chairman Thompson. — Anybody else here ? Secretary Mott. — I would like, with the permission of the Committee, to bring up a little onatter ; I will make it as brief as I can, just to make this point clear: That these correspondence complaints — that a list of correspondence complaints is sent to each Commissioner at the end of each week for the preceding week, together with a statement of all formal complaints, petitions, that have been received, and a summary of the orders which have been adopted. I just simply wish to bring it here and file it with the Committee. 'Chairman Thompson. — That is the procedure on these formal complaints, what you call correspondence complaints, each week? Secretary Mott. — ■ Yes, sir. Chairman Thompson. — That is the fact of the situation ? Secretary Mott. — Yes, sir. Chairman Thompson. — How long has that been ? Secretary Mott. — That has been ever since I have been there ; I think long before. In addition to that a new method, in addi- tion to that, we send daily to each Commissioner a statement con- taining the names and details of the petitions and the complaints which are formal in their nature, which is a statement — Final Eepoet of Joint Legislative Committee 2283 Chairman Thompson. — Which is a statement for the week ending March 13th ? Secretary Mott. — Yes, sir. This I think "was the week of Feb- ruary 27th. I just happened to have it there. Chairman Thompson. — ■ Let it go into the record. (Copy) WEEKLY DICIEST OF Applications and Complaints Received AND Digest of Oedees Passed Feb. 22 to Feb. 27, 1915. Chiefs of divisions will please note and initial, returning finally to the Filing Division. F. X. Disney W. H. Taaife C. R. Vanneman W. E. Griggs H. C. Hasbrouck A. H. Sutermeister J. J. Gill E. McGuire E. B. Rogers Secretary Copy Note. — This digest left the General Office Mar. 5, 1915. Case No. Foemal Cases Received 4806 Application of Municipal Gas Co. of Albany to refund or to set off against bills of certain customers certain inadvertent overcharges for electricity Feb. 23 4807 In the matter of increases in commutation fares by The Long Island R. R. Co Feb. 23 2284 Investigation of Public Seevice Commissions Case No. Foiemal Cases Received 4808 Application of the Chuctanunda Gas Light Co. of Amsterdam imder section 69 of the P. S. C. Law for an order authorizing the issue of $50,000 additional common capital stock. . . . Feb. 23 4809 Application of Geaieva, Seneca Falls & Auburn R. E. Co., Inc., under section 55 of the P. S. C. Law for au-tiiority" to issue notes to an ag- gregate amount of $38,477 Feb. 23 4810 Application of the Eonpire Coke Co. for authority under section 69 of the P. S. C. Law to issue $300,000 of the preferred stock. Feb. 23 4811 Complaint of Puritan Food Products Co against New York Central R. P. Co. as to reparation Feb. 23 4812 Complaint of St. B^s Paper Co. y. ^ew York Central P. K. Co. as to reparation Feb* 23 4813 Complaint of Thos. MiHen Co. v. Delaware, Lackawanna & Western R. R. Co. and 1\gw York Central R. R. Co. as to reparation Feb. 23 4814 Complaint of Troy Brick Co. v. Boston & Maine R. R. Co. as to reparation Feb. 23 4815 Complaint of Joseph H. Conners, President Pathfinder Construction Co. against New York Central R. R. Co. as to reparation .... Feb. 23 4816 Complaint of the Randall Grape Juice Co. of Ripley against ISTew York Central R. R. Co. as to 1,000-mile book good east of Buffalo, not being good west of Buffalo, the Lake Shore having been consolidated with the Central . . Feb. 19 4817 Application of the Columbia Telephone Co. for authorization of an issue of $3,000 of its first and second mortgage bonds Feb. 27 Series A iVo. CoBEESPONDENCE COMPLAIISTTS 1565 Kellam & Shaffer Co. v. N. Y. C. — reparation on shipment of sand Feb. 20 1566 B. M. Phelps v. N. Y. C. — reparation on ship- ment of cattle Feb. 20 Final Eepokt of Joint Legislative Committee 2285 Series A No. CoEREspoNDENCE CoMPLAiNTS Beoeived 1567 Walter H. Kelly v. Int. Ky. — proposed in- crease in fare between Buffalo and Niagara Falls Feb. 20 1568 International Harvester Co. v. N. Y. C. and D., L. & W. as to reparation on agricultural implements Feb. 23 1569 Standard Naval Stores Co. v. IST. Y. C— repa- ration on rosin Feb. 23 1570 Geo. H. Cole v. N. Y. Tel Co.— charge of $60 per year for extension 'phone, etc Feb. 23 1571 Brooklyn Cooperage Co. v. H. Y. C — repara- tion of shipment of cedar poles Feb. 24 1572 Contact Process Co. v. IST. Y. C. and Buffalo Creek K. R. — claim for recovery of demur- rage charges Feb. 24 1573 Eev. Arthur L. Berger v. D. & H. Co. — refusal to install telephone in state at Oan'sevoort . . . . Feb. 24 1574 Dr. Chas. F. Smith v. ISl. Y. Tel. Co.— service and payments Feb. 19 1575 J. E. Nichols v. Cortland Co. Tract. Co.— re- quest that stop be changed to & more suitable place Feb. 23 1576 Walter Waghorn v. Schenectady Ey. Co. — service between Saratoga and Albany Feb. . . 1577 Samuel B. Lyon v. N. Y. Tel Co.— contract . . . Feb. 24 1578 F. A. Kinsley v. So. Shore Nat. Gas & Fuel Co. — asking for reduction in rates Feb. 25 1579 Christy Moir Co. v. N. Y. C. — -reparation on carload of lumber Feb. 25 1580 Thomas T. Laybourn v. "Well-Fargo & Co. Exp. — claim for overcharge on shipnlent of a dog . Feb. 25 1581 Frank Kupferberg v. N. Y. Tel Co. — removal charges Feb. 25 1582 Max Weiner v. N. Y. Tel. Co. — refusal to give slot machine service Feb. 25 1583 A. Z. Windsor v. N. Y, Tel Co. —inability to get service Feb. 26 2286 Investigation of Public Service Commissions Series A No. CoEEESPONDENCE CoMPLAiNTS Received 1584 E. J. Decker v. N. Y. Tel. Co.— refusal to give slot macliine Feb. 26 1585 Canandaigua Steam Laundry v. N. Y. Tel. Co. — refusal to transfer laundry shipments at Stanley Feb. 26 1586 Pinecrest Residents Assn. v. Westcbester Ltg. Co. — failure to give service Feb. 26 158^7 C. R. Berger v. Westfield Tel. Co.— refusal to give service Feb. 26 1588 Mrs. F. Van Sant Ward v. KeeseviUe Tel. Co.— inability to get service Feb. 2Y 1589 Hubbard, Eldredge & Miller v. JST. Y. C— re- fusal to settle claim for overcbarges Feb. 27 1590 Semper Bros. v. D., L. & W. — claim for refund of demurrage charges Feb. 26 1591 Mrs. ]Sr. J. Bragan v. Syra. Ltg. Co. — gas serv- ice and exorbitant bills Feb. 26 1592 Albertson Taxpayers Assn. v. L. I. E. R. Co. — request for shelter at Albertson Station, etc. . Feb. 27 Case No. Oedees Issued Febeuaey 23, 1915 3825 Application of the Central ISTew York Gas & Electric Co. for authority under section 69 of the P. S. C. Law, to issue $50,000 Cumu- lative Preferred Stock. Amendatory Order. Closed 4104 Application of the Central New York Gas & Electric Co. for authority pursuant to the provisions of section 69 of the P. S. C. Law, to issue $164,000 of its First Mortgage 5 per cent. Sinking Fund Bonds. Amendatory Order. Closed 4725 In the matter of the discontinuance generally by carriers of their regulations and practices gov- erning the furnishing of temporary doors or bulkheads to cars loaded with bulk freight Final Repoet of Joint Legislative Committee 2287 Case No. Oedees Issued Febeuaey 23, 1915 (other than grain) ; also of the complaint of the Sterling Salt Company v. Pennsylvania Railroad Company in relation thereto. Supplemental Order No. 1. 3497 Application of the Central Hudson Gas & Elec. Co. for authority pursuant to the provisions of section 69 of the P. S. C. Law to issue $400,000 par value of its 5 per cent, first refunding mortgage bonds. Amendatory Order. Closed 4710 Petition of Erie Railroad Company under sec- tion 34 of the Railroad Law for consent to the discontinuance of the services of an agent at its Orangeburg Station, Rockland County. Denied and Case Closed. Closed 4712 Application of the Columbia Mills, Inc., under section 68 of the P. S. C. Law for permission to construct and exercise franchises granted by State Engineer, State Commissioner of Highways, Commissioner of Highways of town of Oswego, 'and Town Superintendent of Highways of town of Oswego. Granted. Closed 4699 Application of Charles G. & Lewis B. Senif, co- partners, under section 68 of P. S. C. Law, for permission to construct and exercise a cer- tain franchise granted them by the Board of Trustees of the village of West Winfield, Her- kimer County. Granted. Closed 4706 Application of the Niagara & Erie Power Co. under section 68 of the P. S. C. Law for per- mission to construct and exercise a certain franchise granted it by the Board of Trustees of Angola, Erie County. Granted. Closed 2288 Investigation oi' Public Service Commissioms Case No. Oedees Issued Febeuaet 5, 1915 - 4656 Applicatiooi of .the St. Lawrence Transmiseion Co. under section 68 of the P. S. C. Law for permission to construct a pro;posed extension of its transmission line and exercise certain franchises granted it by the town boards and town superin-fcendents of ihigbways of towns of Massena, Pierrepont, Potsdam, ISTorfoIk, Stockholm, and Boards of Trustees of the vil- lages of Massena, Pierrepont and -Norwood. Granted. Closed 4703 Application of tbe Elmira Transmission Corpo- ration under section 68 of the P. S. C. Law for permission to construct and exercise cer- tain franchise granted it by the Poard of Trustees of the village of Wellsburg. Granted. ' Closed 4519 Petition of the ISTorthem Wew York Power Cor- poration, Columbia Mills, Inc., and ISTiagara, Lockport & Ontario Pdwer Com,pany, for au- thority to the first-named corporation, pursu- ant to the provisions of section 69 of the P. S. C. Law, to issue stock, execute a mortgag-e and issue bonds thereunder, -which bonds are to be guaranteed by the Columbia Mills, Inc., and under section 70 of the same law to ac- quire from the Columbia Mills, Inc.. certain hydro-electric power property; and for con- sent to the lease of such property by the Niagara, Lockport & Ontario Power Com- pany. Granted Oedees Issued Pebruaet 25, 1915 4478 Complaint of the city of North 'Tonawanda against Niagara Light, Heat & Power Com- pany, as to refusal to furnish natural gas heretofore furnished; price of natural gas, and condition of mains and pipes in streets. Denied Final Report of Joint Legislative Committee 2289' Case No, Ordbes Issued Febeuaey 25, 1915 4806 In the matter of the application of Municipal 'Gas Oo. of Albany to refund or to set off against bills of certain customers certain in- advertent overcharges for electricity. Granted 4272 Complaint of. patrons of the Albany Southern Bailroad Company against Albany Southern E,. R. Co. as to increase in passenger fares. Dismissed 3916 Application of the Dansville Gas & Elec. Co. for authority, pursuant to the provisions of sec- tion 69 of the P. S. C. Law, to issue and sell $24,!000 par value of its first refunding mort- gage bonds. Closed Xedtard p. Hale, recalled as a witness, testified as follows: By Chairman Thompson : Q. Well, Judge, did you get an opportunity to peiuse that (referring to " Draft Bill for the Regulation of Public Utilities with Documents relating thereto authorized to be published by the IN'ational Civic Federation October 23, 1914," which had previ- ously been banided to the witness by the chairman with a request that he examine it and to later appear before the Committee and express his opinion regarding same) ? A. I read it through. Senator, yes. Q. Well, is there anything in there in the way of new sugges- tions that struck you favorably. Judge, or unfavorably? A. I like the form of this draft of form of bill very much, because it runs through the subject but once. JSfow, the Public Service Law as originally drafted in 1907 had one article devoted to railroads, and then there was another complete article devoted to gas and electric corporations, and I believe that was'tbe end of it in 1907. Then in' 1910 was another complete article in relation to tele- phones and telegraphs, repeating all of these provisions. And then in a year or two — I have forgotten when the steam heating corporation was added.; it seems to me it was 1913; so that repeated them all ajgain. Well now., if you should add water com- panies, you would probably .go to work and repeat all the pro- visions that you find -.applicable in the other articles. !N"ow, I 2290 Investigation of Public Service Commissions think it is better to do as this draft bill does, and take up the various subjects. Q. Cover that in jour definitions. That is the way they did? A. Yes. And then if you need to take care of it under any special article^ make a special provision that shall hit a railroad or gas company or what not. Now, as to matters of substance, there are some things there I would lite to study, and it would need a study before they oould be adapted I think in this State. That is especially true of the telephone and telegraph article, or of the provisions -which would relate to telephones and telegraphs if this form of a bill were adopted. Q. Well, there is one suggestion in there in reference to the books of foreign coi-porations doing public utility business in this State, requiring them to have an office in this State, and books in this State, which is a small addition to the law, but answers a good many questions? A. I think any corporation that is really doing business in New York ought to be willing to furnish the authorities in New York with full information in regard to that, and it ought to be entirely possible to get it and get it without much trouble. Q. I would like you to rather look into the question of their suggestion that stock be issued at par, and where bonds are issued below par? A. You mean the proportions between stocks and bonds, etc. ? Q. This requirement is that stock is issued at par only. Bonds could be issued at not less than 75 per cent, of their face. It pro- vides 'here in the law — the question is whether those things ought to be in the law or whether they ought to be a rule of the Com- mission. It occurs to me that there are some things in this draft of bill that might better be left to the Commission. A. I think the draft bill on the whole is a little more severe. Q. I want to call your attention to those penalties. Those penalties are more severe than they were before, and they make felonies now where they were misdemeanors? A. We are liable to think the penalties provided in our own law are bigger than they really are. They read that they shall not exceed $5,000 a day, when they do not read wbat is just exactly as true, that they may be as small as five cents. I sued, at the direction of the Com- mission, I sued the New York Central Railroad Company in 1908 Final Eepoet of Joint Legislative Committee 2291 for issuing the Equipment Trust Company, 1908, $30,000,000 without coming to the Commission. I sued them for a penalty of $5,000, but we left it to the court, and we agreed on the facts and submitted it to the Appellate Division, and we left it to the court to fix the penalty ; and inasmuch as the action was brought, not for willful disobedience of the law, or willful disobedience of an order, but simply and solely to settle the status of the Equipment Trust certificate, as to whether it was equivalent to a bond ,or a note. The Appellate Division fixed the penalty at $100, just so as to carry costs, so that in the end, after an appeal to the Court of Appeals by the railroad, they paid the judgment — I have for- gotten what the costs were ; about $250, if I remember, and $100 penalty, although the court might have fixed that penalty at $5,000. Now, as to misdemeanors for doing acts forbidden by the Com- mission, I should go pretty slow about adding to the list of mis- demeanors, except by legislation direct from the legislative power. Take the Erie Railroad, for instance, subject to the Commission all the way from Buffalo to New York, except where it goes out of the State ; the only time the Erie Railroad has refused to obey the order of the Commission, a proceeding was brought instantly for a mandamus. That was for the building of a station at Collins or North Collins, I have forgotten which • there is only one place ; and they did not build the station — they did not begin it when they were told to, and they did not finish it — they had not begun it when they should have finished it; and immediately after the expiration of that date I commenced, at the order of the Commis- sion, two proceedings, one in mandamus, and the other for a five thousand-dollar penalty. The court immediately allowed the man- damus, and the Erie immediately went to work, and Mr. Stevens said to me about the time that they got substantially at work, that he had agreed for me that they need not answer in the penalty action until I gave them twenty days' notice that they must, because they needed the $5,000, or such part of it as we would get before a jury, worse than the State of New York did — needed it to build their station with. Now, who would be guilty of a mis- demeanor for not obeying the order, and where would he be guilty ? Would it be somebody in New York, and would he be guilty in New York, or would it be somebody in New York, .and he be guilty out in Erie — if that was the county ? 2292 Investigation of Public Sekvioe Commissions Q. Well, if at least those penalties are provided bj law, thej ouglit to be left in the discretion of the Public Service Commission for their enforcement. A. They are left to the discretion of the court or to the discretion of the jury, and there isn't any likelihood that you will get a bigger penalty before a jury than you -ought to get. Q. Now, there was a proposition in here that contracts for con- solidation or lease should not be capitalized? A. I quite agree to that. Q. That ought to be in the law, you think ? A. It is in the law now, really. Q. Well, that is the rule of the Commission ? A. It is the rule of the Commission, yes. •Q. You think it would be of any value to put it in the law? A. I think it better go in the law, because it is a sound thing in finance, and is the universal action of the Commission. If it were one of those things that might be wiser to not insist on in some cases, it would be as well to leave it. But I don't know any case where consolidation as such, or an agreement for consolidation as such, ought to be capitalized. Q. Now, two propositions in here of suspension of rate sched- ules, for establis'hment of joint rates and emergency rates ; A. Well, you did part of that last winter, Senator ; you treated of the advance of rates by railroads, but I do not think you did the gas companies or other corporations. Q. No, no. A. There were two bills, both introduced by Senator Haley, and the local bill, or rather the bill relating to the railroad, was passed, and the other got held up somewhere, I don't know where. Q. Tou think that authority ought to be given in both instances ? A. Why, I rather think it ought to be given. There is room for the contrary opinion. But if a Commission is broad enough and fair enough, it seems to me a corporation ought to be willing to submit its case before it increases a fare ox a schedule. Q. There is another proposition here of telephone and telegraph physical connection. I assume tha,t means that for instance my house at Middleport there is a Home 'phone, and here at Albany I can only get the use of a Bell 'phone that has a trunk line to Middleport. The Home 'phone haven't a trunk line. Should the Final Report of Joint Legislative Committee 2293 Public Service Commission be given th-e authority to requ ire them to make physical connection at Middleport with my Home tele- phone? A. I ■would have to say about that, Senator, that that involves real legislation. I would not have any opinion about that, ■except as a legislator might have. Q. The question is whether that discretion could be lodged with the Public Service Oammission ? A. For example, the street rail- road, if it has a track that will safely take on a freight car that runs near a steam railroad, can demand as of right that the rail- road should switch to it and deliver to it. Q. Yes. A. On the contrary, if its track is not heavy enough to carry a car in safety, or its bridges not heavy enough, then the Commission has the discretion to refuse it. I would not be in favor of compelling it absolutely as a duty, because it might be quite possible that the small telephone company would have no facilities which would be adequate, and yet the blame for a break- down or a failure might rest really on the telephone company that was adequately equipped. 'So I think if you order that or if you provide for it, that it ought to appear that the telephone company requiring it has really adequate facilities to handle it in a way that would constitute a good service. Q. Well, that is the way it is here. Senator Mills. — Would it be safe. Judge, to leave it to the dis- cretion of the Commission ? A. Why, I think it would. I think it would. Q. Then, again, another question — A. That is, giving them the power to require it, you mighit so provide. Q. If circumstances were such, under certain circumstances? A. If circumstances warranted it. Q. Another proposition here which it seems, as I understand, is now practically one of the rules of the Commission, the right to fix depreciation rates in the laying aside of a depreciation re- serve, and provisions for the impairment of the capital ? A. Well, we have had some applications, although you are getting a little out of my line of thought. Those questions very rarely get into the courts. But we have had some instances where we have done all that we could reasonably do on that score, where capital had really become impaired and where the company needed the help of the Commission to keep it from bankruptcy. 2294 Investigation of Public Service Commissions Q. There is another situation in here in reference to these fran- chises, " The implied consent to future grants of franchises'." I wish you would read them carefully. That is in sections 278 and 279. They were put in there for a divided opinion of these in- vestigators. Now, there are sections 280, 281, 282, 283, 284, 285, 286, 287, 288 and 289, those relate to municipalities and their powers in reference to acquiring and operating plants, gas plants and electric plants, and so on. Now, one of the Commis- sioners testified — I think at least one — that throughout the State there was considerable inclination on the part of municipali- ties to desire to compete or to have municipal plants? A. Yes. Q. And this seems to he a very clever proposed scheme to give the Public Service Commission supervision over it, and to protect the property rights if that honestly were required to be protected in case a municipality shall desire to have a municipally owned and operated plant. Some municipalities — I have some knowl- edge of them — if those sections were feasible, it occurs to me might be a very sensible thing to give them a law and give the Public Service Commission rights over them ? A. In the Skane- ateles water rights case, which you probably are familiar with — Q. I am not. A. I think 161 New York; Chief Judge Parker, then in the Court of Appeals, has decided the case in favor of the local water company, which is about to be displaced by a municipal water company, in the best terms and most adequate way that I know of anywhere. There is a real hardship on the local water company, or any other local company which has spent its money originally and educated the people up to the point where the serv- ice has become profitable, then the community comes on with the municipal proposition, and they are just as conscienceless as cor- porations are, and a little more so, in sacrificing the property rights of a private corporation. It is a difficult question at best. Q. I wish you would look this through carefully. A. I will, Senator. Q. It looks to me as though this protects the property that really, honestly, requires it. A. I may say I like that draft bill on the whole, very much. That does not commit one to every provision in it. Q. Well, I am going to ask you — I have agreed to have a hear- ing before this Committee for those people at Granville, Wednes- Final Eepoet of Joint Legislative Committee 2295 day morning. I do not know how long it will last ; probably won't last very long; and I would like you to study this a little more carefully in the meantime. A. I will be very glad to do it. Q. On these questions I call your attention to, I would like your opinion. The rest of the act is all a matter of enforcement, and that you have already alluded to ? A. There is one thing I would like to volunteer, gentlemen of this Committee, if it is not too pre- suming, and that is, that so far as I know there has been no con- temptuous refusal to obey an order of this Commission since its origin. The failure to obey — there have been a few instances of failure to obey, but not one of them has been a defiance or a state- ment that " You have made your order, now enforce it," or any- thing of that substance or effect. The nearest approach to diso- bedience that I have known anything about was the Erie case which I have already referred to, and in that case we got the alternative writ immediately, they began to build the station im- mediately, and their return to the alternative writ was that they were building as fast as they could, and consented to the issue of the peremptory writ, and then they returned later on that they had completed the station, and our inspector reported that they had done it in accordance with the plans and specifications. Chairman Thompson. — Senator Mills desires to ask something, to ask some questions. By Senator Mills (to witness) : Q. Judge, we found in the First Department, and up here in the Second District, we found instances of delay in negotiation. Is it your opinion that those delays could in any way be avoided, and that you would get better results by, let's say issuing an order here earlier, or using a little more severity in your dealing with these people ? A. Well now, I have just come from the argument in the United Traction controversy, which if you will read the Albany papers, you will note is an acute matter — at least acute in the newspapers. It is an acute situation in the city of Albany, no doubt. I understand the Commission was criticized because it appeared on the record that the order of Mr. Barnes was made in May, 1912, and that he did not begin to work under it until some time in 1914, early I think in January. I know enough of -2296 Investigation of Public Service Commissions the situation to say that there never was a week between tb© time the order was issued in May, 19 12', and the time Mr. BarneS' began his actual field investigation in January, 1914, that the company was not being asked to go ahead. Now, we did know that the United Traction Company did not have any money of its. own. We did know that the Delaware & Hudson had bought imta it at $150 a. share, and that in addition to^ that, and that it had paid altogether more for certain other connected property than the property was worth or could earn; and it was hoped that by negotiation and by asking them — not in a supplicating way, but as a matter of reason, thiat it might voluntarily, without any order, do what ought to be done undoubtedly here in this city of Albany, improve this service materially. They got a new manager. We had had a man here who had not tried, apparently at least, to do what ought to be done and could have been done. They got a new man. He really desired to do something. There isn't any doubt about it. And he promised that if he were let alone, he could' do something. But it turned out that he couldn't. His own people that oug-ht to have furnished him tlie money, wouldn't do it, or neglected to do it. JSfow, if we had known what the delay was going to be, undoub^tedly our a<^tion would have been sooner. Might as well have got into court earlier as to get in now. It is a matter of judgment. Q. You have got to leave it to the Commissions ? A. I think so. I think so. ISTow, we have made an order based on a thorough investigation. There wasn't a syllable of answer ; there wasn't a syllable of testimony on the part of the United Traction Company that they didn't have the money, or, if they didn't have it, that they couldn't borrow it. And yet I have been arguing a ease this afternoon where they came in after the order was amade and say that on account of the war in Europe that the money market is such that they cannot borrow ; and I do not know but they told the truth about it. Q. That doesn't quite answer my question. I am asking for your opinion in a general way. I take it for granted that you think that you will get better' results by negotiation ? A. Let me give you another instance, Senator, if I might, of very quiet nego- tiation which nobody has ever heard about. The Commission became convinced that the Twentieth Century Limited was run- Final Report of Joint Legislative Committee 2297 ning, not only through tte Stat© of New York, too fast, but all the way to Chicago. We had no sort of control over it outside of the State. Whether, being an interstate train, we had control of it in the State, would be an open question, although I think we would have until the Federal Government took that away from us, as they gradually take things. Now, they had had three serious accidents on the Twentieth Century Limited in rapid succession, and they had had three similar accidents on the Pennsylvania, which ran the same sort of a train in the same time. Commis- sioner Sague went to the city of ~Se\v York and asked the Xew York Central officials if they didn't think they were running that train too fast? They said: " Yes, but what can we do about it? The Pennsylvania has got a similar train. If we add to the schedule. the Pennsylvania will carry all our passengers." He says : " Will you authorize me to say to the Pennsylvania people in Philadelphia that you will add to this schedule, lengthen it a rea- sonable amount, if they will?" They said: ^'AYe will."' He went over to Philadelphia and asked them if they didn't think they were running that train too fast ? They said : " There is no doubt about it, but we can't help it. The ISTew York Central will get all our passengers if we don't run it." He said: " If the Xew York Central will slow this train two hours, will you slow yours ? " There was a little consultation, and they authorized him to say to the Central that that would be done. He came back to New York and the arrangement went into effect the following week. Now, that was originally taken only for the winter months, but they never have put it back. It lengthened the schedule to twenty hours. That was a little more than 10 per cent, addition. It just took off that strain and stress on the train crews and on the equip- ment and everything else, and they haven't had a serious accident on either train since. Now, that is a case of negotiation pure and simple — -not even published. Q. You think you get better results, then, by negotiating with the companies ? A. You can with reasonable men, and with men that are not reasonable you might as well knock them down and then reason with them. Q. What has been your experience with these various public service corporations ; 'have they on the whole been reasonable ? A. On the whole they are very reasonable, I think. I have been met 2298 Investigation of Public Sekvice Commissions in one litigation only, in seven years, nearly seven years, with a technical opposition. Q. You think you have accomplished substantially all that the Commission was organized for, by negotiation and without orders ? A. Well, I don't know as I would go as far as that, Senator ; but I think we have accomplis'hed a great many things that nobody has ever heard about even, by negotiation. Chairman Thompson: Q. Of course, that negotiation in reference to those two trains was a proposition that did not cost the railroad a cent to comply with it? A. That is so. Q. You wouldn't have had it quite so easy if you asked them to put on another train ? A. K"o. By Senator Mills : Q. But even in the case where it cost them money, do jou find that negotiating is a more effective method of getting results than fighting right off? A. Well, it is all a matter of judgment in particular cases. You might just as well ti-y to — It is abso- lutely an impossible thing to get some people to be reasonable. Q. I know there are exceptions. I was trying to formulate a general rule of conduct. A. There are two sides to almost all questions. These controversies between the public, and especially between newspapers that get rather anxious to serve the public, and corporations, have got something on both sides, as a rule. Q. And it takes some time to determine the merits ? A. Yes. By Chairman Thompson : Q. The merits ought to be determined some time within a year, hadn't they, on almost any controversy that com'OS up ? A. Yes. Well, there has been delay, gentlemen, in instances, too much, no doubt about it at all. But I do not suppose it will ever be other- wise. That is altogether — perhaps if the Legislature got after the Commissions oftener than once in seven years, it might help. Q. You are in favor of having this Committee sit all the while? That is the way I understand it? Senator Mills. — I vote in the negative. Chairman Thompson. — Well, me too, because I can go back home and work on a farm for my board, and that is all I get here. Final Repoet of Joint Legislative Committee 2299 ■and that only part of the time. And it is more healthy working on a fann. A. I suppose there are times we all do neglect some things, even our own private affairs, when we are private practicing lawyers, we get some old chestnuts th^at we hate awfully to take them up, and we leave them alone until you will be driven by the horrors of them — Chairman Thompson. — You hate to take them up ? A. Yes. We hate to take them up. Chairman Thompson. — And you go on and you go along doing some other — A. And then we get called down and in our own consciences, they punish us even worse than the public criticism. ■Senator Mills. — • I am afraid that is so. Judge. Chairman Thompson. — Well, Judge, if it isn't too much trouble for you to come in Wednesday morning, we would like you to do so. A. Now, when will your hearing be Wednesday ? Chairman Thompson. — Wednesday morning about 10 '.SO. Chairman Thompson (to Mr. Mott). — In this record I see, Mr. Secretary, that you gave me the testimony but you did not give me the order. Will you give me the order? Mr. Mott. — Yes. (Hands paper to Chairman Thompson.) Chairman Thompson. — And if there is an opinion, I would like that. Mr. Mott. — There is no opinion, except this letter. (Hands letter to Chairman Thompson.) If you would read it into the record, I would be obliged to you. Chairman Thompson. — Yes. It is dated January 28, 1915. (Reading) " Case No. 4545 and Case No. 458'T. " Charles H. Collhis, Esq., 116 State Street, Albany, N. Y.: " Deae Sie. — Replying further to your letter of the 20th instant addressed to the Public Service Commission for the Second District in reference to your recent complaint against 2300 Investigation of Public Sebvice Commissions the Schenectady Railway, I beg to saj that, in accordance with the assurance contained in my letter of the 21st instant, your letter was brought to the attention of the Commission at its executive session on Tuesday, January 2i6, 1915. " I am now directed to inform you that while the Commis- sion is unwilling at this time to grant a rehearing in your case, the entire matter having been very carefully considered by the Commission at the tim« its recent order was made, the Commission will be very glad indeed to take up for fur- ther consideration with Mr. Barnes the point that you make with reference to the selection of Stop l^o. 19 as the place at which return tickets shall be sold at the reduced rate fixed by the order. If it should seem desirable to designate some other stop or stops in the central zone in place of, or in addi- tion to. Stop No. 19, as the place or places at which return tickets shall be sold, the Commission will probably modify its recent order in that respect, or suggest to the company that without waiting for a formal order, it should institute the sale of return tickets at other stops in the central zone than Stop Wo. 19. On account of Mr. Barnes' absence upon inspection work in other cities there may be some delay in conferring with him on this question. You will be advised as soon as any conclusion upon it has been reached. For the Oommis- sion. Secretary." Chairman Thompson. — Well, you notice then that there hasn't been any final order in that matter ? Mr. Mott. — That very question is still up for consideration. There hasn't been anything further than that letter. Chairman Thompson. — As I take it from that letter, there was some modification of the rate granted by the Commission and that that now, you still have that under advisement. Mr. Mott. — That compromise — They were unwilling to grant a rehearing. Mr. Collins. — I didn't ask for a rehearing. I asked for a re- consideration. Final Kepoet of Joint Legislative Committee 2301 Chairman Thompson. — They say there they will give it to you. Mr. Mott. — The matter is now under consideration. Chairman Thompson. — I do not know how we can accept your appeal now, if they haven't decided it. I supposed they had beat you. Mr. Collins. — As far as I know, it is all over with. Chairman Thompson. — What is that ? Mr. Collins. — As far as I know, it is all over with, as far as they are concerned. Chairman Thompson. — According to this letter, of January 28, 1915, they still are holding it and can make a further order. Mr. Collins. — I don't know what they are holding it for. They haven't done anything. Chairman Thompson. — I don't know, except possibly they are holding it up for fear you will appeal it, something like that. Mr. Collins. — We appealed to them, but didn't get any satis- faction. Chairman Thompson. — Well, what was the order they made? Mr. Mott. — I think this is the order. This contains, gener- ally speaking, a recitation of the history of this action. Chairman Thompson. — Have you got a copy of this ? Mr. Mott. — I think I can give you a copy of that in the morning. Chairman Thompson. — -AH right. Give me a copy of this order. Mr. Mott. — Judge, do you want to suggest anything about the local authorities? Judge Hale. — This draft here is better than ours on that. Chairman Thompson. — From that letter it appears at Stop 19 they sell round-trip tickets for twenty-iive cents either to Albany and return or Schenectady and return, and then they required 2302 Investigation of Public Seea'ice Cojimissions them to erect signs showing the number of th« stop and told the number of lights there had to be at each one of those stations at night, and then they ordered that the case be closed. They gave you a reduction of five cents on the round trip, and then they held it up; they put another stop besides Stop 19 in the place where you asked, and made a reduction of five cents on the round trip. Did you understand that ? Mr. Collins.- — That is the point we repudiated at the hearing. That is what they ofi'ered us at the second hearing, and we refused to accept, claiming we didn't think it was fair to force people to walk a mile and a half to save a nickel, if they wanted tliem to do anything like that, miake those tickets good in any stop in that zone. That they held up and never decided that. That is the first I ha^'e heard of it. Chairman Thompson. — That is the way it seems to be, and that being so and it still being with the Commission, I am afraid we will have to dismiss your appeal now because you haven't appealed from a final order. Mr. Collins. — Their decision wasn't according to the evidence produced. We showed discrimination. One of those exhibits there, I don't know which one it is, we asked for reconsideration. 'Chairman Thompson. — It seems they haven't finally decided it. But I will look this record over during the night sometime. We will adjourn until to-morrow morning at 10:30 at this place. The Committee then adjourned to meet Tuesday, March 16, 1915, 10:30 a. m., in the Assembly Parlor, Albany, New York. MARCH 16, 1915 The Committee met at the Assembly parlor in the Capitol on March 16, 1915, pursuant to adjournment taken from March 15, 1915. Present: A quorum of the Committee being present. Appearances: Mr. Buchner, counsel for the Committee. By Chairman Thompson. — Is there anybody present who has anything to bring before the Legislative Investigating Committee, Final Report of Joint Legislative Committee 2303 if not, then the Committee will adjourn until tomorrow morning until 10 :30 at this place. In the meantime an executive session of the Committee will be called by notice from the Chair, and we will suspend now until tomorrow morning at 10:30 at this place, and if the place is occupied for something else at that time we will take the hearing somewhere else, and we will now suspend to meet in the Assembly parlor at 10 :30 Wednesday morning. MARCH 17, 1915 The Committee met at the Assembly parlor in the Capitol on Wednesday morning, March 17, 1915, at 10:30 a. m. Vice-Chairman Maier presiding. The Committee adjourned subject to the call of the Chair. MARCH 20, 1915 Proceedings of the Sub-Committee held at Washington, D. C, March 20, 1915, in the matter of the examination of Martin A. Knapp and C. A. Prouty to ascertain whether or not the powers and duties of the Interstate Commerce Commission of the United States conflict with the Public Service Commission of the State of New York. The following members of the Sub-Com- mittee were present: Senators: George F. Thompson, Chairman, George Cromwell, Eobert K. Lawson. Assemblymen: John Knight. Appearances: Burt A. Whedon, Esq., Assistant Counsel to the Committee. Chairman Thompson. — We are to-day in a kind of a bad mess over in New York with our Public Service Commissions over there, with whom I suppose you are acquainted. For some reason or other the people in New York became rather critical of the New York City Commission. You see we have two Commissions 2304 Investigation of Public Service Commissions in New York, the First and Second District. In 'New York they have dual duties. The First District Members are in charge of the engineering and construction of the subways over there and they also regulate the traffic, so you see they carry on the administrative feature of building subways and they also are charged with the duties of regulating Public Service Corporations and there was so much criticism that finally charges were laid before the Governor in January and that finally led to the ques- tion of whether the law was to blame or whether, the Commis- sioners were to blame or whether it was a press blame, or whether there was any blame at all. So, they appointed a Joint Committee of the Legislature consisting of five Senators and six Assembly- men, to investigate the whole subject and report to the Legisla- ture and this has been carried on while the Legislature has been in session and it has been very burdensome to us who are members of this Committee. We spent five and a half weeks in New York City and we spent three weeks u.p State and the criticism became so severe in ISTew York papers that the Governor asked us to give him a report of the investigation in relation to the First District — that is New York City, which we did do and upon that he has filed charges against all the Commissioners of the First District for inefficiency, neglect of duij and misconduct in office and these charges will be heard before the Governor, I think the 23rd. We have gone right along with our investigation and the matters before the Governor are simply collateral. Of course the question of the efficiency or the propriety of keeping these particular men in office is entirely with the Governor and not with us. Also, our Joint Resolution, on which we were appointed, required us to investigate the question of duplication of functions as between the Public Service Commission of the State of New York and the Interstate Commerce Commission of the United States and so far I think it is only fair to say that the only duplication of functions we have been able to — The foregoing statement was made in the form of preliminary remarks to Judge Martin A. Knapp and at this point Judge C. A. Prouty entered and the Chairman continued as follows: Chairman Thompson (continuing) : I was just explaining to Judge Knapp as you came in what brought us into being. In New York our Public Service Commis- Pinal Kepoet of Joint Legislative Committee 230S sion consists of two Commissions practically. We have two Dis- tricts, the first and second Districts. The first District comprises the City of Greater New York and the second District the remain- ing portion of the State and I think at the time we passed the Puhlic Service Law there were only two States that had one. I think we were the third State to establish such a law; that was when Governor Hughes was Governor of iN^ew York. At that time they had considerable trouble with traffic conditions in the City of ISTew York and they were about to complete or had com- pleted the system that is now in operation there. They had what was called the Rapid Transit Commission charged with, the con- struction of tunnel subways and so when Governor Hughes con- templated the idea of public service regulation they made the two Districts and the powers of the Commission in the first Dis- trict were suck that they became administrators as well as quasi- judicial regulators and they are now in process of construction of more complete system of subways in ISTew York. They have a line lip and down Broadway and have a line up and down Seventh avenue and all through Kings county, Greater ISTew York and Brooklyn. They have a very complete system. They say it is the greatest construction in the world, except the Panama Canal. Senator Cromwell. — Involving an expenditure of about $325,000,000. Chairman Thompson. — Senator Cromwell was one of the Borough Presidents before he graduated into the State Senate. So that in the supervision of this subway construction work, of these rapid transit facilities for the city, it has taken a great deal of their time. But for some reason there became a great deal of criticism, as I was explaining when you came in. Judge Prouty, from the City of New York and in January charges were made to the Governor against some of the Commissioners. The question came up as to whether the law was to blame or the men were to blame or whether there was any blame. In any event, the Legis- lature appointed a Joint Committee consisting of five Senators and six Assemblymen for the purpose of investigating and re- porting back to the Legislature. They required us to make this investigation during the Session, so that if there is any legislation 73 2306 Investigation of Public Service Commissions necessary on the subject it can be acted on ati this Session. We expect to adjourn along about the middle of April. The Assembly passed a resolution to adjourn on April 2nd but it has not been concurred in by the Senate. I think possibly the adjournment might be along the latter part of the month. We have gone on and investigated, spending about five and a half weeks in New York City and about two and a half weeks up the State investi- gating that Department and the resolution which brought us into being required that we examine into the question of the duplica- tion of functions of the Public Service Commission of the State of New York and the Interstate Commerce Commission of the United States and if so, if there is any remedy. I think it is only fair to say that the only suggestion of duplication of func- tions we seem to have heard about is the inspection of steam boilers, that is locomotive boilers, that the Public Service Com- mission inspect locomotive boilers and so does the Interstate Com- merce Commission and that one of the two inspections is un- necessary and in other words that one inspection would meet the requirements. That is the extent of duplication that we have had suggested to us so far. Of course difficulties arise, I assume in New York the same as other States as to whether or not in numerous cases the Interstate Commerce Commission should have complete and exclusive jurisdiction ot whether or not the local State Public Service Commission might investigate and decide the matter. Intrastate traffic, of course, is regulated by the Pub- lic Service Commission and Interstate traffic on the same line is regulated by the Interstate Commerce Commission. Sometimes the question arises as to which is which. A suggestion has been made as to whether or not the administration by the State of this regulation and the administration by the United States of the same kind of regulation could be in any way bettered by amend- ment to the statute of the State of New York. In the course of our investigation we, of course, unearthed a good many facts and finally the New York Press became so critical that the Governor requested us to give a report of what facts we had in reference to the Commissioners of the First District and we did so. Of course we are not charged with the responsibility for inefficiency, or neglect of duty or misconduct in office of the men who are exercis- Final Repoet of Joint Legislative Committee 2307 ing these functions. That is entirely with the Governor and we filed a report about ten days ago and since filing 'that report the Governor has preferred charges against all the Commissioners in the First District, all the New York Commissions. I think the return day is on the 23rd of the month, next Tuesday. No charges were preferred against Commissioner Maltbie because his term has already expired. He had no charges preferred against him. Those of us who signed the letter to the Governor recom- mended that — well in effect we said we thought it was the Gov- ernor's duty to prefer charges against them all. It was largely delay in handling the matters before them that seemed to be the subject of criticism. For instance the New York Edison case handled by Commissioner Maltbie, a rate case, I think he has had it four years and a half and no decision. He had an opinion all written and we called for it and since we did that, a day or two ago he rendered a decision in the matter. "•6^ Judge Prouty — Yes, I saw that published a few days ago. Chairman Thompson. — Of course when you figure out his re- duction he made, on the face of it it showed a reduction of $8,000,000 a year but on the other hand when you multiply that by the four and a half years that the matter has been before the Commission it creates criticism. He had the decision ready last August and they voted three to two not to accept it and he drew another one in January and they again reported three to two not to use it. They have changed his opinion somewhat from what it was when we got it. These personal matters, however, we don't care to detain you with. It is only a question of getting your advice, the same for instance as we did the Mayor of New York. We called upon the Mayor of the City, for instance, as to the question whether they ought to continue to administer the function of constructing the subways in New York together with the regulatory quasi-judicial functions of supervising the Public Service Corporations. To some it appears that if a man shall make a success as a Public Service Commissioner it is really a judicial duty to a large extent to regulate these public service cor- porations, that he might make more of a success if he devoted all his time to it and nothing to some other subject which might be 2308 Investigation of Public See vice Commissions inconsistent, and the Mayor gave us advice on this and other sub- jects. We had- the Comptroller of the City of New York, the President of the Board of Aldermen. We also called on the heads of various important Public Service Corporations, Mr. Shonts of the Interborough, Colonel Williams of the Brooklyn Rapid Transit Company and Mr. Whitridge of the Third Avenue Line, a very able gentleman. Oh, I think we had ten or a dozen al- together we asked for their advice in relation to this matter and under our instructions we wanted to get somebody who possibly would know, was thoroughly conversant with the Interstate Com- merce Act and probably with our Public Service Law and ask you as to whether or not it would be within the bounds of propriety or be conducive to the public welfare in Wew York if we should make some amendment to our Public Service Law and wei tried to get in touch with the Secretary to the Interstate Commerce Commission, Judge Knapp and Judge Prouty, and I presume the explanation at his office is responsible for the fact that we cannot get in touch with the Secretary to the Commission. I have explained as well as I know how what we are here for. If it is in accord with your idea of hospitality to give us information on this subject we would like it. We have called this morning at the office of the Secretary of the Interstate Commerce Commission and they have given us a copy of the Interstate Commerce Act and a copy of the Rules of the Commission and a copy of the regulations covering construction and filing of freight tariffs and a copy of some of the rulings of the Commission. They gave us enough copies of these so that every member of the Committee will be supplied with one. Judge Knapp, have you any objection to letting us have your advice and experience in these matters? Maetin a. Knapp, being called as a witness, testified as fol- lows: Mr. Chairman, if any thing I can say is of any value I should be very glad to say it. You extend a very broad invitation and I hesitate naturally to assume that I am competent to advise this Committee. I prefer to be interrogated because I am not an Economist nor am not now an Interstate Commerce Commissioner and consequently I have no views. I assume that during the Final Eepobt of Joint Legislative Committee 2309 course of your investigation some specific matters have been brought to your attention. Chairman Thompson. — That is true. The Committee will take the responsibility for your knowledge and experience, Judge. One particular matter I call your attention to is the question of inspection of locomotive boilers. I don't know how much it costs in ISTew York but I think Commissioner Van Santvoord, Commis- sioner Hodson and Commissioner Irvin all testified that there was an unnecessary duplication there. Is that true, Mr. Whedon ? Mr. Whedon. — Yes. Chairman Thompson. — It seems that you have different rules for inspection than they do. Examination by Mr. Whedon : Q. You were an Interstate Commerce Commissioner for how long? A. ]^ early twenty years. Q. And what information can you give us on that one subject of inspection of locomotive boilers? A. Well, you Gentlemen know that we all have been feeling our way along in these matters for a good many years. The Federal Government has power under the Constitution to regulate Interstate Commerce and the Supreme Court has given very broad definition of that power. The States have equal powei', possibly greater power, to regulate Intrastate Commerce and where these two powers have probably over-lapped each other or come in conflict, we have had to resort to the Court and by a series of decisions the ground has been more or less cleared of difficulty. With this general result I think I may say that since the railroad business in its nature is one which includes Intrastate and Interstate Commerce, each in the nature of the case must be conducted by the same man and with the same instrumentalities. Since either can be in conflict, as a practical matter of regulation it has the effect of ousting State authority and, while there has been no decision to my knowledge upon the precise question of boiler inspection, I would be inclined to say that the principles which have been laid down in reference to safety appliances and other matters are equally applicable to this question of boiler inspection and so it would seem to me that if the 2310 Investigation of Public Service Commissions Federal Government through adequate laws undertakes to perforin that particular service of regulation it should, as a practical matter, be surrendered by the State. Chairman Thompson. — Of course that brings up the one ques- tion which intervenes in this matter. It is a question of the State's rights against the Government and we find that is the whole thing here and of course we feel it our duty to our State to keep every possible thing in the way of power to regulate or right to operate, or right to own ; for instance take the water in the Niagara river — . A. Oh, that is true. We all have more or less of a certain State pride and I think there is naturally a re- luctance to the extension of Federal authority. That is a natural feeling. We look upon that extension of authority, and some of us regard it as inevitable, with a degree of distrust and hesitation. Chairman Thompson — You take the question of water in Ni- agara river, it is the same proposition. It is used to generate power — Senator Lawson. — You said earlier. Judge, you thought the State had even greater power to handle Intrastate conditions than the Federal Government for inspections of this kind. A. Well perhaps that was not quite justified. The thought in my mind was that in respect to some minor matters of detail the State could go further than the Federal Government. For instance, I take it the State could require the railroad to paint all its sta- tion houses red if it choose to. Chairman Thompson. — Because they are in the State. The Interstate Commerce Commission would not think that was an Interstate proposition. A,. It might be that the State thought Congress would not have that power. Chairman Thompson. — Still if Congress does exercise such a power then it has it? A. Yes, if the Supreme Court should sustain the attempted exercise of power. Mr. Whedon. — Judge Knapp, I think Commissioner Decker said in his testimony at Albany that he thought there was an unnecessary duplication of fujnctions in the matter of Isteam boilers and that he thought the State, might give this up for the Final Repoet of Joint Legislative Committee 2311 Government if the Government gave as thorough an inspection of these boilers as the State did; in other words he thought the Government inspection was not as thorough as the State Inspection. A. Who is to decide which inspection is the more thorough ? And which system or method will be best inclined to accomplish the purpose for which public inspection is required ? Q. In yoTir opinion the inspection is insufficient ? A. I don't undertake to say that. Q. I wondered if you thought it was insufficient and that the insufficiency was due to lack of help or something of that kind. A. I have no opinion about that. I observe that the Congress just closing extended the inspection of locomotive boilers to the inspection of all parts of the locomotive and tender. Is that not a fact, Judge Prouty? Judge Prouty. — I didn't know that. Judge Knapp (continuing) : It appears to have conferred upon the Interstate Commerce Commission authority to make a most exhaustive inspection of all parts of the locomotive, engine and its accessories and that to apparently imply the power to prescribe regulations if in its judgment so required. Senator Lawson. — ^Would you say, Judge, that applied to loco- motives in trains operating within the State solely and not Inter- state ? A. Well, Senator, it is very difficult to give a general answer to so broad a question. You have to take a concrete case and see exactly what the facts are and what the circumstances are. Senator Lawson. — Would your opinion of thirty years lead you to believe that Congress ought at this time oust the State from exercising any rights of inspection of locomotive boilers and loco- motive parts on trains operating solely within the State? A. I don't have to remind you,- Senator, that all this while we are pretty much guessing what the Supreme Court will decide in a particular case. ISTow, I notice quite recently in some State a question arose as to the question of employer's liability and the Supreme Court held that it did not apply to an employee, who although at times was engaged in Interstate as well as Intrastate 2312 Investigation of' Public Service Commissions service, was at the time of the injury engaged only purely in Intrastate business. Senator Lawson. — In other words, we have got to wait until the Supreme Court of the United States decides this thing as it goes along. A. If he had been hurt while engaged solely in In- terstate service under precisely similar circumstances, under the Federal statute, there would have been no question of the liability. I only mention that to illustrate. You have first the extent and character of the particular legislation. How far Congress has undertaken to go in a particular direction and then you have to work the problem out as it arises in concrete cases. Mr. Whedon (examining) : Q. Does the Interstate Commerce Commission now undertake the inspection of boilers and engines regardless of where they operate ? A. I don't know anything about it. It has been four years since I have been a member of the Commission. I know only in a general way that their activities in that direction have extended at least — Q. (interrupting) I was wondering if the Legislature should repeal the provisions of the Public Service Commissions Law, which requires an inspection of steam boilers, if that would leave the engines operating wholly within the State without any in- spection at all ? A. Probably it would, or let meput it this way. Probably it would leave the railroad free to resist the inspection of any equipment not actually engaged in State commerce. The Federal Inspector might examine, don't you know, and no objec- tion being made to it, say that as a practical matter their inspec- tion might include all the equipment. Q. Might that not be a serious objection to the repeal of the New York statute ? A. Well, I don't know. Now another thing, take the Safety appliance legislation, you will find there that the Federal authority assumes to extend to all locomotives belonging to a carrier which is engaged in Interstate Commerce and as practically every railroad carrier is engaged more or less with that provision, in terms at least it includes equipment which may from time to time be exclusively employed in Intrastate Com- merce. Final Report of Joint tiEGisLATivE CioMMiTTEii: 2Sl§ Senator Lawson. — Now, let us take a solitary case like the Long Island Eailroad for instance. They will occasionally haul a car from the Pennsylvania under the East river, thence under the North river to Long Island. These locomotives don't go out- side of the State. A. They are hauling Interstate commerce. Chairman Thompson. — Mr. Whedon, you may proceed. Witness (continuing) : If you have familiarized yourself with its decisions, I think the Supreme Court in respect to the safety appliance law has gone to this extent — to hold the carrier liable in a case of defective appliances, although the car and the train of which it was a part and the locomotive and the employees were all exclusively engaged in Intrastate Commerce and yet the Su- preme Court said, and properly said, that possibly the failure to have these appliances on a train that is engaged purely in Intra- state commerce may cause an accident to some other train that is engaged in Interstate commerce. Mr. Whedon (continuing) : Judge Knapp, section 856 of the Interstate Commerce Law and section 26 of the Public Service Commissions Law provide that every corporation, person or com- mon carrier performing a service designated in the preceding section, shall furnish with respect thereto, such service and facili- ties as shall be safe and adequate and in all respects just and reasonable and that all charges shall not be more than allowed by law or by order of the Commission having jurisdiction. Dur- ing your experience as an Interstate Commerce Commissioner did you ever come across a ease in which the jurisdiction of these two Commissions, the New York Commission and the Interstate Com- merce Commission interfered or clashed upon that subject ? A. No. Q. In other words, did you ever find a case where the New York Commission attempted to establish one rate which interfered with the rate established by the Interstate Commerce Commission ? A. I don't recall any instance of that sort. Q. Have there been any of these cases in any State? A. Yes. Q. So that there is a possibility of conflict? A. Oh, a conflict has occurred in numerous instances. I might be permitted to say 2314 Investigation of Public Service Commissions that the Supreme Court in what is known as the Shreveport case has laid down a principle of wide application. Q. Now both Laws provide that each Commission shall have power to compel the establishment of switch and sidetrack con- nection. Did you ever have any conflict with the New York Public Service Commission in respect to those provisions? A. I am quite certain that we did not while I was a member of the Commission. Q. Don't you think it is a good thing for the State to have that principle in its law, as well as the United States has it in the In- terstate Commerce Commissions Law or would you suggest, for instance, that it would be advisable for the State to repeal that provision ? A. I am not prepared to make any such suggestion. Let me say generally under existing conditions and with the Con- stitutional limitations upon Federal authority I think there is a very large field of useful activity for State Commissions. Chairman Thompson. — Well, now, for instance, take a small town in New York. A man wants a side track or a switch con- nection for his plant, could he come to the Interstate Commerce Commission and get that side track connection ordered ox would he have to go to the State Commission ? A. I don't know what relief he could get from the New York State Commission but, as you put the question, I think it comes within the provisions of the Federal statute and that on the assumption that the carrier, with whom the switch connection is desired, is engaged in Interstate Commerce, it may be required and that the traiEc handled over the switch connection would be of that character. Q. Well then any manufacturer in New York who is engaged in Interstate Commerce and sells his goods without the State could get relief from the Interstate Commerce Commission? A. That is my understanding in a proper case. Q. So that there is really a duplication of functions between the Commissions in that respect ? A. I don't know to what extent the State Commission has authority to require switch connections and other facilities of that sort. I am right about that, am I not. Judge Prouty. Judge Prouty. — I think you are. Final Kepoet of Joint Legislative Committee 2315 Mr. Whedon (continuing) : Q. Section 27 of the Public Service Commissions Lav? of the State of New York says that a railroad corporation, upon the application of any shipper tendering traffic for transportation, shall construct, maintain and operate upon reasonable terms a svpitch connection or connections with a lateral line of railroad or private side-track owned, operated or controlled by such shipper, and shall, upon the application of any shipper, provide upon its own property a side-track and switch connection with its line of railroad, whenever such side-track and switch connection is reason- ably practicable, can be put in with safety and the business there- for is sufficient to justify the same. I assume that is the same general practice in the Interstate Commerce Commission Law? A. As I recall it, it is the same as the Federal Law substantially. Q. !N"ow, sections of the Interstate Commerce Law and the Public Service Commissions Law contain provisions concerning rebates and preference-s. Has there ever been any conflict between the Interstate Commerce Commission and the Public Service Com- mission of the State of l^ew York with regard to those provisions ? A. I recall none. Indeed I may say generally that at the moment I do not bring to mind any instance in any direction in which there has been either conflict or particular difficulty as between the Federal Commission and the New York State Commission, do you, Prouty? Judge Prouty. — ISTo. That was my experience when I was connected with the Federal Commission. Q. Section 8569 of the Federal Law and section 28 of the New York State Law provide for the publishing and filing of schedules showing rates for the charges for transportation of passengers and freight and also that the Commissions may determine the form in which such schedules shall be prepared and change the forms from time to time. Now, the Public Service Commissions Law of New York expressly provides that the form of such schedule required by the New York Commission shall conform in case of a railroad corporation as nearly as may be to the form of schedule required by the Interstate Commerce Commission under the Act of Congress. Have you had any experience with conflicts regard- 2316 Investigation op Public Seevice Commissions ing these provisions ? A. JSTone whatever. My understanding is that not only the law but the spirit of that provision has been observed by the State Commission of jSTew York, with the result, as I understand it, that the Carriers prepare their tariffs in ac- cordance with the rules and regulations of the Interstate Com- merce Commission and those are either expressly or impliedly accepted by the State Commission as a compliance with the State Law. Chairman Thompson. — Have you found that the carriers object seriously to the preparation of these schedules. What I mean is we found down in New York one of the railroad corporations complaining because they were required to furnish so many schedules and so much additional information to the Commission. A. I am aware, of course, in a general way that the Federal and State requirements have imposed more or less serious burden upon the railroads and a very considerable expense and that, of course, is a subject of complaint on their part. Q. I was wondering if the requirements of the ISTew York Pub- lic Service Commission placed an additional burden upon the railroads or if the schedules that you have prepared for the In- terstate Commerce Commission practically satisfies the require- ment of the ISTew York Commission ? A. As I have already said or meant to say my understanding is that the rate schedules are prepared by the railroads in accordance with the rules and require- ments of the Interstate Commerce Commission and these rate schedules so prepared by the carriers provide for all their Inter- state as well as Intrastate traffic and that they are then either ex- pressly or tacitly accepted by the State Commission as a compli- ance in that regard with the State Laws, with the result that there is no duplication. Q. (Mr. Whedon examining). — Is the same true of the filing of New York reports by the common carriers? Both laws pro- vide that the Commission shall have power to require the filing of annual reports but does the New York Public Service Commis- sion require additional information ? A. I don't know. Q. Both laws require the investigation of accidents. Does the Interstate Commerce Commission investigate all accidents on steam railroads ? A. I am not able to advise you. Might I sug- Final Report of Joint Legislative Committee 231'r gest that some members of the Commission or its employees would be much more competent to tell you what they are actually doing than I am. Anyway I am not sure that the power of investigating accidents had been conferred when I left the Commission. Judge Prouty. — ^Yes, I think it had been. We were in the early stages. Q. Judge Knapp, we had considerable discussion in the course of our investigation with regard to the ruling of the New York State Court, which permits the Supreme Court to review the pro- ceedings of the Public Service Commission by writ of certiorari. I understand that the Federal courts have interpreted the law in a manner which prevents the review by the Federal courts of a decision of the Interstate Commerce Commission upon a writ of certiorari, but the Court of Appeals of the State of ISTew York has taken a different view and permits review and have you any opinion which you would wish to express upon whether it would be a good thing to repeal that provision or to put a provision in the law preventing the right to review by certiorari? A. I am not sufficiently informed about this question to justify me in expressing any opinion. Q. The Federal courts do not review the rulings of the Inter- state Commerce Commission in that way, do they? A. 'So. Q. We found that the State courts will permit a review by certiorari, a review of all the facts on the testimony taken and that the Public .Service Corporations have resorted to that pro- ceeding frequently, resulting in great delay? A. I would say that the Supreme Court has come pretty nearly, if not quite, to the position that the courts will interfere or restrain or otherwise control the activities of the Interstate Commerce Commission, only for the same reasons and to the same extent that they would interfere or control in cases that were the direct act of legislation. Is that not right. Brother Prouty ? Judge Prouty. — Yes, provided the Commission acts within its constitutional position. A. Brother Prouty's suggestion is a wise one. Under the ex- isting Interstate Commerce Law, therefore, there must be some basis of fact upon which the Commission may exercise ita author- 2318 Investigation of Public Seevick Commissions ity. Congress, of course, would have power to legislate in such a way that whatever the Commission did would be subject to review only to the same extent that if th© same thing was done by Act of Congress. Q. That is the argument that has been presented in favor of amendment to the 'New York law, that the acts of the Public Service Commission are the delegated acts of the Legislature. A. I am frank to say I think that is the correct theory. Certainly this right to review seems to create a considerable delay in arriv- ing at results on the part of the Commission. Q. Now, section 8575 of the Interstate Commerce Commission Law provides that the Cormnissioners shall have a term of seven years. Our Commissioners in ISTew York have a term of five years. Have you any ideas which you wish to express as to whether or not the term should be lengthened to conform with the provision of the Interstate Commerce Commission Law ? A. Oh, I have no definite idea about that. Chairman Thompson. — In connection with that question I call the judge's attention to this. We pay our Public Service Com- missioners $15,000 a year and the United States pays the Inter- state Commerce Commissioners $10,000. We give them a five- year term and the government gives the Interstate Commerce Commissioners a seven-year term. Do you think there is anything in that, that is whether the changes in our practice in that regard might result in improved service in any way ? A. Oh, the per- sonal elements enters so largely into that question that one cannot make a general reply. It would be easy to say and just to say that any man fully qualified and competent to discharge the duties of Public Service Commissioner under the New York State law, as I understand it, is not overpaid at $15,000 a year. Members of the Interstate Commission, in my judgment, are very much underpaid. Chairman Thompson. — Well, now, in that connection let me say that the State makes an appropriation of $101,000,000 to build the Barge canal and we cannot now complete it within the money. The government makes an appropriation of a certain amount of money to dredge the Buffalo harbor and they will complete it Final Report of Joint Legislative Committee 2319 within the appropriation. In this connection I think Mr. Whit- ridge, in JSTew York, called our attention to the fact that the engineering force now employed by the First District Public Service Commission in the construction of subways cost $2,300,000 a year and he said that the Panama canal with its engineering force, doing just as much work, and possibly a more difficult en- gineering problem, were employed at a much less figure. Can you tell me why these things are? Why cannot we be just as saving in business in I^ew York as we are in administering the laws of the nation? A. Well, I think no one can give a satisfactory answer to that question. It doesn't grow out of our dual sovereignty or any inherent difference between Federal and State authority. I am old enough to remember when the capitol at Albany was begun. Chairman Thompson. — And there won't any of us live to see it finished, judge. A. I know it cost several times the ordinary estimate. ' Qhalrman Thompson. — They are still working on it. A. ISTow, you take the adjoining State of Connecticut, they made an appropriation for a capitol building there and have completed it within the ordinary and original appropriation. Chairman Thompson. — So you don't blame us in iNew York who have been trying to find out what is the matter with us in that respect ? A. 'No, I hope you will be able to find out. Mr. Whedon continuing: Q. This particular provision of the Law also provides that not all of the Commissioners shall be' appointed from the same politi- cal party. We have no such provision in our law. Do you think such a provision has resulted in higher proficiency? A. I am very strongly in favor of it. I think any administrative body dealing with these subjects are important to have non-partisan and every community should be just as free from political influ- ences or control as is humanly possible. Chairman Thompson. — In connection with that what do you say about the tenure of office ? A. If you can be sure of getting good men, the longer the term the better and if you don't get good men any term is too long. 2320 Investigatiom- of Public Service Commissions Q. You find in the national government we appoint judges for life under good behavior. In the State we elect them for fourteen years. We give them a long tenure of office and the reason is obvious. ISTow, a Public Service Commissioner of the State of New York is called upon to consider as much or more than any possible question that may come before a Supreme Court Judge of our State. Now, these two propositions are true. Now, is there any reason in the case of the court why the courts should have any concessions as against the Public Service Commissioners? A. Of course the question of life tenure is a very large one. I don't hesitate to say that for such service as State Commissioners are called upon to perform I would favor a long tenure of office. In the first place it is an unusual man, who coming to such a place without previous experience or any training specially fitting him for it, can within two years get such knowledge of the subject, such a grasp of its ramifications, such ability to take in the whole subject and cause a wise administration of the law. He is an uncommon man who can acquire that within less than two years. Chairman Thompson. — Of course, I can see it in another way. For instance, the Public Service Commissioners in New York State come in contact with men who draw $40,000 and $60,000 and $75,000 and $100,000 a year and the answer to that ques- tion is that the State cannot afford it, but, of course, if the office of Public Service Commissioner might be made sure for some time and then they be given as much of the dignity of the court as possible, that the State might pay them part of the salary in honor. A. Oh, manifestly the compensation of any man in the public service cannot be measured by what the more successful man earns in a corresponding vocation. The reward must come from the dignity of office, the opportunity for usefulness which appeals to the high-minded man and the presumption, which I think ought to exist there, that if his duties are well discharged he will be reappointed or otherwise continued in office indefinitely. Q. You see our Court of Appeals as a court. We have great confidence in them. A. They are a very able court. Q. (Mr. Whedon examining). — Do you find, judge, that a great deal of the siigg^ss of tb? Iptej-stat§ Cpmffierce Corftjnission Final Eepoet of Joixt Lbgislative Committee 2321 has been brought about by making the Commission bi-partisan and that it has served to keep the Commission out of politics? A. I thinli I can safely say that is so. I think I cannot too strongly emphasize on the fact that during the twenty years of my connection with the Commission it was absolutely non-parti- san. I have never known of anything done by the Commission as a body or any member of it acting in an official capacity which indicated to me the slightest political influence or prejudice. I have every reason to believe, as most men would, that that is the most desirable policy. You know the law originally required that only three members should belong to the same political party, which indicated the intent of Congress, unmistakably, to estab- lish an administrative body which should be as free as possible from political control. Q. (Mr. Whedon continuing). — I see that this section also provides that the members shall not engage in any other business, vocation or employment. We have no such provision in the New York law. Do you think such a provision would be advisable? A. I am inclined to answer that question in the affirmative. I feel that the office itself is of such consequence and dignity, to say nothing of its power, that it is proper and wise that the in- cumbent should not be engaged in any other occupation. I think he should take the office upon the understanding that he is to devote to these duties his entire time and attention. He should not be incumbered or embarrassed by other activities. Q. I see that your law provides that a Commissioner may order testimony taken by deposition. There is no such provision in the ISTew York law. The testimony and all testimony given for the Commission is to be taken before a Commissioner. We were wondering it if would not be a good plan to so amend the law as to permit the Commissioners to assign the duties of taking testimony to referees or commissioners or men appointed for that purpose, thus relieving them of a great deal of work. What would you think about that ? A. I should favor it without the slightest hestitation. Chairman Thompson. — In that connection, judge, as I under- stand your law, it gimply pj-pyi^es that depositions ma.j be taken 2322 Investigation of Public Service Commissions — that is, not the appointment of a referee to determine that issue ; simply take testimony and report the testimony back to the Commission. A. As a matter of fact very little testimony in pro- ceedings before the Commission is taken by what is technically called a deposition. It is largely taken by the examiners of the Commission, who hear the hearings orally and the testimony is taken by a stenographer and written out. That is made a part of the record upon which the Commission decide ultimate action. Q. T)o they report that testimony with recommendations ? A. No, I don't think so. Of course, the work of the Interstate Com- merce Commission is getting to be of such extraordinary volume no one man could do it. I might state in this connection that the proposed report is in the nature of the recommendation of the examiner who has heard the case and those recommendations are examined by a board of review. Q. It is practically a complete determination of the matter subject to the Commission to pass upon it to say whether or not there were violations ? A. It manifestly is obvious, to use that term that under existing conditions a member of the Commission cannot be perfectly certain of the credibility of the statement of facts in the report. Q. He must take that; he must depend upon the employee's report? A. Yes. Q. Does that work out with satisfaction, with general satisfac- tion, that method of handling matters ? A. Well, I am not pre- pared to say that it does not. It is a very troublesome question and I cannot say that it works out ideally, but perhaps it is the best working plan for the present. I know that various changes are proposed and various methods and probably something will have to be done to relieve the Commission from its tremendous burden which it is. now carrying. Senator Cromwell. — Then if it were physically possible you would prefer to have some member of the Commission see the hearings and personally ascertain the facts but because of the functions of the individual Commissioners, you think that makes it impossible? A. Whether the number of cases requiring inves- tigation makes it impracticable for your State Commission — one member at least — I don't know. It all comes to the question of the capacity of the five men to do the work. Final Repoet of Joint Legislative Committee 2323 Senator Cromwell. — If practicable, however, you would tHink it an improvement ? A. Oh, j'es. Assemblyman Knight. — It seems to me that the necessity for the procedure under the Federal law is hardly parallel to what it would be in an individual State. You have a great many more cases and more territory and jurisdiction. A. On the other hand your State Commission has to do with the issuing of railroad securities and that, I understand, takes a great deal of their time. Assemblyman Knight. — That the Interstate Commerce Com- mission don't have ? A. ISTo, not yet. Senator Thompson. — Is there any sort of prophecy contained in your answer to the last question, judge? A. Oh, I don't want to put myself in the role of prophet. I don't see any place for regulation to stop and no thoughtful man could question the pro- priety of the exercise of Federal authority over the capitalization and issuance of securities by public service corporations. Senator Thompson. — I assume if the national government were satisfied that the states were making a complete and serviceable job of it that they would not interfere? A. That is a supposition, if I may be permitted to say so, to be addressed to the Congress. Senator Thompson. — I started to interrogate you in reference to the question of natural resources because I came to Congress with that matter, with a committee, about a year ago, for the pur- pose of asking Congress to place, not assume, complete jurisdic- tion of the natural resources of Niagara river. The result was that they never did pass the bill but they threatened to do so. A. That brings us around to the question we began with. Senator Thompson. — That is an annoying situation. A. The tendency, the almost irresistible tendency of the Federal authori- ties to extend the exercise of its power is perfectly obvious. Senator Thompson. — Largely that is what we are here for and that is to tell us we can do so that the United States government will feel that the State government is being properly adminis- tered. Solve that question. A. It would take a much wiser man than I. All I have been able to do is to exercise my best judg- ment, that my degree of intelligence permitted me to form upon 2324 Investigation of Public Seevice Commissions a particular concrete question whicli I had to deal with. That is about as far as I have been able to go. Senator Thompson. — That is what is annoying us. A. That has been annoying the country for a great while. Senator Thompson. — I thought I had the solution in the power proposition. I think yet I have. I think the United States gov- ernment has the right to govern the Niagara river insofar as it might interfere with navigation and insofar as it might affect national defense in times of war or national aggression. Beyond that I think that the government should first certify to the State of New York how much water they can take from that river and that should become the State's natural resource which they should thereafter handle. I think Congress will take that view some day. This proposition here as to where you shall leave off State super- vision of a railroad engaged in Intrastate and Interstate Com- merce both and where the Interstate Commerce Commission shall take it up, is a proposition that if we could only determine it for this Legislature, we would feel that we had done fair service to the public. A. One might say that the ideal condition in that regard would be the exclusive exercise by Federal authority of the regulation of public service corporations. Q. (Chairman Thompson). — Whether interstate or intrastate? A. Say that, yes. Chairman Thompson. — By that you simply refer to transporta- tion. You don't refer to public utilities, like electricity com- panies ? A. ISTo, I am speaking of transportation service. Chairman Thompson. — You mean electricity service in the city and suburban transfer service? A. I don't quite mean that be- cause you have got to take into account the practicability of doing the thing, dealing with the job as a unit and so far as it is sepa- rable and measureable — and urban transportation is separable — it should be left under the control of the local authority because of the appalling magnitude of a complete general and local regu- lation of all agencies of transportation by Federal authority alone. Chairman Thompson. — Take the ISTew York Central & Hudson RivCT Bailroftd Company. They run from New York to Cbicago, PiNAt Report of Joint LegIsLa'tive GoMMiTTiiE S3S5 1 live at a place called Middleport — I like to advertise it. That is located on what is called the Falls Branch of the New York Central, the old original road from Canandaigua to Niagara Falls. The question comes up as to whether or not we will have a train leaving Buffalo at 11.30 at night and bring us home from the theatre. Should we not come to the Interstate Commerce Com- mission with that? A. Surely not. I do not mind assuming that the ideal condition is the one where there is but a single authority, primary authority. Of course, that is only a theory because of constitutional limits. Chairman Thompson. — Let me give you a suggestion. Suppos- ing we work out an administrative scheme of administering this regulation, by which we hold the Interstate Commerce Commis- sion — now the reason for its existence is this as I see it: One railroad might establish a rate of two cents a mile, another three, the roads operating in different states. They base the higher rate on too large a burden, more than its share of the burden of paying for the operation of its railroad. The Interstate Commerce Com- mission comes in then as a sort of clearing house to make these rates proper as between the two states. You have got to do that. Well now, assuming that the national government could be pre- vailed upon to accept a condition, by which the Public Service Commissions of each state had the national regulation, with the power of review by the Interstate Commerce Commission in all cases where it affected interstate traffic ? Is it possible to bring that about and would it be practicable and would it bring about a result which is an improvement over present conditions. A. Oh, I hardly feel able to answer that question. Q. Something we would have to try and get experience with, you think? A. I think you will find Brother Prouty can prob- ably answer your query. He has perhaps considered that ques- tion about as carefully as any man in the country. He may have different notions about it. Assemblyman Knight: Q. I just had a question or two that occurred to me. Your statute fixes a penalty for the violation of any of the orders ? A. Yes, $5,000. 2326 Investigation 6f Public Service Commissions Q. That is a specific amount for each violation? A. I think that ia in there. Q. Makes each separate day during the continuation of the violation a separate violation doesn't it ? A. I believe so. Q. The point that I was getting at is that under the 'New York State Statute the penalty fixed for disobedience to any of the orders of the Commission is an " amount not to exceed Five Thou- sand Dollars " and the point urged by some is that the amount of the penalty being fixed in such a way, it is practically nonenf orce-' able for the reason that a jury would not find the maximum penalty and it would have the tendency to have the jury find no penalty or a nominal fine. Would you think it would have such an effect under such a statute? A. I don't at the moment see how a State statute would operate which provided a penalty not exceeding a given amount. That goes to the old question which used to be very much discussed in the courts of New York, that is the difference between a penalty and a forfeiture in the matter of misdemeanor and other criminal matters and where the statute fixes the punishment in the form of a penalty not exceeding a certain amount it is then in the discretion of the court. Where you want to confer civil right of enforcement you fix a definite amount as a forfeiture for failure to comply, then you sue for that forfeiture. Q. The point I raise is that this penalty being fixed at not ex- ceeding $5,000, it being so much, that where a violation might probably be apparent, that the very fact the penalty is so large it would drive or lead a jury against the finding of a penalty at all ; on the face of it it would seem excessive and unnecessarilv large. Mr. Whedon examining: Q. The findings of- your Commission are conclusive on the facts ? A. Yes, practically so. Q. Where is the review in the first instance? Does it go to your Commerce Court? A. That is abolished. The method is that which would be taken against any legislation considered to be beyond the power of a legislative body. The carrier files an appeal in the United States District Court to restrain the order. Q. I didn't know whether there was any express provision in Final Repoet of Joint Legislative Committee 232T the act for review but perhaps some question of law involved in your decision ? A. There is not. Q. Well, there is some time limit now isn't there? A. About bringing suit on the orders of the Commission ? How about that, Brother Prouty? Mr. Prouty. — I don't recall it but I think it is two years. Q. Now in regard to your orders, do you have some time fixed in the statute in which these orders shall be obeyed, after the orders are issued ? A. The time may be fixed by the Commission at not less than thirty days is my recollection. Q. And do you have some method by which the Commission itself can keep in touch at all with the complaints that are entered or does the volume of the complaints necessarily leave them to the direction or oversight of the employees of the Commission? A. To what extent different members of the Commission can keep in touch with what are known as informal complaints, which come by letter or of that sort, depends upon the volume of the work and its distribution among the Commissioners. In my day we had a method in which they were divided up. Correspondence from different territories would be referred to different Commissioners, with the idea that each one member of the Commission would be fairly informed as to what was going on at all times. Q. That is informal complaints and formal complaints ? A. Yes. Assemblyman Knight: Q. We found in ISTew York State that thousands and thousands of these complaints against Public Service corporations there were not brought to the direct attention of the Commissioners them- selves and so that a great majority of these complaints they never had any knowledge of at all. The question here is whether you have any suggestions to make or whether the Commission has adopted any plan along the lines you have stated here, by which these informal complaints should be brought to the attention of the Commissioners themselves. A. I think that is a matter of proper organization. I venture to assume that the Commission, either Federal or State, can so organize its work with sufficient skilled subordinates to at least have some record of attention to 232B tNV±:sTtGA*rtolsr of Public Seevice OoMMissiOMS practically every complaint whicli is made by any citizen. I know we used to. Q. You think it is practicable to do it, do you not? A. We used to deal with very little delay by answering letters, instituting inquiries, giving information. I venture to say that as a whole it is a matter of oiHce organization and can be made responsible and efficient, to meet the public requirements, to which your question relates. Chairman Thompson. — We had a little difficulty, that is the chairman of this committee did, over the question of informal and formal complaints. It was very hard for me to find the difference. I thought they were all just the same. That they all deserved equal treatment and it seems that I think your answer is the answer to the whole proposition. It is a question of proper or- ganization. If that is all right, all complaints will get equal treatment. Q. Were you a member of the ISTew York Commisedon? A. No. It was not created until long after I was made a member of the Interstate Commerce Commission. The law creating the Commission was passed in 1887 and the members were appointed by President Cleveland. Q. Did they have an equal power then as compared with their powers now ? A. l^o. Our powers were limited. It was prac- tically an unimportant body then. That is one of the conspicu- ous instances of the growth and activities of Federal Government and the disposition to exercise the power which is vested in it under the Constitution. It was not until 1906 that the Commis- sion got any real authority. Senator Root a year or so ago in one of his characteristic speeches regretted in what he character- ized as the tendency of the negligence of the State to do its duty, which neglect and failure is one at least of the potent reasons why there is such a strong pressure upon the Federal Government for the exercise of its authority. Chairman Thompson. — Well, Judge, if there is anything more you have in mind that you think would be of value to us we would be glad to have you give it to us. A. Only to express my regret that I am not able to be of greater service to you. Final Report of Joint Legislative Committee 2329 Chairman Thompson. — We think yon have been of very great is'ervice to us. A. Yon are dealing, of course, with a, very large question, full of diiSculty. They appal the wise man and every man who thinks about things must be more or less apprehensive as to the extent to which the activities of Government, ISTational and State, are to go. Where are we going to stop ? I don't see where. Chairman Thompson. — Of course the State cannot do without certain of these functions. We are very much obliged to you, Judge, for the very valuable information you have given us. Judge Prouty, will you kindly take that seat there and tell us what your views are in this matter. Chaeles a. Peouty, being called as a witness, testified as follows : Judge Prouty. — I don't think I can tell you any more than Judge Knapp has told you or that you know yourselves. The regulation of railroads and railroad rates is a large proposition. I was for seventeen years a member of the Interstate Commerce Commission and something over a year ago I resigned to become Director of Valuation. I have charge of that work for the Com- mission under their direction. I don't think, gentlemen, that I can add anything to what Mr. Knapp has said. He and I were associated on the Interstate Commerce Commission during most of my entire period of service there. Frequently requests were made on the subject, about which he has addressed you. His ideas and mine are very much the same. It would hardly be possible for me to add to anything he has said and surely would not be practicable for me to undertake to repeat what he said. If there is anything in particular that you desire I would be glad to give my views, if I have any. Chairman Thompson. — The question that Judge Knapp prac- tically referred to you and that is regulation must be had of all public utilities; production of goods and distribution of it; pro- duction of electricity for light, heat and power and its distribution and local electric railways carrying city trafl&c and interurban traffic. Many of these things are local but they grow. You 2330 Investigation of Public Sekvice Commissions take we have an electric line running from Buffalo to Canada ; that becomes international. They connect' with some road handling freight and that becomes international traffic. Now where can we find the point to stop the duplication of functions? Is it pos- sible to find that point where the State regulating body leaves off its ordinary investigations and the Interstate Commerce Commis- sion, the national body begins? A. Well, now you see some of these public utilities are local. Where they are local the local regulating body ought to be allowed to regulate them. The elec- tric light plant is a local utility and to my mind ought to be regulated by the State and not by the national government. I think that is proper, even though the light plant might be located in one State and might transfer current across the border into another State. There are certain other utilities which are not local, which in their very nature are Federal. They cross State lines and they must cross State lines. Now, when a utility is es- sentially Federal it seems to me that the regulation ought to be Federal. Transportation by a railroad is really a Federal func- tion. I don't know what part of the transportation of this coun- try is interstate but the greater percentage of it is. I have some- times estimated that from 60 to 75 per cent, of all traffic of this country would be interstate traffic. That would certainly be so if you left out the handling of certain important commodities, like lumber and coal. Take the shipment of logs before they are set into lumber. That trajisportation is to a considerable extent local, within the confines of a State but taking transportation as a whole it may safely be said 75 per cent, of it is interstate. If you go into New England, where I live, you will find more than 75 per cent, is interstate. It is only a short distance over there from one State to another. It is impossible for the State to regulate that transportation. It is essentially a Federal function and conse- quently it has got to be regulated very largely by the Federal government. The difficulty, as you point it out, is in knowing where to stop. There may be such a thing as regulation of rates and there may be such a thing as regulation of facilities. For instance, you have referred to the inspection of a locomotive. Now take a very simple thing, the locomotive headlight. What kind of headlight are you going to use. There are different no- Final Report of Joint Legislative Committee 2331 tions on that subject. Some say electric, some say gas, one kind or another kind. You have told where you live, Mr. Chairman, so I may say I live at Newport, Vermont, and I frequently make the trip. When I return I ride for the first sixty miles in the State of Vermont; I then ride in the State of New Hampshire. I ride the balance of the distance in the State of Massachusetts. The same engine runs from my home half the distance. It runs a little ways to the New Hampshire line; it crosses the New Hampshire line and goes on another sixty miles to Cornish. If Vermont says that this engine shall use a certain kind of head- light and New Hampshire says another, what is the result ? That presents to you in a very simple form the trouble with allowing the State to exclusively supervise the instrument. I would be in favor myself to allow the State to supervise the tracks and the construction of the tracks and to generally supervise all those things which are peculiarly and particularly local and which can- not go outside of the State, subject to the right of the Federal government to add to or correct that supervision if it was not efiiciently done by the State. But where you say the whole su- pervision of the rolling stock of a railroad, that is impossible be- • cause that moves from state to state. Q. Chairman Thompson. — Your answer to that then is the State should not, in your judgment, undertake the inspection of locomotives? A. I believe that so far as locomotives of rail- roads engaged in intrastate commerce are concerned that their in- spection should be left to the Federal government, provided they will undertalve it. Under our laws, as I recall them, as they stand to-day, if a Federal inspectoT says that a locomotive is out of order and must be taken out of service, your State cannot put it in service. Your inspector could say that a locomotive was unfit for service and should be taken out of sendee, and if the Federal inspector had passed it, there might be great duplication of functions, yet I don't think if the Federal inspector examined it and said it was fit, that yonr inspector would have any right to take it out of service. It would be a duplication nevertheless. There are in New York, I think even in Vermont, possibly some locomotives on some railroads which are not engaged in in- terstate commerce and somebody ought to inspect them. Some- 2332 Investigation of Public Service Commissions body should inspect those cars in reference to locomotives in railroads engaged in interstate commerce and referring to the cars of roads engaged in intrastate commerce, it seems to me they naust be entirely handled by the Federal government. Their function is a Federal function. Then you come to the question of rates. The rate from one State to another is a Federal rate and the Federal government must establi&h that rate. The rate from one point to another point in !New York is a State rate and the State must, under all principle, establish that rate. The difficulty arises when the State rate conflicts with the Federal rate. ISTow, for instance, grain comes from Chicago to Buffalo by water or from Duluth to Buffalo. It goes from Buffalo to New York by rail or by Barge canal. E"ow the transportation from Chicago to Buffalo is unregulated. It is almost entirely by steamer. The transportation from New York to Buffalo may be entirely by the New York Central railroad. The rate is entirely State and yet those State rates absolutely determine the rate at which every pound of grain shall move from the whole west. It is not merely a question of the rate to 'New York City. It de- ■ termines the rate to apply from Minneapolis to New Orleans, from Milwaukee to Baltimore. It determines, as I say, what rate shall be applied to the movement of all wheat! Q. How is that so? A. It is so for this reason. The rate from Buffalo to New York determines the rate from Chicago to New York City. The rate must be the same through all the ports. The rate to New York City determines the rate to Bos- ton. It determines the rate to Philadelphia and to Baltimore and New Orleans because the commodity will move out of that and through that port where the rate is lowest. The rate on wheat determines the rate on flour. The rate from Chicago de- termines the rate from Milwaukee and Kansas City, consequently when you. chalige by one cent the rate from Buffalo to New York you have affected every flour rate and every wheat rate almost in this whole country. We have been through that whole thing. Assemblyman Knight. — I should think much would be de- pendent upon the nature of your cargo. A. The trouble there iis thisu Wheat can have its origin in Kansas or Nebraska and can Final Eepoet of Joint Legislative Committee 2333 go to New York by a good many different ways. It may go through Kansas City, through Milwaukee or Chicago. When you reduce the rate through Chicago you require a corresponding reduction through Kansas City or Milwaukee. The place of origin is much more the same than you would imagine. From the point of growth in most parts of Kansas and Nebraska it must move about the same rate through these different utilities. So that the State practically by changing the State rate can also affect the interstate rates and the question is how far they should be allowed to deal with those rates which necessarily effect inter- state traffic. In the Minnesota case it was held that if State rates affected interstate traffic and that if the position of the railroads was consistent the State Commission would not have anything to do. There are a great many State rates which do affect interstate rates and the great question is how to harmonize these matters; how to prevent your Commission in New York; how to prevent the Missouri Commission from improperly reduc- ing the rate from St. Louis to Kansas City ; how to prevent the Georgia Commission from reducing the rate from Savannah. I don't think I can advise any scheme of legislation which will ever accomplish that. When I investigated the B. & M: situation up there, I became convinced that the rataa of the B. & M. were too low and ought to be advanced. Then the question of how to secure a proper advance. You cannot make that advance with- out the consent of the Vermont Commission, the New Hampshire Commission, the Massachusetts Commission, the Maine Commis- sion. What I did do was to call together, with the consent of the Interstate Commerce Commission, the Commissions of all these States and we sat down and considered the whole question and we arrived at a conclusion and made that recommendation and the thing was done with the merchants and representatives of the B. & M. The rates were materially advanced. I have thought that some scheme of that kind might perhaps be worked out. I think there should be conferences. These things can only be accomplished if you go about it in a spirit of co-opera- tion. I never felt there would be any great difficulty. The State must have the power to regulate State rates and the Federal government the power to regulate Federal rates. 2334 Investigation of Public Seevioe Commissions Chairman Thompson: Q. Well, Judge, we have a Federal Constitution and a State Constitution. They get a litigation started in a State court; there arises a Federal question. It is a question whether it violates the Constitution of the United States. From our Court of Appeals there is a practice established by a writ of error to our United States Court and they are a Clearing House which decides the proposition. With this Commission it is a pretty well established fact that we, as a part of our government, must regulate these Public Service corporations. It is probably go- ing to be as firmly rooted as other judicial bodies. Now, what about the writ of error or appeal to the Interstate Commerce Commission in all cases where it might directly or indirectly affect the Federal authority? A. That is what I tried to indi- cate. Take the condition in your rate matters. It seems the State should be allowed to deal with that in the fir&t instance. It can better deal with it. If your State Commission doesn't properly deal with that and they later fail to do so and it affects interstate business, then it seems to me that there should be a right to come to the Interstate Commerce Commission. You take this case. When I was a member somebody wrote me from l^ew York and objected to the regulations on the Hudson tunnels in reference to smokers, stating that they were wrong and they asked me to take it up and correct it. Well, of course, we couldn't very well be bothered with a question of that kind, — what kind of a smoking car they should run. At the same time who would decide it? New York couldn't, New Jersey couldn't, but somebody ought to decide it. I never knew what was done with it. We advised them that we had nothing to do with that question at that time. I never knew what was done with it. If that could be handled in the first instance by either New York or New Jenaey, or by some agreement between the two Commis- sions or if they could have let me review the question it would probably have resulted in the working out of this proposition. I have felt that some system of appeal or review, like you indicate, might be worked out. I am for State rights but I might just as well recognize a strong arm when I see it. I am not for State rights, however, when they result in what happened in the New Final Report of Joint Legislative Committee 2335 Haven case and I don't see how you can prevent it as long as you have purely State rights. Chairman Thompson: Q. The Interstate Commerce Commission has entire jurisdic- tion of water transportation as well as rail ? A. It has no juris- diction of water tran&portation unless conducted in connection with rail transportation. If the water transportation is part of a through interstate rail, in which an interstate railroad partici- pates, then the Interstate Commerce Commission has jurisdiction. Q. You have no jurisdiction over gas or power purchasing companies ? A. No, not at the present time. Q. Has that been agitated? A. ~No. There was a proposi- tion to give us jurisdiction in one case, I believe, where current was to be generated in Connecticut and sent into other States. That question has not been agitated, I don't think. Q. I notice that the provisions of the act provide that the Interstate Commerce Commission is permitted to refer it to the United States District Attorney and to the Attorney-General ? A. Yes. It's the duty of the Interstate Commerce Commission to investigate these matters and if any violations are found to refer them to the district attorney who, under the direction of the United States Attorney, prosecutes for the violation. Q. Has that been found out to work well ? A. 'No. And yet it does. As a matter of fact the Commission employs attorneys of its own and these attorneys look up for violations and when a prosecution is to be begun our attorney, in fact, goes into the district where the indictment is to be found and usually under appointment from the Attorney-General he appears and repre- sents the United States. That work is mostly done by the at- torneys of the Interstate Commerce Commission and not by the district attorney. Q. Do you think it would be particularly bad if done by the district attorney ? A. I don't think they would be well equipped to do that. They would not understand it as well as the attorneys for the Commission. Q. Is there any view in the fact that these men have to be appointed by the Attorney^eneral ? A. Well, the Attorney- General is at the head of the Department of Justice and I don't 2336 iNVESTlGATtON OF PuBLIC SeEVICE COMMISSIONS tHak anyone else should have this power of designation and appointment. Mr. Whedon (examining) : Q. Have you any difficulty in enforcing the penalty provision of the law ? A. What do you mean by the provision ? Q. The $5,000 penalty for violation of the Commission's order ? A. I don't think that has been attempted in any case. The pen^ alty is large enough so that no railroad would take a chance and if the railroad does not intend to comply with our order it brings the necessary action. I don't recall any case where the railroad has failed to obey an order unless it has filed a petition for the enforcement of an injunction order. I don't know of any cases where they have neglected. Oh, they may sometimes neglect, but the neglect has always been rectified. It might run for a few weeks or a month after the date to comply with the order. We would find out it had not been done and would call their attention to it. They would explain their reasons and would remedy the matter. Senator Cromwell: Q. Through your machinery you were always able to find out ? A. Yes. Certainly. Senator Lawson: Q. Do you have the railroads serve you with orders that they will obey your order ? A. They are required to file a brief with our Petition Department and if they don't file it, why there is no difficulty. When we decide a case and make an order we simply send up a note to our Attorney Department. They keep it filed for thirty days and if it is not complied with within thirty days our Department notifies the Commission that the order has not been complied with. Q. Have they ever served you with notice that they wouldn't comply? A. Not until they served the papers as I have pre- viously described. Assemblyman Knight: Q. What would it be with the question of appliances ? A. We make no order at the present time as to appliances except under FixAL Report of Joint Lecuslative Committee 2337 the boiler inspection law. Wow, we can order a railroad to put a given locomotive out of service until certain repairs have been made. I am not sufficiently familiar with the operation of that law to know whether we require the railroad to make any state- ment to us as to whether the locomotive has be«n taken out of ser^'ice or not. We have an inspector in each district and it is his duty to Imow what has been done and I take it for granted he knows. Senator Lawson: Q. How large a district -does he have ? A. There are fifty dis- tricts in the coimtry. There is one inspector in charge of each district. Q. You must have two or three in New York State? A. I don't know. T should think so. Q. He must have some assistants? A. Well, there is an in- spector in each district. Q. I should think it would be very difficult to find out whether or not a certain specific engine which was put out of business because it needed certain small repairs, whether that order had been complied with. A. You understand that at the outset the boiler inspection only referred to the locomotive boiler. Now, I have not read the act that has been referred to, extending that to the entire locomotive. I should think that would make an entirely different proposition. I should think they could not begin to handle the work. Q. As to cost comparison, have you any idea how much it costs to cover a special district in the State of New York in that par- ticular department ? A. I wouldn't like to hazard any opinion. I don't know. I rather assume that the inspection of the Inter- state Commerce Commission in the past has not been anything like as thorough as New York State inspection because it has only concerned itself with the boiler and not with the entire locomotive. Assemblyman Knight : Q. You have the safety appliances ? A. But there the law re- quires the carriers to do that very thing and we simply inspect to see whether it is done. If it has not been done we prosecute the carrier and see that that is done. 74 2338 IXVKSTIGATIOX OF PniLIC SeRVJCE CoAlMiSSKiXS Q. Do they designate the specific kind of coupler^ A. It simply provides that it shall be automatically coupled by impact. There has never been any such question. Q. The Commission does prescribe certain standards for the equipment of a freight car and a locomotive, etc. Now, supposing those standards are not complied with ? A. If that standard pre- scribed by the Commission is not complied with, that is a criminal offense and we would prosecute for violation. Senator Thompson: Q. I notice you have a mandatory act in reference to the mat- ters of service in reference to transportation of explosives, boiler inspections, block signals. Know anything as to block signals? A. Well, there is a Block Signal Board. We have no power, at the present time, unless it has been given to tis by the last Con- gress and on the last day, we have no authority to order the in- stallation of block sigTials. Senator Lawson: Q. If that block signal were used in Interstate Commerce would you be able to jurisdiction over it? A. Oh, we should. Chairman Thompson: Q. Well, now the question is, what is your judgment about whether or not this legislation ought to be mandatory or whether some of it ought to be left to the Interstate Commerce Commis- sion in its discretion? A. You mean as to whether the Federal legislation should be mandatorj^ ? Q. Yes. A. I have already told you I would be in favor of leaving things of that kind, so far as fixed property is concerned, to the State. So far as a locomotive, which runs from one State to another, I think it cannot be left to the State. Q. The question is whether Congress should do it by a manda- tory act, or whether they should not leave it entirely to the Inter- state Commerce Commission ? A. I prefer the latter course. I think the Commission should be given authority to establish its rules for the operation of a railroad. I don't believe the Legisla- ture ever ought to undertake to do it. It leads to more trouble than any other thing. Final Report of Joint Legislative Committee 2339 Senator Cromwell. — I was just going to say that all things come to those who wait. A. We have waited because we had to. Chairman Thompson: Q. This question of salary and number of Commissioners and tenure of oiEce, you heard Judge Knapp's ideas in reference to that ? A. I think and have always thought that $10,000 is enough for a Commissioner. When I was a Commissioner they used to try to make me believe that we should receive $15,000 or $25,000. I thought that taking the general range of government salaries that $10,000 was enough and I thought that the government could secure better men for $10,000 than they would for $15,000. Senator Lawson: Q. How do you reconcile that opinion with the fact that our district judges in New York, both the southern and western dis- trict, are retired, many of them, some, at least, going on the Su- preme Court bench because their salary is not sufficient ? A. You have in the city of New York a peculiar condition of things. Your lawyers make large amounts of money. Perhaps you can- not acquire the necessary judicial ability in New York city for the salaries they are paid. Take in the city of New York gen- erally, certainly taking the United States as a whole, because I know more about that, I think you can find for $10,000 just as good Interstate Commerce Commissioners as you can for $15,000. Senator Lawson. — We pay oxir Supreme Court judges in the first district $1Y,500, the district judges get $8,000. You see there is quite a discrepancy. Judge Noyes left the bench and went into private practice. I don't know anything about what he gets, but anywhere from $25,000 to $30,000. I suppose he felt obliged to do that but certainly it miist have been entirely on that account. Chairman Thompson. — Well, there is Judge Haight, whom I understand left the bench for a much smaller salary. Oh, you will find instances where some railroad comes along and offers a judge some prohibitive salary and he naturally takes it. A. T don't think you can compete with the prices that private corpora- tions pay. 2340 Investigation of Public Service Commissions Chairman Thompsoia. — You know the Governor of the State of New York reeeives $10,000 a year and a Public Service Commis- sioner receives $15,000 a year. A. Well, as I say, I have always thought that you paid them too much. I think the railroad presi- dents are paid too much. I wonder what Mr. Whitridge gets ? Chairman Thompson. — He gets $80,000 a year. He hasn't very m^ich time for Commissioners. A. I don't know of any Gom- missioners who have time for him. I don't think any man earns that salary. I have often said and I most profoundly believe thai if the law had provided that no railroad president in the United States should receive over $25,000, that the railroads of this country would have been administered better than they have been and more in accordance with law, since I have been a member of the Interstate Commerce Commission. Senator Lawson.- — You think the State or government could obtain more able men? A. ISTot in all cases, perhaps. But the fact that you pay a man an exorbitant salary of that sort, he usually is led to the belief that he should do something remark- able. Por instance. President Mellen, he thought he should do something remarkable. If you want a first class man you can acquire him for $10,000, in my opinion, just as quickly as you can for $15,000 or $20,000. It seems to me that your term of office should be longer. When you select a judge you take him from the bar and he is already qualified. When you select a Public Service Commissioner there is no body from which he can be- taken. He has to be educated after he gets on the Commission. He has got to be educated and it takes two or three years say; then the term of ofiice should be longer. Senator Cromwell. — ^What would your suggestion be? A. I don't know. There used to be some talk that Interstate Commerce Commissioners should be appointed for life. I think seven years is about right. That is a good term. Senator Lawson. — How long would it take a man to become educated, to cover the preliminaries, so as to make him efiicient? A. I have seen that tried out and I figure that for the first two years a man doesn't really know what he is doing. Isn't that right, Brother Knapp? Final Repoet of Joint Legislative Committee 2341 Judge Knapp. — As I said this morning, it is ;aai uncommon man who can acquire an accurate knowledge and be efficient in two years. He thinks he knows, but he doesn't acquire that wisdom and good judgment necessary under two or three years. Chairman Thompson. — Two years to educate him and five years of service. Senator Cromwell. — One difficulty with that would be in our State with the seven-year term is that the Governor has a two- year term. I ask you if you think ten years would be all right, because that would give each Governor a chance to give his per- sonal impression on the Commission and he would thinlt carefully, realizing the importance of the appointments and that he would give gTeat thought to it ? A. There is a great deal to that, too. Chairman Thompson. — What would be the harm occasionally of consulting a fellow on this Commission, but just one fellow that had considerable experience in public utilities, as a public service corporation employee ? A. That is very often done, but as a rule I believe that the Public Service Commission can employ extra talent, but better benefit than that can be obtained by hiring him than by appointment as a member. If you want an engineer I think you should hire him rather than appoint him. His ideas, if they don't happen to be right, are not of that official importance that they would be if they came from an engineer who is a mem- ber of the Commission. He would be the whole thing. Assemblyman Knapp: Q. Do you think if he comes from the service of a public serv- ice corporation his mind is apt to be prejudiced or warped by his previous employment? A. Now, when I first went on the Inter- state Commerce Commission Public Service Commissioners were, as a rule, a little prejudiced, but to-day I thinl?; both State and Interstate the Public Service Commissioners are pretty fair- minded m.en as a rule. Q. I speak of those who had previously been in the employ of a public service corporation ? A. I don't think that would neces- sarily hurt a man. It depends on the man, sir. 2342 Investigation of Public Seevice Commissions Chairman Thompsoii: Q. Yon take a man like Whitridge, if it were not for the big salary proposition, there is a man who gives all his time and in- tellect practically to the corporation that employ him. He gets over-ambitious perhaps at times and in some cases. Take him away from that and employ him by somebody else, the natural thing he would give his entire energy to the new thing. A. If you talk about that particular individual, I think he is too old. Chairman Thompson : ( }. Is there anything else that occurs to you ? A. ISTo, sir. '}. T am sure the Committee agrees with me that we feel grati- fied after having this conference with yourself and Judge Knapp in these matters and I think it will help us a great deal. Absemblyman Knight : (i. There are one or two questions that occur to me as to the over-lapping of this jurisdiction between the State and National authorities. Now, as I understand you, you encourage the exten- sion of the authority of the Interstate Commerce Commission to all parts of the railroad business, including the equipment of the railroad, except the actual maintenance of the trackage, as I un- derstand it. It seems to me that the supervision of equipment is going pretty far. Doesn't that inevitably lead to the control or supervision of the Interstate Commerce Commission of all rail- roads whether they are wholly within the State, or whether they extend without the State, for this reason: Should your author- ity be extended to that equipment which operates entirely within the State. It seems to me that is important here bearing upon thr question. A. So long as a road is engaged in interstate com- merce I don't think it makes an}- difference whether it runs out- side the State or not. Q. Well, now there is. a railroad in my State, that runs out of the village of Arcade. That appeals to me directly. It is a road that operates entirely in intrastate traffic. Now then, would you extend the jurisdiction of the Interstate Commerce Commission to the supervision of the equipment and the appliances upon the ca'-- u^ed upon that line '^ A. Well, what road does that connect with ? Final Report of Joint Legislative Committee 2343 Q. Well, it connects with the Erie at one end. A. It seems to me that if the Federal government is to inspect at all it may just as well inspect them on that line. Q. I mean the supervision of its engines and its cars and its equipment. These engines are not used in interstate commerce. A. You probabty do have ou that road traffic which is interstate. It seems to me that if you undertake to let the Federal govern- ment supenase engines on the Erie and the Xew York Central and the State government on this little road, why you have created a division of authority there. You might just as well let the Federal government do it. That case you mention is quite typical of sev- eral I had in mind. I don't think the Federal government should have anything to do with the physical condition of the road unless it becomes absolutely necessary. Q. Suppose they should make such an order as would incon- venience train service? A. In that event you should have an ap- peal to the Interstate Commerce Commission. Senator Cromwell: Q. Judge, you would go so far then as to think the extension of the powers of the Interstate Commerce Commission would reach to a little road I had in mind. Some friends of mine own extensive salt works in New York State. They have a little road along the property. I think it is five, perhaps three, miles in length. I think they run their own engines. They are to carry the cars down the siding and I think they have a switch at the other end. Salt is, of course, an interstate commerce product. Would you extend authority to that locomotive that never goes off those three miles I A. I don't think that would be neces- sary if you wanted to extend the State authority for that purpose. Q. You would think so ? A. Yes. I would think so. If there were a great many cases of that kind, perhaps some different rule might be necessary. The Federal government is bound to handle most of the equipment in I^ew York State. Chairman Thompson: Q. Judge, I might say that Justice Hatch, formerly of our Su- preme Court, and who had been assigned to New York at a sal- ary of $17,200 and $1,500 expenses, has resig-ned that office in 2344 Ikvestigatiox of Public Sekvice Commissions order to go into the practice of law. He agrees with you on that salary proposition exactly, that yon get a better man for lower salary. That has been his experience. He resigned a $17,200 job and went to work for a less salary. Judge Prouty. — That is my view. Judge Knapp. — Getting back to the original question, doesn't it after all come to this, that when the Federal government in the exercise of its constitutional powers, enters upon any particidar field of activity, it should exclusively operate in that field. Chairman Thompson. — The answer to that is that their arm is strong enough so that they will. Assemblyman Knight: Q. Judge Knapp, do you consider the United States statute about that little road I spoke of so that the Interstate Commerce Commission has jurisdiction to inspect an engine upon that road at the present time. A. If that traffic is handled in interstate com- merce it has. Q. Wei] there may be one car that goes outside of the State once in a while. A. Y\^ell, it has jurisdiction. Judge Prouty. — Now, if that railroad files a tariff with the Interstate Commerce Commission I take it is going to be my busi- aess to ^'alue it as one of the interstate railroads of this country. Chairman Thompson. — How long do you think it will take you to make up this report. A. About five years. Q. How much of an organization do you have ? A. About one thousand men. Q. How large an appropriation do you have ? A. It will depend a little on what we do with other things than railroads. I have estimated it will cost from $12,500,000 to $20,000,000. Our ap- propriation this year is $3,000,000. I told the Committee we should ask for another appropriation of $700,000. That includes railroads and telegraph. That is the salaries of the thousand men and expenses. That is the entire expense. That contem- plates an increase in our force. We are spending now at the rate FiA'Ai. Report of Jois't Leotsl.vtive Cn.MMiTTKrc 2;]4.') of $2,000,000 a year. There is expense besides salary. I couldn't tell you how much but I should say half of it was set aside for salaries. Senator Cromwell. — With the broadening of your powers with regard to the inspection of engines you will require a larger force to do it reliably and carefully and I hoiifi Cougro.ss has been gen- erous enough to provide you with the means. Opinion of Commissioner William- in f'afo Ko. lC>(V-\. Re Purchase of Stock of Coney Is. & Bklyn. R. R. Co. 493. In the Matter of the Application of the Coney Island & Gravesend Railway Company, under Section 54 of the Public Service Com- missions Law, for Authority to Purchase, Acquire, Take and Hold All the Outstanding Capital Stock of The Coney Island & Brooklyn Railroad Company. Case No. 1663. In the Matter of the Application of the Coney Island & Gra\'e&£-nd Railway Campany, under Section 8 of the Railroad Law and Section 5.5 of the Public Service Commissions Law, for the Consent of the Commission to the Issuance of a ^Mortgage for $2,983,900 and to the Issuance of $2,983,1)00 Ten-Year C. Per Cent. Collateral Notes Thereunder. Williams, Commissioner. — This is an application to the Com- mission for its consent to the purchase of 15,841 shares of stock of The Coney Island & Brooklyn Railroad Company, as provided in subdivision 2, section 54, of the Public Service Commissions Law. The first question that has arisen is whether the Coney Island & 'Gravesend Company has a valid franchise, or whether its cor- porate existence has ceased because of its not building its entire line within the time prescribed by the Railroad Law. The Coney Island & Gravesend Railway Company filed its cer- tificate of incorporation in the office of the Secretary of the State 2346 I-\vESTiGATiox OK Public Service Cojimissioxs on March 22, 1893. The outstacding capital stock of the company is $350,000. On August 29, 1893, the Commissioners of High- ways of the town of Gravesend granted to the company a fran- chise on various streets and avenues, some of which were officially opened, and some of which were merely mapped streets, neither officially nor actually opened. On August 31, 1893, the Town Board of the town of Gravesend granted to the company a fran- chise over the same routes. The company constructed its tracks on Neptune avenue. West Sixth street, West Eighth street and Surf avenue in 1895^ this trackage being 10.36 per cent, of the total mileage of streets included in the franchise. It is claimed that the tracks on Nostrand avenue from the Old Town line to Avenue U were constructed in 1909, although the records in the Franchise Bureau of the Public Service Commis- sion did not contain any information about this stretch of track until 1911. ISTostrand avenue was opened in February, 1906. The following summary indicated the mileage of constructed and unconstructed routes: Miles Per cent. Total mileage of franchise 31 . 368 Oonstruoted within five years 3.25 10.36 Constructed to date 3 .-950 ,12 . 59 Mileage of streets on franchise route officially opened at date of franchise about 18 Mileage of streets covered by franchise now officially opened 20 . Y85 Mileage of streets not now officially opened. . 10. 583 West Eighth street, from Neptune avenue to Atlantic Ocean, .448 miles, was originally constructed, but had to be abandoned on account of the city closing West Eighth street between Surf avenue and the Atlantic Ocean, a distance of .18 miles. Bragg street, from Avenue U to Emmons avenue, 1.143 miles, is un- opened, and is said to be in a swamp. East 14th street, from Emmons avenue to Voorhees avenue, .17 miles, has been opened, but that part between Xeck road and Avenue G, 2.247 miles, is not opened, and is said to pass through a swamp where no grade for the street has yet been fixed. Bath avenue from Town Line Final Repokt of Joint Legislative Cojimittke J^jiT to Bay 37th street has not been opened; .2 miles of track on pri- vate right of way of a steam railroad. Surf avenue from West Fifth street to West Eighth street, .168 miles, has been officially opened on the east and west sides of Culver terminal, but 'the city has not yet acquired title to the street in front of said terminal. Sea Breeze avenue from West Fifth street to East Fifth street, .519 miles, was officially opened in 1891, but the company claims that the greater part of this street has been washed away by the ocean, and no connection can be made with East Fifth street, which is not yet opened. West Fifth street, from Surf avenue to Sea Breeze avenue, .087 miles, is occupied by The Coney Island & Brooklyn Railroad Company, and was opened in 1886. Ocean avenue, from Avenue M to Emmons avenue, 2.352 miles, was opened in 1871 and the Nassau Electric Railroad Company constructed tracks upon it in 1895. Statutes Section 12 of the Railroad Law reads, in part, as follows: " Section 12. — When corporate powers to cease. If ar.y domes- tic railroad corporation shall not, within five years after its cer- tificate of incorporation is filed, begin the construction of its road and expend thereon 10 per centum of the amount of its capital, or shall not finish its road and put it in operation in ten years from the time of filing such certificate, its corporate existence and powers shall cease. * * * (This section shall not APPLY TO ANY STREET SURFACE RAILROAD COMPANY IN- CORPORATED prior to July first, eighteen hundred and ninety- five, which has obtained or become the owner of the consents of the local authorities, of any city of the first or second class, p,iven under article five of this chapter to the use of the public streets, avenues or highways for the construction and operation of the railroad thereon.)" (The portion in parentheses was inserted in 1901.) By chapter 209 of the Laws of 1902, section 99 of the Railroad Law was amended in relation to extensions of time to construct 2348 Invkstigatiok- of Public Skuvtce Commissions road. The existiiig provisions are now found in section 179 of the Eailroad Law, as follows: " If the performance of any act required by this chapter or any prior acts within the time therein prescribed, is hindered, delayed or ipre^'-ented by legal proceedings in any court, such court may also extend such time for such period as the court shall deem proper or if the performance of any act required by said statutes within the times therein prescribed is hindered, delayed or pe^ vented by works of public improvement, or from any other or different cause, not within the control of the corporation upon which such requirement is imposed, the time for the performance of such act is hereby and shall be deemed to be extended for the period covered by such hindrance, delay or prevention." By chapter 449 of the Laws of 1894, the town of Gravesend was annexed to the city of Brooklyn. By chapter 378 of the Laws of 1897, the city of Brooklyn was consolidated with other municipalities and became part of the city of New York. Section 1 of the Act provided, in part, as follows: * * * " and the said city of New York is hereby declared to be the successor corporation in law and fact of all the municipal and public corporations united and consolidated as aforesaid with all their lawful rights and powers and subject to all their lawful obligations without diminution or enlargement except as herein otherwise specially provided; and, all of the duties and powers of the several municipal and public corporations united and consoli- dated as aforesaid into the city of New York are hereby devolved upon the municipal assembly of said city of New York so far as the same are applicable to said city and not herein otherwise specially provided, to be exercised in accordance with the pro- A'isions of this act. This act may be cited by the short title of ' The Greater New York Charter.' " And section 1538 of the said Act provided: " This act shall not extend the territorial operation of any rights, contracts or franchises heretofore granted or made by the corporation known as the mayor, aldermen and commonalty of the city of New York, or by any of the municipal and public corpora- tions which by this act are united and consolidated therewith, in- cluding the counties of Kings and Eichmond, and the same shall Fi2vAL Repoet of Joint Legislative Committee 2349 be restricted to the limits respectively to which they -would have been coniined if this act had not been passed ; nor shall this act in any way validate or invalidate or in any manner affect such grants, but they shall have the same legal validity, force, effect and operation and no other or greater than if this act had not been passed." Upon the facts and under the provisions of statute above pre- sented, has the Coney Island & Gravesend Railway Company lost its corporate existence and powers? Under section 5 (now 12) of the Railroad Law, literally con- strued, it was incumbent upon the company to begin construction of its road, and expend thereon 10 per cent, of its capital within five years, and to finish its road and put it in operation in ten years, from the time of filing its certificate of incorporation. The ten-year period expired March 22, 1903. The company had duly complied with the requirements as to beginning construction and expending capital, but had not completed its road and put it in operation before the ten-year period elapsed. -It is urged on behalf of the Coney Island & Gravesend Railway Company, that the amendment to section 5 (now 12) made by chapter 508 of the Laws of 1901, whereby the section was declared inapplicable to certain street surface railroad companies incor- porated prior to July 1, 189 5, operated to exempt the company from the provisions of forfeiture. The amendment applied in terms to any company which had obtained or become the owner of the consents of " any city of the first or second class, given under article IV of the Railroad Law." It is suggested that, by the merger of the town of Gravesend into the city of Brooklyn and the subsequent consolidation of Brooklyn and other municipalities into the city of New York, prior to 1901 (the year in which sec- tion 5 of the Railroad Law was amended), the consent of the town of Gravesend to the company was binding upon the city of E^ew York, and may be regarded as the consent of the city of Kew York — a city of the first class. Possibly the Courts might ac- cept that view, but, in the absence of judicial construction, I am inclined to the opinion that the consent of the local authorities of a town was not, under the amendment of 1901, equivalent to the eoaisent of the local authorities of a city of the first or second class. But, if I am correct in the conclusion reached as to the effect 'of 2350 Ikvestigatiox of Public Sekvjce Commissions another amendment of the Railroad Law, the point last considered becomes unimportant. I refer to the amendment of section 99 (now 179) effected by chapter 209 of the Laws of 1902, before the ten-year limit prescribed by section 5 (now 12) had expired. The provisions of the statute are set forth under II., ante, and the question presented is ^vhether the complete performance by the company of the construction and operation of its road has been " hindered, delayed or prevented " by any cause " not within the control of the corporation " upon which such requirement was imposed. In the cases People ex rel. Westminster Heights Co. v. Coler, 121 A. D. 293 (reversed, 189 IST. Y. 554, on ground that relator had no standing), and People ex rel. Brooklyn Heights R. R. Co. V. Coler, 131 A. D. 905 (unanimously afifirmed, 195 N. Y. 571), it is held, in substance, that the consents of local authorities do not become effective until the street in which construction is to take place is legally opened, and that the five and ten-year periods do not begin to run until such time. As to the streets covered by the franchise of the Coney Island and Gravesend Rail- way Company not yet legally opened, it seems to follow that the company has not lost its rights. The same conclusion applies to such streets (if any) as have been legally opened less than ten years. But what is the status of the company as to streets legally opened more than ten years ago and not yet built upon under its franchise ? It would be illogical to hold that its " corporate existence " survives as to some streets on which it has not yet con- structed its road, but has ceased as to other streets. The " cor- porate existence " is an indivisible unit, and has, I think, been wholly preserved under the statute as constructed by the Courts. ISTor have I found aiiy judicial authority for the projiosition that the corporate " powers " of the company have automatically ceased as to any part of its road not yet constructed. Statutes providing forfeitures are strictly constructed. It is not suggested that any urgent demand has heretofore been made for the development of the routes described in the company's articles of incorporation. Portions of the routes have apparently become unavailable by natural causes, and other portions are not yet available for construction. If the Commission should deter- Final Repokt oj- Joint Legislative Committee 2351 mine that public convenience and necessity require the construc- tion and operation of any parts of the road unconstructed, it has authority to make an order to that effect. If the company should wish to abandon a part of its route, it may do so under section 184 of the liailroad Law, with the approval of the Commission. But until, by some affirmative act on the part of the State or of the company, and an abandonment or forfeiture of some i^ortion of the proposed road is legally effected, I think the consents of the local authorities given to the company in 1893 are still in force. I have considered a number of decisions of the Couits of this State, on various questions pertaining to statutory construction of forfeitures and loss of corporate existence and powers, but have found no authority justifying the conclusion that the existence •and powers of the Coney Island & Gravesend Eailway Company have ceased, in whole or in part. As TO THE PUECHASE OF THE StOCK OF The CoNEY IsLAND & Beooklyn Raileoad Company Any corporation, except a banking corporation, may purchase, acquire and hold the stock of another corporation (section 52 of the Stock Corporation Law). There is nothing in tbe Public Service Commissions Law which prohibits this, except that, before it can be done, the consent of the Commission must be obtained. It is proposed to purchase the stock at par. This brings up two questions : First, is it necessary to go into the value of the stock so purchased? and second, if so, bow far? If the purchase can be made, for the same reason the notes can be issued. The Coney Island & Brooklyn Railroad Company has hereto- fore paid large dividends upon its property, larger, perhaps, than were justified (see reports on file with Public Service Commis- sion) but it is a railroad that has been in operation for m^any years ; the major portion of it goes through a well-developed section of Brooklyn, and the remainder of it goes through a section which is rapidly developing. The road's physical condition has been testified to by its President, Mr. Huff, to be good and he has tes- tified that its stock, in his opinion, is worth par. The evidence shows that, prior to the strike last year, the stock was earning around 6 per cent. ; that since the strike the stock has not earned 2352 Investigation of Public Seevice Commissioxs so much, but its earnings are gradually increasing. The book value of its property is in evidence, and from that the physical property alone would sliovy the stock to be worth par. It is proposed by the Coney Island & Gravesend Railway Com- pany to purchase this stock, and the same, in a measure, will re- ceive the benefits of any economy that may be worked out by operating the road in connection with the Brooklyn Rapid Transit system. There is no doubt but what the operating expenses will be reduced by operating this company under practically the same management as the other railroad. It necessarily follows that, if the economy can be worked out this way, the stock can be made to earn more than it is now earning, or which its increase shows it may earn. The testimony of Mr. Brady is that it is worth par. He testiiied that there had been an offer for it of $160 since the stock was acquired. This brings us to the question of how far the Commission should go into the question of its value. There are several ways of fixing the value of the stock of a railroad corporation. There is its mar- ket value. Some stocks sell for more in the iuarki.-t than they are actually worth, and some sell for less. There is its earning power. Probably more people, in purchasing the stock of a railroad cor- poration, look to its earning power more than to anything c-se. Then there is the cost to reproduce the property. There i? no hard-and-fast rule by which the value of stock can be ascertained. The market value of stock, of course, is always influenced by what is offered for the stock. Some people will not even sell at the market value, because they want more. It seems in this case that there are some holders who will not take par for the stock, and the evidence is that there is an outstanding offer of par. Evi- dently, some of the holders think it is now worth more than what is offered, or that they can get more by holding out longer. The very fact that anothei* railroad company is in the market for this stock is bound to have some influence on its value. But if the Commission would never give its consent under those conditions for one railroad company to purchase stock of another unless it purchased the stock at its actual market value, this, of itself, would very likely stop all future purchases of that character, be- cause it would be impossible for one railroad company to purchase FiSAL Repoet ov Joi.\t Legislative CoioiiTTiiE 2353 a controlling interest in another without paying more than its market value. Especially would this be so where the stock is dis- tributed among many holders. It is very evident in this case that the stock will soon be earn- ing 6 per cent. It probably could be made to earn that amount more easily by receiving some of the economical advantages which it may receive in the operation under one management in connec- tion with a larger system. If this be so^ in view of the well-known character of this property, there should not be any objection to the purchase, in so far as its value is concerned. As to what it would cost to reproduce the physical property, would throw very little light upon the present case. Of course, each individual case must stand upon its own merits, but there are many railroads which are earning much more money upon their physical property than 6 per cent, upon what it would cost to re- produce the same. For instance, the large special-franchise assess- ments against the various railroad corporations in this State indi- cate that. Special franchise valuations are reached by ascertain- ing the cost to reproduce the physical property, then deducting from the earnings 6 per cent., and then capitalizing the remainder of the earnings to find the value of the special franchise, or the intangible value of the property. In many public" utility prop- erties in this State, the intangible value is found to be far in ex- cess of the tangible value, or what it would cost to reproduce the tangible property. A valuation of the tangible property of this corporation would be quite a task. All of its property, from a tie-spike to a power house, would have to be valued. It would require considerable labor and the time of high-priced experts, which, necessarily,, would have to be paid for by somebody, and, after the valuation was secured, it might be of very little value in this case, so far as this particular application is concerned. Moreover, the valuation of property which has been in use for a long time is a matter which those who claim to be experts in differ about. It would pertapsbe more difficult to arrive at the value of a car, or a stretch of track, which had been in use for ten years, than it would, to reach a conclusion as to the value of the stock of a corporation. There are things which influence the value of the 2354 Investigation oi'- Pudlic Seevice Commissions stock which would not influence the value of other property. Therefore, an attempt to make a valuation of the physical property in order to ascertain the value of the stock, leads to many com- plications. There are a great many theories about it, some of which may be good and some bad; but a valuation to-day of the property would be of very little use to determine the value in a year, because the whole character of the physical property may change within that time, by deterioration, neglect, abuse, or extravagance. It is therefore clear that, if the Commission can arrive at the value of this stock from its market value and from its earning capacity, it should do so, and it should resort to a re-valuation of the physical property only as a lasit resort, after it had information in its possession suggesting grave doubts that the market value and the earnings shown were accurate. Some suggestion was made upon the hearing that someone con- nected with the Brooklyn Rapid Transit Company was profiting by this transaction. Xot only was there no evidence to support such a suggestion, but evidence directly to the contrary was ad- duced and forms a part of the record. Appearances were made at the public hearing by individuals ■and representatives of civic associations, who demanded that, be- fore permission be granted to purchase the stock referred to, the Commission exact or force from the Coney Island & Gravesend Railway Company, The Coney Island & Brooklyn Railroad Company and such other companies of the Brooklyn Rapid Tran- sit system as intersect either of these lines, an agreement to ex- change free transfers. If this application to purchase stock is such as should be granted, an order to that effect should be entered. If the applica- tion is not such as should be granted, it cannot be made right by means of a bargain as to the giving of transfers. No transfers are now given between the lines of the Brooklyn Rapid Transit system and The Coney Island & Brooklyn Railroad Company; but it does affirmatively appear from the testimony of Mr. Meneely, the Vice-President and Treasurer of both the Coney Island & Gravesend Railway Company and the Brooklyn Rapid Transit Company, that he expects to -make recommendation for Final Report of Joint Legislative Committee 2355 transfers between the Coney Island & Brooklyn lines and the Brooklyn Heights and Nassau Railroad Company lines (both sub- sidiary companies of the Brooklyn Rapid Transit system), at a number of intersections ; and the Commission has now under con- sideration a proposition made on behalf of the Brooklyn Rapid Transit Company to issue transfers at everj' intersection of any of the lines controlled by it, which, of course, would mean trans- fers from the Coney Island and Brooklyn Company at every in- tersection with other trolley lines in the Borough, should the order be granted. Under the Public Service Commissions Law the Commission has ample authority to establish a joint rate, which matter is also before the Commission in another case. EXHIBIT No. 18 (Printed at p. 1298) EXHIBIT No. 22 ANNUAL EEPORT FORM E STREET AND ELECTRIC RAILWAYS Annual Report of To the Public Service Commission, for the First District of the State of New York, for the Year Ending June 30, 1913. ?^otice to All to Whom These Papers Come 1. Attention is directed to the following excerpts from the Public Service Commissions Law (Chap. 48 of the Consolidated Laws) . Section 2. Definitions. 1. The term " commission," when used in this chapter, means either public service commission hereby created, which by terms of this chapter is vested with the power or chained with the duty in question. 2356 IxvESTiGATiOA- 01- Public Seevice Commissions 3. The term '" corporation," when used in this chapter, in- cludes a corporation, company, association and joint-stock associa- tion. 4. The word " person," when used in this chapter, includes an individual, and a firm or copartnership. 5. The term '' street railroad," when used in this chapter, in- cludes every railroad by whatsoever power operated, or any ex- tension or extensions, branch or branches thereof, for public use in the conveyance of persons or property for compensation, being mainly upon, along, above or below any street, avenue, road, high- way, bridge or public place in any city, village or town, and in- cluding- all equipment, switches, spurs, tracks, right of trackage, subways, tunnels, stations, terminals and terminal facilities of every kind use-d, operated or owned by or in connection with any such street railroad; but the said term "street railroad," when used in this chapter, shall not include a railroad consisting or used as part of a trunk line railroad system. 6. The term " railroad," when used in this chapter, includes every railroad, other than a street railroad, by whatsoever power operated for public use in the conveyance of persons or property for compensation, with all bridges, ferries, tunnels, equipment, switches, spurs, tracks, stations and terminal facilities of every kind used, operated or owned by or in connection with any such railroad. 7. The term " street railroad corporation," when used in this chapter, includes every corporation, company, association, joint stock association, partnership and person, their lessees, tiaistees, or receivers appointed by any court whatsoever, owning, operating or managing any street railroad or any cars or other equipment used thereon or in connection therewith. S. The term " railroad corporation," when used in this chap- ter, includes every corporation, company, association, joint-stock association, partnership and person, their lessees, trustees or re- ceivers appointed by any court whatsoever, owning, operating or managing any railroad or any cars or other equipment used thereon or in connection therewith. 9. The term " common carrier," when used in this chapter, in- cludes all railroad corporations, street railroad corpoi-atioDS, ex- FixAL Report of Joixt LoioisLATivE Cojimittee 2357 press companies, car companies, sleeping-car companies, freight companies, freiglit-line companies, and every corporation, com- pany, association, joint-stock association, partnership and person, their lessees, trustees or receivers appointed by any court whatso- ever, owning, operating or managing any such agency for public nse in the conveyance of persons or property within this state ; but the said term common carrier when iised in this chapter shall not include an express company unless the same is operated wholly or in part upon, or in connection with a railroad or street railroad. 14. The term " transportation of property," when used in this chapter, includes any service in connection with the receiving, delivery, elevation, transfer in transit, ventilation, refrigeration, icing, storage and handling of the property transported. 15. The term " line," when used in this chapter, includes '^ route." Section 3. Public Service Districts. There are hereby created two public service districts, to be known as the first district and the second district. The first district shall include the counties of New York, Kings, Queens and Kichmond. The second district shall include all other counties of the state. Section 46. Reports of Common Carriers, Railroad Corpora- tion and Street Railroad Corporations. 1. Every common carrier, railroad corporation and street rail- load corporation shall file an annual report with the Commission verified by the oath of the president, treasurer, general manager or receiver, if any, of such corporation, or by. the persons required to file the same. The verification shall be made by said official holding office at the time of the filing of the said report, and if not made upon the knowledge of the person verifying the same shall set forth the sources of his information and the grounds of his belief as to any ma.tters not stated to be verified upon his knowl- edge. The Commission shall prescribe the form of such reports and the character of the information to be contained therein, and may from time to time make such changes and such additions in regard to form and contents thereof as it may deem proper, and on or before June thirtieth in each year shall furnish a blank form for such annual reports to every such corporation and person. 2358 Investigation of Public Sekvice Commissions The contents of such report and the form thereof shall conform in the case of railroad corporations as nearly as may be to that re- quired of common carriers under the provisions of the act of con- gress, entitled "An act to regulate commerce," approved Febni- ary fourth, eighteen hundred and eighty-seven, and the acts amend- atory thereof and supplementary thereto. The Commission may require such report to contain information in relation to rates or regulations concerning fares or freights, agreements or contracts affecting the same, so far as such rates or regulations pertain to transportation within the State. When the report of any such corporation or pertion is defective, or believed to be erroneous, the Commission shall notify the corporation or person to amend the same within the time prescribed by the Commission. The origi- nals of the reports, subscribed and sworn to as prescribed by law, shall be preserved in the ofEce of the Commission. The Com- mission may also require such corporations and persons to file periodic reports in the form, covering the period and at the time prescribed by the Commission. The Commission may require of any such corporation or person specific answers to questions upon which the Commission may need information. The annual re- port required to be filed by a common carrier, railroad or street railroad corporation shall be so filed on or before the thirtieth day of September in each year. The Commission may extend the time for making and filing such report for a period not exceeding sixty days. If such corporation or person shall fail to make and file the annual report within the time above specified or within the time as extended by the Commission, or shall fail to amend such report within such reasonable time as may be prescribed by the Commission, or shall fail to make specific answer to any ques- tion, or shall fail to make the periodic reports when required by the Commission as herein provided, within the time and in the form prescribed by the Commission for the making and filing of any such report or answer, such corporation or person shall for- feit to the State the sum of one hundred dollars for each and every day it shall continue to be in default with respect to such annual report, amendment, answer or periodic report. Such for- feiture shall be recovered in an action brought by the Commission in the name of the people of the State of New York. The amount Final Report of Joint Legislative Com.mittke 23ri9 recovered in any such action shall be paid into the State treasury and credited to the general fund. Any railroad corporation or common carrier other than a street railroad corporation operating partly within the second district and partly within the first dis- trict shall report to the Commission of the second district; but the Commission of the first district may, upon reasonable notice, require a special report from such railroad corporation or com- mon carrier. Any street railroad corporation operating partly within the first district and partly within the second district shall report to the 'Commission of the first district; but the Commission of the second district may, upon reasonable notice, require a special report from such street railroad corporation. 2. Defiiaitions of terms used in this report. Unless the context clearly indicates some other meaning, the following terms when used in this report have the meaning below stated : The word respondent means the person or corporation in whose behalf the report is made. The year means the year ended June 30, 1913. The close of the year means the close of the business on June 30, 1913. The beginning of the year means the beginning of business on July 1, 1912. The preceding year means the year ended June 30, 1912. The Uniform System of Accounts is used as the abbre- viation for the Uniform System of Accounts for Street and Elec- tric Railways, as prescribed by the Public Service Commission for the First District, and made effective January 1 and July 1, 1909 (being the final order in Case 641, with a modifying order of June 18, 1909). 3. Every inquiry contained in the accompanying form of re- port must be definitely answered. Where the word " none " truly and completely states the fact, it may be given as the answer to any particular inquiry or any particular portion of an inquiry. Except in cases where they are specially authorized cancellations, arbitrary check-marks and the like must not be used either as par- tial Or as entire answers to inquiries. If any inquiry, based upon a preceding inquiry is, because of the answer rendered to each preceding inquiry, inapplicable to the persons or corporation in whose behalf the report is made, the words " not applicable " should be used in answer" thereto. 4. Answers to the inquiries contained in the following forms 2360 Investigation of Public Service Commissions must be complete. No answer will be accepted as satisfactory which attempts by reference to any paper or document other than the present report to make the paper or document or portion thereof thus referred to, a part of the answer without setting it out. 5. All entries should be made in permanent black ink except those of a contrary and unusual character (like deficits for ex- ample) which should be made in a permanent red ink. Sheets inserted or accompanying the present forms when returned and in- tended by the respondent to be made a part of its annual report should be securely and permanently attached hereto (preferably along the inner margin of the page to which attached) in such wise that they cannot be removed without mutilation of the report, and in such wise that if removed their removal or detachment will be readily apparent. Attachment by pins or clips is insufficient. 6. Each respondent should make its report to this Commission in duplicate, retaining one copy in its files for reference in case correspondence with regard to such report becomes necessary. For this reason two copies of the accompanying forms are sent to each corporation concerned. 7. This annual report must be filed in the office of the Public Service Commission for the First District, at 154 Nassau street, New York City, on or before September 30, 1912. Each re- spondent is requested to send in connection with its report to this Commission two copies of its latest annual report to stockholders if such report is in print; if not in print, that fact should be stated (p. 4). Identity oe Respondent 1. Give the exact name by which the respondent was known in law at the close of the year. Use the initial word the when it is a part of the name, and distinguish between the words railroad and railway, light and lighting, etc. The name here stated should be used uniformly throughout this report in designating the respondent. If it is desired to use an abbreviation in the lat- ter portions of the report, the standard abbreviation to be used (preceded by the words "standard abbreviation") should be given following the complete name. Final Report of Joint Legislative Committee 2361 2. State whether the respondent was at the close of the year a corporation, a joint-stock association, a firm or partnership, or an individual. If it was none of these, state fully its character and makeup. If the report is made by receivers, trustees, a commit- tee of bondholders, or any others than the beneficial owners, names and facts (including authority under which possession is had) must be stated with precision. 3. If the respondent was at the close of the year a corporation or association, give the location (including street and number) of its corporate or associate olfice on that date. 4. Give the location (including street and number) of the main business ofiice of the respondent at the close of the year. 5. Give the name, title and office address of the officer of the respondent to whom should be addressed any correspondence con- cerning this report. 6. Show the various kinds of business in which the respondent was engaged at the close of the year, by marking before each of the kinds below named which was a principal kind of business the letter P, each which was a secondary or auxiliary kind of business the letter S, and each in which the respondent was not engaged the letter 2s^: (a) Common carrier by trunkline railway. (b) Common carrier by interurban railway. (c) Common carrier by street railway. (d) Express. (e) Fast freight line operation. (f) Freight collection and forwarding in carload lots. (g) Freight storage. (h) Baggage and freight transfer. (i) Cab and omnibus service. (j) Ferry line operation. (k) Lighterage and float transfer. (1) Water plant operation (commercial). (m) Gas manufacture and supply at wholesale. (n) Gas supply at retail. (o) Electric energy production and supply at wholesale. (p) Electric energy supply at retail, 2362 Investigation of Public Seevice Commissions and stating in addition each other kind of business (if any) then engaged in. Give in connection vrith each kind of business en- tered upon since the last report of respondent the date when it was entered upon, and in connection with each kind of business abandoned since such last report, the date of its abandonment. 7. State whether or not the respondent during the year carried on any portion of its business within the State of New York, under a name or names other than that shown in response to in- quiry ITo. 1, above; and if so, give full particulars. Important Changes During the Year Hereunder (on pages 4 and 5) state the following matters: 1. All extensions of road put in operation, giving termini, lengths of road and dates of beginning operation. 2. Decrease of mileage by straightening or abandoning line, giving particulars as above. 3. All other important physical changes, including herein all new tracks built and changes in motive power. 4. All leaseholds acquired or surrendered, giving dates, lengths of terms, names of parties, rents and other conditions. 5. All consolidations, mergers and reorganizations effected. 6. All stocks actually issued, giving names of stock, amounts actually issued, and purposes for which issued, and describing the consideration realized, giving amounts and values. State also the date of the authorization by the Public Service Commission (or by the former Board of Eailroad Commissioners) under which such issues were made. 7. All funded debt actually issued, giving names of securities, amounts actually issued, and purposes for which issued, and describing the consideration realized, giving amounts and values. State also the date of the authorization by the Public Service Com- mission (or by the former Board of Railroad Commissioners), under which such issues were made. 8. All changes in the respondent's holdings of stocks and funded debt, including herein a statement of its own securities reacquired after actual issue, and a statement of such reacquired securities later sold, if any. Final Report of Joint Legislative Committee 2363 9. All other important financial changes, giving full particulars including herein all funded debt discharged and all stocks retired. 10. All modifications of or additions to franchise rights de- scribing the actual considerations given therefor and the parties from whom acquired. 11. All contracts, agreements, arrangements, etc., with other companies or persons, which became effective at any time during the year, and concerned in any way the transportation of persons or things, stating them in the following order: 1, express com- panies; 2, mail; 3, sleeping, parlor and dining car companies; 4, freight or transportation companies or lines; 5, other railway companies; 6, steamboat or steamship companies; 7, telegraph companies ; 8, telephone companies ; 9, other contracts. 12. All changes in rates of fare. 13. All changes in the name of the respondent. 14. All changes in general officers, giving names of outgoing and incoming officers, and dates of changes. Make the statements explicit and precise, and number them in accordance with the inquiries. Each inquiry must be fully answered, and if the word " none " truly states the fact it may be used in answering any particular inquiry. Following the last of the numbered answers, there may be shown any additional matters of fact relative to the year which the respondent may desire to incorporate in this report, including explanation of failure to file copies of the annual report to stockholders, re- quested in paragraph 7, page 2. CoRPOEATE Powers and Organization 1. Give (a) the date of organization of the respondent. If incorporated under a special charter, give (b) the date of passage of the act; if under a general law, give (c) the date of filing cer- tificate of organization; if a reorganization has been effected, ^ve also (d) the date of reorganization; if a receivership or other trust, give also (e) date of creation of such receivership or other trust, and (f ) date when possession under it was acquired ; if a partnership, give (g) date of formation, and also (h) names in full of present partners, and the extents of their respective interests at the close of the year. 2364 Investigation of Public Seevice CoMjrissiONS 2. State under the laws of what Goveimment (Federal, State, or Provincial) the respondent was organized; if more than one-, name all; give reference to each statute and to all amendments thereof. Give the like particulars for all amendments of the charter of the respondent. 3. State (a) whether the respondent is a consolidated or merg- ing company, and if so name (T>) all constituent and merged com- panies, giving reference (o) to the charters of each and (d) to all amendments of the same. Give reference to (e) special or (f) general laws under which each consolidation was effected. Specify (g) the Government imder the laws of which each company con- solidated or merged into the respondent was organized ; give refer- ence to (h) the chartei-B of each, and to (i) all amendments of them. Cases in which corporations have become inactive and have been absorbed through ownership or control of capital stock, through leases more than 100 years or otherwise, where such cor- porations do not keep up separate organizations even for financial purposes, and where no distinction is made in operating or ac- counting and the original separate incorporation is completely ignored may be included here if fully explained in the answer to this and the following inquiry. 4. Give (a) the date and (b) the authority for each consoli- dation or merger. 5. State (a) whether the respondent is a reorganized company,.. and if so give (b) the name of the original corporation and (c) refer to the laws under which it was reorganized; state (d) the occasion of the reorganization, whether because of foreclosure of mortgage or otherwise, giving particulars. DiEECTOES 1. Give the names and office addresses of all directors of the respondent at the close of the year, and the dates of beginning and expiration of terms, and the annual salaries, fees and per- quisites of each. If the property of the respondent is controlled by receivers, trustees, committees of bondholders, or others than regularly con- stituted directors, such receivers, etc., should alao be named here^ under with appropriate designations and particulars. FiSAL Report of Joint Legislative Committee 2365 Name of Office Date of Date of Compensation I^ine No. director address beginning expiration and remarks of term of term (if any) 1 to 15 (a) (b) (c) (d) (e) 2. Give the names (and titles) of all officers of the Board of Directors, Managers, or Trustees of the respondent at the close of the year. Chairman of Board, Secretary (or clerk) of Board. 3. Xame the members of the executive committee of the Board of Directors, Managers, or Trustees of the respondent at the close of the year, naming first the chairman, and state briefly the powers and duties of that committee. Officees Give the titles of the respondent's officers, the names and officers' addresses of the persons holding such offices at the close of the year, and the date when each entered upon the discharge of the duties of his office. Line Xo. Title of officer 31 to 50 (f) Date of entry upon office (g) Name of person holding office Office at close of year addreaa (h) (i) Remarks (J) 31 President. 32 First Vice-President. 33 Second Vice-President. 34 35 Secretary. 36 Assistant Secretary. 37 Treasurer. 39 Auditor. 40 Comptroller. 41 Attorney or General Counsel. 42 Claim Agent. 43 44 General Manager. 45 Assistant; General Manager. 46 Chief Engineer. 47 General Superintendent. 48 General Purchasing Agent. 50 Stockholdees and Members 1. State the par value of the amount of common stock the holder of vs'hich is thereby entitled to cast one vote. $ 2. State whether or not all classes of stock have equal voting rights in respect of equal par values; if they do not have equal 2366 INVESTIGATION OF PuBLIO SeeVICE CoMMISSIOAS voting rights, state the par value of amount of various classes of stock entitling to one vote. 3. Are voting rights proportional to holdings \ If not, state in detail the relation between holdings and corresponding voting rights. 4. Are voting rights attached to any other securities than stock ? If so, nanae each security other than stock to vphich voting rights are attached and state in detail the relation between holdings and corresponding voting rights, stating whether voting rights are actual or contingent, and if contingent showing the contingency. 5. Has any class or issue of securities any special privileges in the election of directors, trustees or managers, or in the determina- tion of corporate action by any method i If so, describe fully each such class or issue and give a succinct statement showing clearly the character and extent of such privileges. 6. Give the date of the latest closing of the stock book within the year, and state the purpose of such closing. 7. State the total number of members of the respondent at the date of such closing, or at the end of the year in case the stock- book was not closed within the year; number resident in New York State. 8. State the total voting powers of all members at the same date^ votes ; of members resident in New York State, votes. 9. State the total number of votes cast at the last general meet- ing for the election of directors of the respondent, votes cast. 10. Give the date and place of such meeting. 11. Give (a) the names of the persons who at such meeting cast the highest seven number of votes, showing for each (b) the total number of votes cast by him, and the number thereof cast by him or on account of (c) his own holdings, (d) the holdings of corporations, and (e) the holdings of other members. Number of Votes Cast hy Voter Named Number cast in behalf of — Line No. Name of Total Voter's Corporate Other Remarkss voter holdings members members' 21 to 27 (a) (b) (c) (d) (e) • (f) Final Report of Joint Legislative Committee 2367 _ 12. State whether or not any corporation held at the date of the latest closing of the stock-book of the respondent more than ten per centum of respondent's capital stock or other securities with voting rights. If so, give the names of all such corpora- tions and show for each the location of its main business office and the number and par value of such shares of stock or other voting securities then held. If the stock-book was not closed within the year, show such facts as of the close of the year. L'ne No. Exact name of corporation 41 to 50 Cg) Location of main Number of votes to busine'S office which member was entitled \h^ (i) Pae Values of Securities Held at the Close of the Year PHEFERRED STOCK Line No. Common stock" 41 to 50 (j) Second Firdt Other securities with votin-j: power (k) (1) (m^ Intercorpoeate Relationships 1. State whether or not any person or corporation at any time during the year had the right to exercise the major part of the voting power in the respondent corporation. If so, state whether such right was derived (a) through title to securities issued or assumed by the respondent, (b) in consequence of advances made for construction or equipment of the respondent, (c) through express agreement or some source other than above enumerated. 2. If during the year any person, corporation or association had the right to exercise the major part of the voting power in the respondent corporation, give (a) the exact name of such person, corporation or association, (b) the location (including street and number) of his or its main business office at the close of the year, (c) the location (including street and number) of its corporate or associate office at the close of the year, (d) the name, address, and official title of its principal execu- tive officer, (e) the date upon which he or it acquired the right to exercise the major part of ll e voting power in the respondent corporation, .2368 Investigatiokt of Public Seevice Commissions (f ) the transaction or transactions through which he or it ob- tained such right, (g) the date (if any) upon which he or it relinquished such right, (h) if such right was relinquished during said year, state the transaction or transactions through which such relinquishment was effected, (i) if at any time during said year he or it exercised such right through an intermediary or intermediaries, give the names of all intermediaries. 3. State whether or not any corporation or association at any time during the year had the right to name the major part of the board of directors, managers, or trustees of the respondent cor- poration. If so, state whether such right was derived (a) through title to securities issued or assumed by the respondent, (b) in consequence of advances made for construction or equipment of the respondent, (c) through express agreement or some source other than above enumerated. 4. If during the year any corporation or association had the right to name the major part of the board of directors, managers, or trustees of the respondent corporation, give for the corporation having such right (a) its exact corporate or associate name, (b) the location (including street and number) of its main business office at the close of the year, (c) the location (including street and number) of its corporate or associate office at the close of the year. (d) the name, address and official title of its principal execu- tive officer, (e) the date upon which it acquired the right to name the major part of the board of directors, managers or trustees of the re- spondent corporation. (f) the transaction or transactions through which it obtained such right, (g) the date (if any) upon which it relinquished such right, (h) if such right was relinquished during said year, state the transaction or transactions through which such relinquishment was effected, Pinal Report of Joint Legislative Committee 2369 (i) if at any time during said "year it exercised such right through an intermediary or intermediaries, give the names of all intermediaries. 5. State whether or not any corporation or association at any time during the year had the right to control in a specific respect the action of the respondent corporation. If so, state whether such right was derived (a) through title to securities issued or assumed by the respondent, (b) in consequence of advances made for construction or equipment of the respondent, (c) through express agreement or some source other than above enumerated. 6. If during the year any corporation or association had the right to control in a specific respect the action of the respondent corporation, give for the corporation having such right, the par- ticulars specified in inquiry i above. 7. State whether or not any corporation or association at any time during the year had a matured right to foreclose a first lien upon all or a major part in value of the tangible property of the respondent corporation. If so, state whether such right was de- rived (a) through title to securities issued or assumed by the respondent, (b) in consequence of advances made for construction or equipment of the respondent, (c) through express agreement or some source other than above enumerated. 8. If during the year any corporation or association had a matured right to foreclose a first lien upon all or a major part in value of the tangible property of the respondent corporation, give for the corporation having such right the particulars specified in inquiry 4 above. Associated Coepoeations The terms below defined are used throughout the inquiries in this report in the senses stated and must be used in the same senses by the respondent in its answers. 1. Control over a corporation means ability to determine, whether directly or indirectly, the action of that corporation. For the purposes of this report, the following are to be considered control : I. Right, through title to securities issued or assumed by the 75 2370 Investigation of Public Service Commissions controlled corporatioB, to exercise the major part of tlie voting power in such corporation. II. Right, through express agreement of some character or through some other source than title to securities, to name the major part of the board of directors, managers, or trustees of the controlled corporation. III. Matured right to foreclose a first lien upon all or a major part in value of the tangible property of the controlled corporation. IV. Eight to secure control through advances made for construc- tion of plant and equipment of the controlled corporation. V. Right to control only in a specific respect or respects the action of the controlled corporation. 2. Direct Control is that which is exercised without the inter- position of an intermediary. 3. Indirect Control is that which is exercised through an inter- mediary. Where A has direct control over B and B has direct control over C, it will (with possible exceptions in cases III and V above) be proper to consider A as having indirect control over C. Cases to which this rule is inapplicable should be set out with special fullness in the answers of the respondent. 4. Sole Control is that which rests in one person, corporation or other association. 5. Joint Control is that which rests in two or more persons, cor- porations or other associations (or in any combination of two or more of these) and was acquired by them through the same act or transaction or through the same series of acts or transactions. 6. A proprietary corporation is one all of whose stock is owned by the controlling corporation (or corporations in case of joint control) . 7. Two corporations are affiliated when both are subject to the control of some third corporation, or are subsidiary to the same controlling interest or interests. 8. Associated companies is the term used in this report to in- clude controlling, affiliated, and controlled or other subsidiary corporations of the respondent. 9. An inactive corporation or association is one which has neither operating nor fiscal autonomy, but merely legal existence. All existent corporations not inactive are to be considered active. Final Report of Joint Legislative Committee 2371 conteolled coepoeations oe associations 1. Give hereunder in alphabetic order a list of all corporations and other associations over which the respondent held at any time within the year any form of sole direct control, showing for each such controlled corporation or other association its exact corporate or associate name, the location (including the street and number) of its main business office (and if it has no business office, then give the location of its corporate office), the name and the official title of its principal executive officer, its character with regard to activity (i. e., whether active or inactive as hereinbefore defined), and the nature of the source of control (classifying the same as I, II, III, IV, V, according to the classes hereinbefore defined). (2) Follow this list with one showing in alphabetic order all cor- porations and other associations over which the respondent held at any time within the year any form of sole indirect control, showing for each such corporation or other association the par- ticulars above called for, and in addition thereto giving, by appro- priate line number references, the intermediaries through which STich control was had. (3) Follow this list with another showing all corporations over which the respondent and another or others had at any time within the year joint control as defined on page 9, showing for each the particulars above called for and giving in addition the names of all co-tenants in the joint control and the extent of their respective interests. Location (including street Exact corporate or and number) of main Name and official title of associate name buAiness office principal executive office Line No. (a) lb) (c) 1 to 20 State whether Contbol ^i^^^^^'^AJ^-"* °"^" ^^"^ ?' ™-t™ants ^. ,, corooration „ State whether bers of this report m jomt control ard Line No. °°^°JSve ^"^^"^ diW o? slio^'ng names of extent of their re- or inactive indirect. mtermedianes spective interests; lif any. remarks 1 to 20 (d) le) (f) [g) (h) 2. Give hereunder in alphabetic order a list of all corporations and associations (omitting only those solely or jointly controlled) in which the respondent had, at the close of the year, sufficient influence to have enabled it to name one or more directors, trus- tees or managers, had an election thereof been then in order. Show for each such corporation or association its exact corporate or associate name, the location (including street and number) of 2372 Investigation of Public Seevice Commissions its main business office (and if it has no business office, then give the location of its corporate office), the name and the official title of its principal executive officer, the total number of directors, trustees or managers, provided for in the charter, by-laws or articles of association, the total number eligible at each election of directors, trustees or managers, the frequency prescribed for such elections, the number of directors, trustees, or managers qualified and acting at the close of the year, axid the number and names of directors then qualified and acting who were named by or on behalf of the respondent. This list must include corpora- tions and associations of every character. Corporation or Assooiatiost over Which Respondent had Sufficient Influence to Enable Respondent to Name One or More Directors, Trustees or Managers Looation (including street Exact corporate or associ- and number) of main Name and official title of Line No. ate name business office principal executive officer (i) U) (k) 31 to 45 Directors Named by Charter or By-Law Provisions Concerning Directors, Trustees oa on Behalf op OR Manager Respondent. T„<-oi ....„K»,. Number direc- nf dire????™ Number eligible Frequency and tora, trustees Line No. *„,;>„.„„„' at each eleo- dates of elec- or managers Number Names managers ^^.^j^^ 31 to 45 0) Iml (n) lol (p) (q1 1. State whether or not the respondent had at the close of the year, either directly or indirectly, title to 30 per cent, or more (but less than a majority) of the total voting power in any corporation or association. 2. If, at the close of the year, the respondent had, either directly or indirectly, title to 30 per cent, or more (but less than a majority) of the total voting power in any corporation or association, show in alphabetic order all such corporations or associations in which respondent had such influence directly, and for each corporation or association give . its exact corporate or associate name, the location (including street and number) of its main business office, the name and official title of its principal executive officer, the total voting power in the said cor- poration or association, the amount of voting power therein held by the respondent, and (in footnotes, appropriately rrferred to) the source of respondent's voting power (as e. g., through owner ship of securities, describing them, or through agreement, etc.), Final Eepoet of Joint Legislative Committee 2373 Follow this list with another showing in alphabetic order all cor- porations and associations in which respondent had such influence indirectly, showing the facts as above called for, and showing also, in footnotes appropriately referred to, the names of the respective intermediaries. The corporation and associations here required to be listed need not include any jointly controlled cor- porations and associations shown on the preceding page. Voting Power in Cor- poration OR Associa- tion. Location (including -mo^o onH r.ffitje of prmcloal accrue to respondent *° "'Se p'JSperty °^'' business office executive officer described 1 to 22 (b) to) A,iuiu iiu^ close of year (d) (e) (1) (g) (h) (i) U) Equipment Obligations Show hereunder for each series of obligations issued or assumed by the respondent and outstanding at the close of the year, the issue of which was in total or partial payment for equipment ac- quired and the security for which is a trust deed or other form of mortgage upon the equipment so acquired: (a) the serial or other designation of the obligation; (b) the nominal date of issue ; (c) the term (in years) of the series (i.e., the number of years from nominal date of issue to date of maturity of the latest ma- turing obligation in the particular series) ; (d) the number of payments provided for the particular series (and if the payments are unequal in amount, or are to occur at irregular intervals, the particulars in these regards must be shown) ; (e) the equipment covered, showing classes and numbers of units ; (f ) the contract price of the equipment acquired ; (g) the amount of cash paid upon acceptance of equipment j (h) the par value of equipment obligations actually issued; 2406 Investigation of Public Seevice Commissions (i) the interest rate per annuin (if any) borne by such obliga- tions prior to their maturity ; (j) the dates of maturity of interest ; (k) the par value of such obligations actually outstanding ma- tured and unpaid at the close of the year ; (1) the par value of such obligations actually outstanding im- matured at the close of the year ; (m) the amount of interest matured and unpaid at the close of the year; (n) the amount of interest accrued not due at the close of the year; (o) the amount of interest accrued on actually outstanding ob- ligations during the year ; (p) the amount of interest paid on such obligations during the year; Line 1 to 10. Additions and Betterments Owing to Lessee Corporations State below the amount owed by the respondent to its lessee cor- poration for additions and betterments to respondent's road and equipment at the beginning of the year, the amount credited the lessee for such additions and betterments made during the year, the amount of payments made by respondent on this account during the year (distinguishing between interest and principal), and the amount owing at the close of the year. Payments During Year Designa- Credits for a _ » tionof Amount improve- Amouat line No. Name of property owed at ments Interest Principal . °?'^ , creditor and im- beginning made during ** °^^* ° provement of year year ^^^^ lto6 (a) (b) (c) (d) (e) (f) (g) Judgments Unpaid Show hereunder the various unpaid judgments against the re- spondent at the close of the year, as defined in the Uniform System of Accounts for Street and Electric Railways. This account should include interest as well as principal. Final Repoet or Joint Legislative Committee 2407 Line^No, Description ^-"-^af ^"'^- 1°'--' -"-d Tot^'Jir ryeaf ' 11 to 20 a) (k) (1) (m) Totals Other Funded Debt Show hereunder the items included in the balance-sheet under this title with the amount of the same at the close of the year, stating separately the amount due and unpaid and the amount unmatured. Line No. Insurance Description **1^plfd'""^ ^°*' ^°' "^"^ ''■°'''' 21 to 28 (s) (t) (u) (v) Totals ] lESEKVES Show hereunder the balances at the beginning and the end of the fiscal year, and in detail the debts and credits made during the year in respect of each of the reserve accounts of the responden'^ grouped in the following order: (a) Premiums on Stock, (b) Other Permanent Reserves, (c) Sinking Fund Reserves, (d) Other Contractual Reserves, (e) Accrued Amortization of Capital, (f) Unamortized Premium on Debt, (g) Other Required Reserves, (h) Casualties and Insurance Reserve, and (i) Other Optional Reserves. State the purpose of each reserve not defined in the Uniform System of Accounts, and in appropriate footnotes de- scribe each sinking fund and other contractual reserve, giving the date of establishment and the purpose of each fund covered by such reserve. The entries in column (b) should show clearly the fact's result- ing in charges and credits to the various reserve accounts. Line No. Name of reserve Transaction Dr. Cr. lto45 (a) (b) (c) (d) Miscellaneous ITotes Respecting Assets and Liabilities Description of Road and Equipment Classification of Road Show hereunder (I) all electric road to or in which the respond- ent had right of possession or occupancy at the close of the year, classifying the same into — 2408 Investig-ation of Public Seevicb Commissioks 1. Road held under a sole title in perpetuity; 2. Road held under a terminable sole title, (a) Owned by a corporation whose stock is entirely owned by the respondent, seized and held by the respondent without formal eonveyanee from the proprietary corporation, (b) Reversion (under lease or other arrangement) in an asso- ciated corporation,, tenure terminable after a specilied term of years, either absolutely or after notice, (c) Reversion in an associated company, tenure terminable at will or after the expiration of a fixed period not in excess of one year after notice ; 3. Road held under a terminable sole title, reversion in an in- dependent corporation — (a) Terminable after a specified temi of years, either abso- lutely or after notice, (b) Terminable at will or after the expiration of a fixed period not in excess of one year after notice ; 4. Road held under a joint (or a common) title in perpetuity; 5. Road held under a terminable joint (or common) title, re- version in a cO'UtroUed, affiliated, or controlling — subclassified ac- cording to (a),- (b), and (c), under (2) foregoing; 6. Road held under a terminable joint (or common) title, re- version in an independent corporation — subclassified according to (a) and (b) and (3) foregoing; Name of road, working division, t . . ,. , . , . Class or branch, and principal Termini between whick road l;^^ jJo. streets traversed extenas Ca) (b) 1 to 51 and showing for each portion of road so held or occupied the class, the name of the road (meaning the original lessor in case the road is sublet to the respondent), the termini connected by it, the length of it in miles and thousandths of a mile, the length of it in street or public ways and on private right of way, and respective lengths of second track, of turnouts, sidings, and other running tracks, of track in storage yards, car houses, etc., of unused tracks, separating the latter class to show what has and what has not been already included. Show separately each portion of the road having separate and distinct termini. Show separately also all FixAL RiiPOET OF Joint Legislative CoiiMiTXEE 2409 portions of road determined by intersections of the boundary lines of borougbs, cities, counties or state, whether stations are located at such points or not. Follow the statement of electric road with similar statements as to (II) horse car lines, and (III) road operated with other motive power. Underneath the totals of road thus held, operated and main- tained by the respondent show in similar detail road occupied or occupyable under trackage right or other form of license from (a) a controlled, affiliated or controlling corporation, and (b) an inde- pendent corporation. Give finally a similar statement of road operated by the re- spondent for any period within the year (the results of which are included in its operating revenues and expenses), but to which it did not have right of possession at the close of the year. Track owned but not operated by respondent should not be shown here, but on page 16 ante. Length of Koad Total Length LineNo.'*;i?s'^oS?^^'' ^"-'-^'^tof Offirsttraok ,Ofthi^___^ Of.cood by track ^ay v/inraixraoK to fifth track track (a) (b) (c) (e) (d) Length of Unused Trace: Length of aid- Total length of Length of track Total lonirtJi nl Included Not included ings and running tracks in car houses, all trSa '°P''^°*^'°8 in preceding turnouts (cols, c-f) shops, etc. irauita columns columns (« fe) (h) (i) a) (k) SuMMAEY Statement of Teack Mileage Show hereunder the particuars below called for concerning the length of road and of track (in miles and hundredths) as organized for operation at the beginning and at the close of the year ; also the number of miles of private right of way owned by the re- spondent, the number of miles of private right of way held under some form of l&ase, and the number of miles of road in streets and other public ways, excluding herefrom all road (iterated under mere trackage rights. 2410 Investigation of Public See vice Commissions Line No. Mode of operation of road 'a) 1. Electrically operated subway, third rail contact. 2. Elect, aper. elev., both third rail and trolley contact. 3. Electrically operated elevated, third rail contact. 4. Electrically operated surface line, third rail. 5. Electrically operated surface line, underground contact. 6. Electrically operated surface line, overhead trolley. 7. Electric storage battery. 8. Animal traction. 9. Other (specified). 10. Total. 11. Eight of way. 12. Private right of way, completely owned. 13. Private right of way, held under lease. 14. Eoad in streets and other public ways, owned. 15. Eoad in streets and other public ways, held under lease. Length at Beginning of Yeab Length at Close op the Year First track Second track All tracks First track Second track Third track gf°" tracks (b) (c) (d) (e) (f) (g) (h) Increase During the Year All other tracks All tracks First track All tracks (i) a) (k) (1) Track Steuctures Show hereunder the particulars below called for concerning the road in the possession of the respondent at the close of the year. Eoad occupied under trackage rig'ht or other form of license should not be included here, but all road held under any form of lease should be included. The overhead highway crossings called for are those by means of which foot passengers and ordinary highway vehicles are enabled to cross the tracks of the respondent upon structures underneath which its cars and trains may pass. Over- head railway crossings are corresponding structures by means of which the tracks of other carriers are carried at corresponding elevations across the tracks of the respondent. Final Report of Joint Legislative Committee 24-11 Number Aqobegate Length, Feet Line XT-, T4. In New No. Item York city On entire line In New York city On entire line M (m) (n) (o)J (P) (q) 31. Bridges : 32. Stone or concrete. 33 Steel or iron. 34. Wooden. 35. Combination. 36. Total. 37. 38. Trestles. 39. 40. Tunnels. 41. Minimum [length I. (feet) 3 Maximum length, (feet) t (r) 'b) Nttmbeb Item In New York city On entire line ^L'lre'^.if.X'lT (t) (u) (v) (w) Overhead Highway Crossings : Bridges. Conduits. Trestles. Total. Overhead Railvpay Crossings : Bridges. Conduits. Trestles. Total. Tunnel clearances. Replacement of Rails Show hereunder the amounts and cost of new rails of various weights, kinds, and prices, laid in replacement during the year. Distinguish between new and old rails. Average price per ton at distributing point (i) Total cost of rails Amount charged .Amount charged to Amount charged goivapfi on nlr? at distributing to replacement in additions and to operating ex- °„ii_ ?„i,°„ „ point iiied capital betterments penees raus taKen up 0) (k) (1) (m) (n) Line No. Kind of rail Number of tons Pounds per yard 51 to 63 (f) (g) (h) Total. 2H2 Investigation of Ppblic Service CoiniissiONs Details ov Teack and Roadway Siow hereunder the paxtieTilars called for as to ballast, ties, raik, rail joints and bonds, and paving, of the road operated bv the respondent at the beginning and at the close of the year so far as its record will permit, and all additions and subtractions during the year, including replacements. When the respondent had paving, ballast, etc., of another kind than those specified appropriate entries should be made in the blank lines, to the end that the statement shall completely account for the entire length of track. line No Item 1. Ballast : iililes of track laid on crushed stone. 2. Miles of track laid on concrete construction. 3. 4. 5. 6. Ties: Xumber of steel ties. T. Xumber of wood ties, treated. 8. I^umber of wood ties, untreated. 9. Miles of track laid on ties. 10. Eail:* 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Kail Joints (stated in miles of track) : 22. Bolted plates. 23. Cast. 24. Electric weld. * Classtfv miles of track according to material ( iron or steel ) , weight, length and type, including height of rails. Final Report of Joint Legislative Committee 2413 Line No. Item (a) 25. 26. Rail Bonds : Miles of track classified according to length,, size and installation of bonding. 27. 28. 29. 30. Average distance between cross bonds. 31. Paving (stated in miles of track) : 32. Macadam. 33. Cobble. 34. Wood block. 35. Brick. 36. Belgian block. 37. Granite block. 38. Asphalt. 39. 40. 41. At beginning of Added during Removed dtiring Net increase dm- . » „i.„ f „ year year 5'ear ing year " (b) (c) (d) (e) (f) Replacement of Tibs Show hereunder the kind, number, cost, and average price at point of distribution of new ties in replacement during the year,, and the disposition of the expenses of replaceoment. A^'erage price per Amount charged' Line No. Description of ties Number of ties tie at distribut- to replacement ini ing point fixed capital 51 to 56 (g) (hj (i) fki Total cost of ties at l^dTons'andf tet-° Amount charged to Salvage on old ties- distributing point terments operating' expenses taken up (j) (I) (m) Cn) $ C. $ C. $ C. $ e. 57 Total. Details of Electric Line Construction Show hereunder the particulars called for concerning the electric line construction of road operated by the respondent at the close 2414 Investigation of Public Service Commissions of the year, so fax as its records permit, and tke additions and subtractions during the year. Cables should be classified as shown and should also show the number of miles according to size, insula- tion and number of conductors. line T^ Added during No. "™ the year Removed during year (a) a>) (c) 1. Poles : Total number. 2. Whereof wood treated. 3. Whereof wood untreated. 4. Whereof steel. 5. Whereof. 6. Whereof. 7. Overhead construction: Miles of line. 8. Whereof span wire. 9. Whereof side bracket. 10. Whereof center pole. 11-15. 16. Trolley wire: Classify miles accord- ing to size, section and material. 17-23. 24. Third rail: Protected. 25. Unprotected. 26. 27. Underground Conduit: Miles of line. 28. Whereof concrete. 29. Whereof terra cotta and fire clay. 30. Whereof. 31. 32. Underground conduit : Duct miles. 33. Whereof concrete. 34. Whereof terra cotta and fire clay. 35. Whereof. 36. Final Repoet of Joint Legislative Committee 2415 Units at close of Item Added during Kemoved during Miles at close of year year year year (d) (e) (f) (g) (hj 1. Transmission cables: 2. Underground (voltage . . ) 6. Overhead (voltage....) Line No. Item (2) 10 Distribution cables : 11. Underground (voltage . • ) 27. Overhead (voltage....) Telephone and Telegraph and Signal Systems Show hereunder the number of miles of (1) telephone and (2) telegraph line on the property to which respondent had right of possession or occupancy at the close of the year, whether such line was operated by respondent or others (giving in each case the name of the owner, the name of the operator, and the number of miles of wire, as well as line), and (3) describe the signal and in- terlocking switch system of the respondent. Geade Ceossings Show hereunder the particulars called for concerning grade crossings at the close of the year; and follow it with a statement containing a description of each crossing at grade with steam railroads in New York city. Line No Grade crossings *No matter by whom maintained (a) 1. Unprotected 2. Protected by *gates 3. Protected by *flagmen 24 hours a day 4. Protected by *flagmen part time only 5. Protected by *both gates and flagmen 6. Protected by *crossing alarm only 7. Protected by *interlocking devices 8. Protected by *signals not interlocked 9. Protected alone by derailing devices on electric rail- roads. 10. Totals 2416 Investigation of Public Service Commissions With Steam Railsoads ra New Entiee Line Yobk City Withsteazn ^^^'iaSys' With highways ^otal ^,r,?S;f ''c1^eo7* Net change railroads outade.of^dtfes °"*^^^ufager' ''-"''er ^^gmiung close^of Net change (b) (e; (d) (e) ■ » (g) (t) Miscellaneous Structures, Transfer Points, Etc. Show hereunder the number of buildings, trans^fer points, etc., on the street railway property operated by the respondent at the beginning and at the close of the year. T ;„o M„ Tt„„ At beginning At close of Ti„„ At beginning R At close of Line No. Item of year year "^^ of year year (i) (i) (k) a) (m) (n) 51 Number of power houses Number of passenger stations 52 Number of sub-stations Number of freight stations 53 Number of repair shops Nramber of transfer points 54 Number of car houses • — storage Number of horses 55 Number of ear hoi;ses — service Number of parks or pleasure resorts 56 Number of office buildings operated Power Plant Equipment Show hereunder for each of the principal classes of power plant equipment which the respondent had in service, the number of units and total capacity in service at the beginning of the year, the number of units and the capacity placed in seiwice during the year, the number of units and the capacity withdrawn from service dur- ing the year, the minimum capacity in service during the year, the number of units, the total capacity, the minimum individual ca- pacity, and the minimum individual capacity in service at the close of the year. Rated capacity, as here used, has reference to con- tinuous operation. In Sekvice at Beginning of Year Line No. "^'"""eqiipS"'^"' Number o« units Total rated capacity (a) (b) {c> 1. 2, Station equipment: Boilers, water tube (hp). .3. Boilers, fire tube (hp.). 4. Peed water heaters (hp.). 5. 6. 7. Superheaters (hp. ). Economizers (connected hp.). Steam engines ; reciprocating', direct (hp.). 8. Steam engines, reciprocating, belted, etc. (hp.). Final Eepobt of Joint Legislative Committee 2417 In Service at Beginning of Year Class of power plant - — ~ ■ * ; — • Line No. equipmsnt Number of units Total rated capacity (a) (b) (c) 9. Water-wheels (hp.)- 10. Gas engines, direct, connected (hp.). 11. Gas engines, belted, etc. (hp-)- 12. Turbo-units, A. C. (kw.). 13. Turbo-units, D. C. (kw.). 14. Generators, direct-connected A. C. (kw.). 15. Generators ; direct-connected D. 0. (kw.). 16. Generators, belt-connected A. C. (kw.). 17. Generators, belt-connected D. C. (kw.). 18. Boosters for outside feeders (kw.). 19. Exciters, motor-driven (kw.). 20. Exciters, steam-driven (kw.). 21. Switchboard, generator panels (kw.). 22. Switchboard feeder panels (kw.). 23. Switchboard A. C. line panels (kw.). 24. Switchboard A. C. rotary panels (kw.). 25. Switchboard D. G. rotary panels (kw.). 26. Other switchboard pajiels (kw.). 27. Storage battery cells, 1-hour rating (a.h.). 28. Storage battery cells, 3-hour rating (a.h.). 29. Transformers (local light and power)* (kw.). 30. Transformers (local rotaries)* (kw.). * In a footnote give particulars of primary and secondary voltages. 2418 Investigation of Public Sekvice Commissions In Service at Beginning of Yea.h Class of power plaat - — Line Xo. equipment Number of units Total rated capacity (a) (b) (c) 31. Transformei-s (transmission)* (kw.). 32. Rotary converters (kw.). 33. Reactive coils for rotaries (kw.). 34. Frequency changes (kw.). 35. Auxiliary generators within plant (kw.). 36. Miscellaneous, t 37-38. 39. Sub-station equipment: 40. Switchboard A. C. line panels (kw.). 41. Switchboard A. C. rotary panels (kw.). 42. Switchboard D. C. rotary panels (kw.). 43. Switchboard feeder panels (kw.). 44. Other switchboard panels (kw.). 45. Eotaries (kw.). 46. Reactive coils for rotaries (kw.). 4Y. Transfoi-mers for rotaries (kw.). 48. Other transformers (kw.). 49. Storage battery cells for station use (a.h.). 50. Storage battery cells for line feed (a.h.). 51. Miscellaneous, t 52. Desceiption of Cae Bodies Installed oe RetiiSed Within THE Yeae Describe hereunder all cars installed or retired during the year, beginning with the revenue cars. If respondent did not hold in- ' In a footnote give particulars of primary and secondary voltages. f Specify. Final Report of Joint Legislative Committee 2419 stalled or retired cars under complete title, give name of lessor or participating interests. In addition to the characteristics noted in the column headings the description in column (a) should dis- tinguish between open, convertible or semi-convertible, and closed cars; standard, pay-as-you-enter, and pay-within cars; steel and wooden cars, etc. Estimates of cost should be so designated. Length T- M „?l\°l'"i?,S» No. of each Year pur- p„. Average oft-j^ Over aU Line No. of each type ^ j^^^ Cost ^^j^^ Ot body bumpers ot car bodies ^ (a) fb) (c) (d) (e) (f) fg) 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37. Classification of Cak and Locomotive Equipment Show hereunder for each of the various classes of car and loco- motive equipment in the possession of respondent and available for seiTice (whether on the road, in the shop, or awaiting shop) at the beginning of the year, the number placed in service during the year, the number withdrawn from service during the year, the minimum number available during the year, and the number avail- able at the close of the year. State also the form of title under which the equipment was held at the close of the year, i. e., the number of units to which the respondent had complete title, the number held under lease from some other electric railway com- pany, and the name of such lesser corporation, the number held under some form of equipment trust and other forms of title with the names of the trustees and participating interests shown in foot- notes appropriately referred to. Cars owned and leased or other- wise assigTied for operation to other companies should not be in- cluded hereunder (but described on pages 16-17) except where such assignment was under an arrangement whereby the owner housed and maintained the cars and leased them to the operator on a per diem or per mile basis. Under suclh an arrangement equip- ment is regarded as being in the possession of the owner, for the purposes of this report, and should be returned by the owner and not by the operator, the circumstances being explained in each case by appropriate footnotes. Columns (c) and (d) of this schedule should include equipment converted from one class to another during the year, and particu- lars thereof should be shown in a footnote. 2420 Investigatioh of Public Sebvice Commissions NuMBEK OF Units Line No ^'*^ "* equip- At begiimiiig of Installed during Retired during ment year year year fa) (b) (c) (d) Minimum num* ber available during year (e) Kevenue service. Car trucks — double, pairs of. Car trucks — double, pairs of. Closed passenger. Open passenger. Convertible passenger. Semi-convertible passenger. Combination passenger and express. 9 Bodies Parlor. Car 10 11 12 13 14 15 16 17 18 19 Motor Sleeping. Mail. Baggage. Express. Preigbt. Other revenue. {Closed passenger. Open passenger. Convertible passenger. r Semi-convertibfo passenger. 20 Non-motor < Pr eight. 21 [ Other revenue. 22 Car equipments — quadruple motor. 23 Car equipments — double miotor. 24 Car equipments — single motor. 25 Electric locomotives. 26 Steam locomotives. 27 Company service. 28 Snovsr-plovs's ( type). 29 Sweepers. 30 Work cars. 31 Wrecking cars. 32 Other service cars, 33 Motors iised only on service cars. 34 Electric locomotives, non-revenue. 35 Steam locomotives, non-revenue. Final Report of Joint Legislative Committee 2421 Number of Units Available fob Sebvice at Close of Year Held Undbk Lease from Another Carrieb ■TT |j j-_ Designation of leaser companies Held under other Total number ..^tH'tle Total number . . forma of title (f) (g) (h) (i) (i) (k) (1) (m) (n) (p) Enter hereunder the names of the various lessor eompanies, trustees, and other participating interests corresponding with the several columns (i) to (p). CriABACTEEISTICS OF CaeS Show hereunder the specified characteristics of ears in posses- sion of respondent and available for service at the close of the year, and classify each class of passenger cars according to seating capacity. ^°^ Claaa of equipment '^°'*' "i"''^' °^ ^"^"^ '=*™ Non- Motor cars (a) (b) (c) (d) 1 Eevenue cars. 2 Closed passenger cars. 3 Open passenger cars. 4 Convertible pase^iger cars. 5 Semi-convertible passenger cars. 6 Combination passenger and express cars. 7 Parlor cars. Equipped with Cass with Vestibules Handbrakea Power brakes Both hand and Prepayment plat- Other endlosed u Lj aa.c^^ xuYTcx u>aa.co powBr brakes forms platforms (e) (f) (g) (h) (i) Cabs -with Vestibules Heated with Lighted with *^°8ide*^ °°^ Front only Electric heaters Stoves Electric lamps Oil lamps a) (k) (I) (m; (n) (o) Line Class of passenger Number of cars at the close of the year No. cars with a seating capacity of — 31 Non-motor, open. Under 20 20-24 25-29 30-34- 32 ISTon-motor, closed. 35-39 40^4 45-49 50-54 33 Non-motor, other. 55-59 60-64 65-69 70-74 34 Motor. 75-84 84+ 35 Standard, open. 24:22 IlSVESTIGATION OF P0BLIC SERVICE COMMISSIONS Line Class of passenger No. cars 36 Standard, closed. 37 Standard, other. 38 Prepayment, open. 39 Prepayment, closed. 40 Prepayment, other. 41 42 43 Total Seating Capacitt Total number Aggregate ■^'™™P "^ car 45 State the average weight of passenger cars (including motors, trucks, etc.) ass'gned to duty at the close of the year lbs. ; on December 31, lbs. 46-60 Desceiption of Car Motoes Give hereunder the details called for by the headings concern- ing car motors which were in the possession of the respondent and available for service at the close of the year, classified (according to the form of title shown on page 46), as (A) motors owned, (J8) motors leased, (C) motors held under some form of equipment trust, (D) motors held under other form of title. Fnder " de- scription of type " of motor show name of manufacturer, also whether quadrviple equipment, double equipment, or single equip- ment, etc. Under " type of control " show whether multiple unit (M. TJ.), series parallel (S. P.), or rheostatic (R.). Motors owned but not in possession of respondent should be shown on page 16. _ _ _ _ . . no=,.,.;n*inr, nf -_ . . M,...,>,=, „« Total horse- Lar le JNo. f orr Q 01 tiiie each type lei ir acquir ea motors power ratmg per motor (b) (a) (c) (d) 1, 2, 3, 4, 5, 6, 7, s, 9, 10, 11, 12, 13, 14, 15. Final Repoet of Joint Legislative Committee 2423 Control ^"motrfblr ^^Totr'*"' Type Single end Double end (e) (f) (g) (h) (i) Desceiption of Oak Trucks Give hereunder the details called for by the headings concerning car trucks which were in the possession of the respondent and available for service at the close of the year, classified (according to the form of title shown 'on page 46) as (A) trucks owned, (B) trucks leased, (C) trucks held under some form of equipment trust, (D) trucks held under other form of title. Line No. Description of each type Manufac- turer Double or Number single trucks of Wheel base ^^^,4^" (b) (c) (d) (ej (f) (g) Form of title Total weight truck (lbs. per Average coat ] ) truck per Year acquired (a) (h) (i) (i) 2, 22, 23, 24, 25, 26, 27, 28, 29. 30, 31, 32, 33, 34, 35, 36, 37, 38; 39, 40. Total. Cae Fenders and Wheel Guards Show hereunder the number of car fenders of each type in pos- session of the respondent and available for service at the beginning of the year, the number added and the number retired during the year, and the number available for service at the close of the year. NnMBEH AT FiBST OF Yeab Added During Year (a) (b) (cl (d) (e) (f) Retired Ddbinq Year No. at Close of Year Fenders "™"°L™'' Fenders Total Wheel or truck -ca^ja™ Wheel or truck guards ^^°'^^" guards (g) (h) (i; 0' (k) 51, 52, 53, 54, 55, 56, 57, 58, 59, 60. Corporate Surplus or Deficit Account for the Year Show hereunder the debits and the credits to the Corporate Sur- plus or Deficit Account of the respondent during the year, classi- 2424 Investigation of Public Sekvice Commissions fied in accordance with the Uniform System of Accounts for Street and Electric Railways, giving explanations in footnotes. State the rate and the amount of each dividend declared, as well as the date. L.ne No. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Debits (aj To Debit Balance at be- ginning of year Debit Balance for year transferred from Income Account Expenses elsewhere unpro- vided for ■ *Dividends declared on ■ Stock: . . .Jo on $ . . . . payable ... % on $ . . . . payable ... % on $ . . . . payable ... % on $ ... . payable *Dividends declared on t . . .Jo on $ . . . . payable ... % on $ . . . . payable . . .Jo on $ . . . . payable . . .Jo on $ . . . . payable Amortization elsewhere ujiprovidedj foor Appropriation to reserves. Gifts to controlled corpo- rations , Other appropriations . . . . Bad debts written off. . . . Other deductions from sur- plus Tv Balance Credits (b) By Credit Balance at begin- ning of year Credit Balance for year trans- ferred from Income Account Bad debts collected. . Other additions to (specified) : surplus By Balance * Exclusive of dividends on reacquired stocks and on stoclcs never actually issued to a bona fide puTchas«r for value. t Name the securities. FlKAL E.EP0ET OF JoiKT LEGISLATIVE CoiIMITTEE 2425 Ai^^ALYSis OF Appeoi-eiation Accodjsts Show hereunder the various miscellaneous appropriations which were made by the respondent and charged to Corporate Surplus or Deficit during the year, classified umder the headings, "Amortization elsewhere unprovided for," "Appropriations to reserves," " Gifts to controlled corporations," and " Other appro- priations " (lines 14-17 above), giving in each case the purpose of the appropriation as well as its amount. Show further the principal items included in " Expenses else- where unprovided for " (line 3) and " Other deductions from sur- plus " (line 19). Purpose of appro- Purpise of appro- I-'-No. "a'iSionft^m Amount deducted SSon f"?^' Amount deducted surplus surplus (c) (d) (e) (f) 33, 34, 35, 36, 37, 38, 39, 42, 43, 44, 45, 46, 47, 48, 51, 52, 53, 54, 55, 56, 57, 58. Income AccouiffT foe the Yeae Show upon this and the following pages the various items of the Income Account of the respondent for the year, classified in accordance with the Uniform System of Accounts for Street and Electffic Railways; if for less than a year, state precisely the period covered. Companies making non-operating reports: When the respond- ent has transferred possession of its plant and equipment to an- other corporation under some form of lease whereunder it receives into its own treasury none, or a portion only, of the consideration for the use of its road, etc., it should show hereunder, for each of the various classes of securities, the amount at par on which the lessee has assumed interest or dividends, the rate per cent, and the amounts accruing during the year. If the expense of main- taining the organization of the respondent is assumed by the lessee, the amount of such payments should likewise be shovm below. If the respondent maintains its own organization and thus has expenses of administration, such expenses should be 31, 32, 40, 4=1, i9, 50, 2426 Iktestigatiox of Public Service CosQ^5SIO^'s stated as well as its gross receipts from the lease and from other sources, and the expense of administration should be included in the non-operating revenue deductions on line 29 below. So also if the respondent is required to pay taxes on plant, etc., which it has leased to another, such taxes should be included in the non- operating revenue deductions. Amount appli- Line cable to pre- Detail No. ceding year (a) (b) 1. $ . . c. . . Operating Income. 2. Revenue from transportation (p. 52 i. 3. Other street railway operating revenue (p. 52). 4. Total revenue from street railway operations, (p. 52). 5. Maintenance of way and structures (p. 54). 6. Maintenance of equipment (p. 54). 7. Horsepower — revenue car service (p. 55). 8. Operation of cars (p. 55). 9. Operations of cars (p. 55). 10, Injuries to persons and property (56). 11. Traffic expenses (p. 56). 13. Total street railway operating expenses (p. 56). 14. Taxes accrued on street railway (p. 5S). 15. Income from street railway operations.* 16. Revenue from outside operations (p. 51). 17. Expenses of outside operations (p. 51). 18. Taxes assignable to oiitside operations (p. 5S). 19. Income from outside operations* (p. 51). 20. Total operating income.* 21. jST on-Operating Income. 22. Rents accrued from lease of road and equipment (p. 60). 23. Miscellaneous rent revenues (p. 60). 24. Interest revenues (pp. 28, 60). 25. Dividend revenues (p. 28). 26. Profits from operations of others (p. 61). 27. Miscellaneous non-operating revenues (p. 61). * If loss, enter the amount in red ink. Final Report of Joint Legislative Committee 2427 Line No. Amount appli- cable to pre- ceding year (a) Detail (b) 28. 29. 30. 31. 32. 33 U. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. Total non-operating revenues. Non-operating revenue deductions (p. 61). ISTon-operating income.* Gross income applicable to corporate and leased properties.* Deductions from Gross Income. Interest accrued on funded debt and debenture stocks (p. 33). Other interest deductions (p. 63). Eent for lease of other road and equipment (p. 62). Track and terminal privileges (p. 62). Hire of equipment (p. 62). Joint facility rents (p. 57). Miscellaneous rent deductions (p. 63). Sinking fund accruals (p. 64). Guaranties of periodic payments (p. 64). Loss on operations of other (p. 61). Other contractural deductions from income (p. 64). Amortization of landed capital (p. 64). Amortization of debt discount and expense (p. 64). Amortization of premium on debt — cr. (p. 64). Total deductions from gross income. Net Corporate Income (or loss).* Per cent, of operating e venues for the year (c) Amount Applicable to the Year Itena (d) Totals (e) C. Increase or decrease (in red) for the year (f) $ Outside Operations Show hereunder the particulars called for concerning the several operations of the respondent other than street railway, such as commercial light and power, gas supply, etc. * If loss, enter the amount in red ink. 2428 iNVESTiGATiaN OF Public Seevice Commissions Dbpt. Line No. ■^**'" e^ "enl^"^ " Amount this year Amoun^reoeding (a) (b) (e) 1. Gross revenues. 2. Discounts and abatements from gross price (deducted). 3. Operating revenues. ■i. Maintenance • — actual. 5. Maintenance — depreciation reserve. 6. Other direct operating expenses. 7. Gteneral operating expenses. 8. Uncollectible bills. 9. Taxes. 10. Total revenue deductions. 11. Operating income. * Dept. Amount this year Amount preceding year (d) (e) Street Railway PEECBiirTAGES and Aveeaqes Show hei-ennder the various classes of revenue and expenses and other matters specified, per day, per fare passenger, per revenue car mile, and per oar hour. The length of track to be used as the basis represents the length, in miles of single track, of all revenue or main track; i. e., track extending between stations or route terminals, upon which cars or trains are operated by time table or train order; being the same as the total running track shown in column (g) page 39, less unexercised trackage rights, averaged for the twelve months, and excluding unused tracks, tracks in car-houses, shops, etc. Give first (j) the mileage of track maintained and operated by the respondent whether under lease or agreement or actual ownership (joint track being included ouly to the extent of respondent's interest) but excluding rights over track maintained by others, and secondly (k) the total track mileage including such rights exercised over track maintained by others, and including also joint track entire. * Enter the name of the separate operation or department other than street railway. Final Eepoet of Joint Legislative Committee 24-29 Line Amount Item Dav No. (g) (h) (if 21. Number of units (used as divisor) . 22. $ 23. Passenger revenue per 24. Transportation revenue per 25. Street railway operating revenue per 26. Street railway operating expenses per 27. Taxes accrued on street railway per 28. Street railway operating income per 29. Maintenance — actual* pei 30. Maintenance — depreciation! per 31. Maintenance — total per 32. 33. Revenue car miles per 34. Car seat miles per 35. Eevenue car hours per 36. Electric energy (kw. hrs. D. C.) con- sumed per 37. 38. Average maximum number of cars operated daily 39. Operating pay-rolls — per cent, of operating revenues : ^ Average Number of Miles of Revenue Track; with Track- age Rights Excluded Included Fare passengers ^®''Sa°*'' '^^"hSura"^' (J) 'k) (1) (m) (n) $ $ C. C. $ C. Explain bow tbe average number of cars (line 38) is determined. Street Railway Operating Revenues Show hereunder the revenues derived by the respondent during the year from its street railway operations ; as defined in the Uni- * Excluding amount carried to reserve "Accrued Amortization of Capital." t Representing amount carried to reserve "Accrued Amortization of Capi- tal." 2430 Investigation of Public Service Cojoiissions form System of Accounts, those foT the preceding year, and the increases of the former over the latter year. If the respondent operated, during any portion of the year, elevated lines or subways lines as well as surface lines, the revenues from the operations on each of these classes of lines must be separately stated. Amount of Line revenue for Class of street railway No. the preced- operating revenues ing year (a) (b) $ C. 1. I. Revenue from Transportation. 2. Passenger revenue (451). 3. Freight revenue (458). 4. Mail revenue (454). 5. Express revenue (455). 6. Baggage revenue (459a). 7. Chartered car revenue (459b). 8. Parlor and chair car revenue (459c). 9. Milk revenue (469d). 10. Switching revenue (459e). 11. Miscellaneous transportation revenue (459f ). 12. Total revenue from transportation. 13. II. Other Street Railway Operating Eevenues. 14. Advertising privileges (460). 15. Other car and station privileges (461). 16. Rent of land and buildings (462). 17. Rent of equipment (463). 18. Rent of tracks and terminals (464). 19. Saleof power (465). 20. Joint electric power revenue (466). 21. Parcel room receipts (468a). 22. Storage charges (468b). 23. Car service (demurrage 468c). 24. Telephone and telegraph service (468d). 25. Park and resort revenue (468e). 26. Miscellaneous (468f). 27. Total Non-Transportation Revenues. 28. Total Street Railway Operating Revenues. Final Report of Joint Legislative Committee 2431 Amount op Revenue for the Year "" '— ' — -^ Increase of revenue Surface. Elevated Underground over the preceding year (c) (d; (e) (f) $ C. $ C. $ C. $ C. Power Bought, Sold, Exchanged or Transferred Give hereunder the particulars of all electric energy received from or delivered to other coi-porations by the respondent during the year, not reported in the Joint Facilities and Arrangements schedule (page 57). This requires an analysis of all transactions recorded in (1) the expense account, '"' Power Purchased," and " Power Exchanged — Balance," and (2) the revenue account, " Sale of Power." Any transactions of other departments than the railway (as, for example, a commercial light and power depart- ment) are to be treated as outside operations and reported under that head on page 51 ; but electric current transferred from a com- mercial lighting department to the street railway department of respondent should be reported hereunder. Separate entries should be made for A. C. and D. G. current, and iu appropriately re- ferred to footnotes, complete information must be given as to points of delivery and points of measurements of all energy re- ceived or delivered. Total num Amount Mftrnp nf Kttt- rtf t ' Average Discounts Amount debited or Line No. ;„mn„n' w hours ^""^ ^^ '^"'^^ P"** *'"' °*'^^^ credited to credited delivered ^' ^' ^°^^ abatements revenue (red) to expenses (g) (h) (i) Q) (k) (1) (m) $ c. $ c. $ c. $ c. 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46 Street Eailwat Operating Rents Receivable Show hereunder particulars of the credits accruing to respond- ent's street railway operating revenue accounts for the use by others of its road or equipment, the rentals, whereof are not governed by joint arrangements for the apportionment of ex- penses, etc. (as set forth on page 57). This requires an analysis of * If respondent operates more than one class of roads, the combined earn- ings should be entered in that one of the three columns that is not otherwise used. 2432 Investigation of Public Service Commissions transactions (other than the foregoing) recorded in the revenue accounts, Eent of Land and Buildings (462), Eent of Equipment (463) and Rent of Tracks and Terminals (464). Give abstracts of all pertinent contracts or agreements, showing parties thereto, property affected (including the extent and location of track' rented) and the consideration. Against each property show the amount of revenue that accrued during the year and the amounf actually received. Group the entries under the headings named. Line No, De.=ription of property ^-^^Sfthe y™ar^ """ ^™ing thfjlS ''"" llto 55 (a) (b) (o) Street Eailwat Operating Expenses (For explanations and instructions, see the next page.) State the total number of revenue car miles; of revenue car hours ; Line Title of account No. la) 1. I. Maintenance of Way and Structures — Total. 2. Superintendence of way and structures (701). 3. Ballast (IM). 4. Ties (Y05). 5. Rails (706). 6. Rail fastenings and joints (707). 7. Special work (708). 8. Undergroimd construction (709). 9. Roadway and track labor (710). 10. Paving (711). 11. Miscellaneous roadway and track expenses (712). 12. Cleaning and sanding track (713). 13. Removal of snow, ice, and sand (714). 14. Repairs of tunnels (716). 15. Repairs of elevated structures and foundations (717). 16. Repairs of bridges, trestles, and culverts (718). 17. Repairs of crosses, fences, and signs (719). 18. Repairs of signal and interlocking systems (720). 19. Telephone and telegraph repairs (721). 20. Other miscellaneous way expenses (722). 21. Pole and fixture repairs (S. 522). 22. Underground conduit repairs (S. 523). Final Kepoet of Joint Legislative Committee 2433 Line Title of account No. (a) 23. Transmission system repairs (S. 524). 24. Distribution system repairs (S. 527). 25. Miscellaneous electric line expenses (724). 26. Repairs of buildings and stractures (725) : 27. Stables — horse car revenue service. 28. Power plant (incl. sub-statio^n ) buildings. 29. Other buildings and structures. 30. Other operations — D'r. (726). 31. Joint way and structures — Dr. (727). 32. Other operations — Or. (728). 33. Joint way and structures — Cr. (729). 34. Depreciation of way and structures (730). 35. II. Maintenance of Equipment — Total. 36. Superintendence of equipment (741). 37. Repairs of furnaces, boilers and accessories (S. 508). 38. Repairs of steam engines (S. 509). 39. Repairs of hydraulic power plant (S. 510). 40. Repairs of gas power equipment (S. 511). 41. Repairs of power plant electric equipment (S. 512). 42. Repairs of miscellaneous power plant equipment (S. 513). 43. Repairs of cable power equipment (742g). 44. Repairs of sub-station equipment (S. 528). 45. Repairs of passenger and combination cars (744). 46. Repairs of freight, exp^ress, and mail cars (745). 47. Repairs of locomotives (746). 48. Repairs of service cars (747). 49. Repairs of electric (motor) equipment of cars (749). 50. Repairs of electric equipment of locO'motives. (750). 51. Repairs of shop machinery and tools (752). 52. Shop expenses (753). 53. Repairs of vehicles (754). 54. Other miscellaneous equipment expenses (755). 55. Other operations — Dr. (756). 56. Maintaining joint equipment — Dr. (757). 57. Other operations — Cr. (758). 58. Maintaining joint equipment — Cr. (759). 59. Depreciation of equipment (760). 77 2434 Investigatiok of Public Service Commissions Amount op Expenses During Yeah Class A Class B Class C Cents per car p , corporations corporations corporations mile 'b) (c) (d) (e) (f) $ c. $ c. $ c. $ c. Show on pages 54-56 the varioiis items of expense in conducting the street railway operations of the respondent during the year, classified in accordance with the Uniform System of Accounts. Companies that earned an annual revenue of more than $500,000 are required to report in column (b) all items listed in column (a), but independent corporations of Class B (revenues more than $100,000, but less than $500,000) and Class C (revenues not more than $100,000) may make such combinations of the primary ac- counts as are permitted by the accounting order. The car-mile and car-hour ratios in columns (e) and (f) must be given for at least the eight group totals. Companies that have separate operating divisions should report the expenses of each division, using for that purpose the colimins for corporations of Class B or C. Line Title of accouat No. (a) 1. III. Horsepower — Revenue Car Service. 2. Wages of stablemen (781). 3. Provender (782). 4. Horseshoeing (783). 5. Harness and other horse equipment (784). 6. Stable supplies and expenses (785). 7. Total — Group III. 8. IV. Operation of Power Plant. 9. Power plant labor (S. 50L) : 10. (a) Power plant superintendence and care. 11. (b) Boiler room labor. 12. (c) Producer labor. 13. (d) Engine labor. 14. (e) Electric labor. 15. (f) Cable power plant labor. 16. Sub-station labor (S. 525). 17. Fuel for power (S. 502). 18. Water for power (S. 503). Final Repoet of Joint Legislative Cojcmittee 2435 Line Title of account No. (a) 19. Lubricants for power (S. 504). 20. Miscellaneous power plant supplies and expenses (S. 505). 21. Sub-station supplies and expenses (S. 526). 22. Power purchased (786). 23. Jointly produced power — Dr. (78Y). 24. Power exchanged — Balance ( 788) . 25. Other operations — Dr. (789). 26. Other operations — Cr. (790). 27. Jointly produced power — Cr. (791). 28. Total — Group IV. 29. V. Operation of Cars. 30. Superintendence of transportation (780). 31. Passenger motormen (80-2a). 32. Hcrse car drivers (80'2c). 33. Horse car conductors (802b). 34. Electric surface car conductors (802b) 35. Elevated conductors and guards (802d). 36. Other passenger trainmen (802d). 37. Freight and express motormen and trainmen (803). 38. Miscellaneous car service employees (805). 39. Miscellaneous car service expenses (806). 40'. Station employees (807). 41. Station expenses (808). 42. Car-house employees (809). 43. Car-house expenses (810). 44. Operation of signal and interlocking systems (811). 45. Operation of telephone and telegraph systems (812). 46. Express and freight collections and delivery (813). 47. Loss and damage (814). 48. Other transportation expenses (815). 49. Joint operation of cars — Dr. (816). 50. Joint operation of cars — Cr. (817). 51. Total — Group V. 52. Total expenses shown on this page. Amotjnt of Expenses Dtjking Year Class A Class B Class C corporations corporations corporations (b) (c) (d) I c. $ c $ c. Per car mile Per car hour (e) (0 C. $ c. 2436 Investigation of Public Seevice Commissions If disbursements on account of injuries and damages are charged to a reserA^e account, instead of the operating expense ac- counts, listed hereunder, they must be reported hereunder, in accordance with the prescribed classification, and the amount carried to the reserve over and above the actual disbursements shown on line 2, with the appropriate notation. Line Title of account No. (a) 1. VI. Injuries to Persons and Property. 2. Accidents and damages (SiYa) : 3. Claim department expense. 4. Medical expenses. 6. Claims for injuries to employees. 6. Other injuries and damages. 7. Other expenses. 8. Law expenses in connection with damages (847b) : 9. Salaries and expenses of attorneys. 10. Court costs and expenses. 11. Law printing. 12. Total — Group VI. 13. VII. Traffic Expenses. 14. Superintendence and solicitation (770a). 15. Advertising (770b). 16. Parks and other attractions (770c). 17. Miscellaneous traffic expenses (770d). 18. Total — Group VII. 19. VIII. General and Miscellaneous. 20. Salaries and expenses of general officers (S. 833). 21. Salaries and expenses of general office clerks (S. 834). 22. General office supplies and expenses (S. 835). 23. General law expenses (S. 836). 24. Insurance (S. 837). 25. Relief department and pensions (S. 839). 26. Miscellaneous general expenses (S. 841). 27. General amortization (S. 842). 28. Other operation — Dr. (S. 843). 29. Joint general expenses — Dr. (S. 844). 30. Other operations — Cr. (S. 845). Final Kepoet of Joint Legislative Committee 2437 Line Title of account No. (a) 31. Joint general expense — Cr. (S. 846). 32. General stationery and printing (S. 848). 33. Store expenses (S. 850). 34. Stable expenses (S. 851). 35. Undistributed adjustments — balance (S. 853). 36. Total — Group VIII. 37. Total expenses shown on this page. 38. Total expenses shown on page 55. 39. Total expenses shown on page 54. 40. Grand total — Operating expenses. Amount of Expenses During Year Class A Class B Class C corporations corporations corporations (b) (c) (d) $ C. $ e. $ C. Per ■ car mile Per car hour (e) (f) C. $ C, State hereunder the various kinds of insurance for which charges are made to the account " Insurance" (line 24) in operating ex- penses, and the total charges made during the year in respect of each. Corporations of Class C are requested to state hereunder the amount paid during the year in settlement of claims or suits for personal injuries to employees. Joint Facilities and Ae-eangements Show hereunder the particulars indicated by the headings con- cerning each joint facility or arrangement in the use or benefit of which the respondent participated at any time during the year. By a joint facility is meant any plant or equipment maintained and (or) operated by one corporation for the commoin benefit of itself and another or others under an agreement or understanding that the parties participating shall share the expense of such share- ing being dependent on the amounts of benefit derived. Joint ar- rangements include not only all agreements covering joint facili- ties, but all other agreements or understandings whereunder one corporation conducts any portion of its operations for the common benefit of itself and another or others, with the understanding that the resultant expense and risks shall be shared by the benefi.ciaries 2438 Investigation of Public Sekvice Commissions in proportion to the benefits derived. The total burden to be dis- tributed over the participants may or may not include any allow- ance in the nature of a rent or return upon the cost or value of the joint facility, but the charge against any participant must depend on the expense of maintenance and (or) operation as well as upon the amount of benefit received if the arrangement is to be con- sidered " joint " as the term is here used. Enter first the corporations supplying the respondent and then those supplied by it. A.mounts charged to the respondent should be shown in black, and those charged by it should be shown in red ink. Entries in column (b) in case of jointly produced electric energy should show the quantities transferred between the re- spondent and the party named ; and the point of delivery and place of measurement should be shown in each case. Distribution Total charge Line No. Name of party ^^^"^uct ''"' crSfrldHo ^^P^""^^^ Taxes Rents respondent 1 to 25 (a) (b) (e) (d) Ce) (f) $ c. $ c. $ c. $ c. Rents Payable Ohaeged to Opeeating Expenses Show hereunder the particulars indicated concerning conduits, transmission lines and other property leased, but not maintained by the respondent, the rental whereof is charged to operating ex- penses. This schedule must not include any rents payable accrued in respect of property in the exclusive possession of the respondent under lease. In describing subways and conduits include a state- ment of length of ducts rented. T : xT„ Description of facility ^t c „ .. Amount charged to LmeNo. or property Name of owner operating expenses 41 to 50 S c. Totals Taxes A. Taxes Levied and Taxes Paid During the Year Show hereunder the various particulars called for with respect to the taxes levied and the taxes paid during the year. The prop- erties to which this statement relates shall be classified as follows : (i) street railway properties completely owned by the respondent; (ii) street railway held by it under some form of lease controlling, affiliated, or controlled corporations; (iii) street railway held by it Final REPoifx of JoI^'T Lp:ctIslative Committee 2439 under some form of lease from other corjiorations than those pro- vided for in (ii) ; (iv) properties devoted to other than street rail- way corporations, specifying those for the several operations, and (v) properties from which non-operating revenues are derived, as e. g., properties let out to others, and from which the respondent derives rent. This last group ( v ) should contain only such taxes as have been borne by the respondent, and have been charged against its non-operating reACuues before stating the non-operating in- come on page 50 of this repoTt. Payments and charges to income on account of taxes should be reported as such by the corporation having possession of the property to which such taxes pertain. Distinguish between State and local taxes, and between the various kinds of taxes in each jurisdiction. Show separately the several payments due the municipality that are deductible from the special franchise tax, such as car license fees, percentages, etc. Water rents are not to be treated as taxes. If any tax has been paid under protest, the fact should be stated in a footnote. Taxes Levied Dun- Taxes Paid During ING Year Year Property to which appli- cable — De- scription $ C. $ C. Totals B. Tax Charges Show hereunder the tax charges of the respondent during the year, classified in accordance with the Uniform System of Ac- counts. This requires an analysis of taxes as charged in the income account for the year and of charges to corporate surplus or to other accounts. It also requires an analysis of taxes paid and charged to Taxes Accrued or Prepaid Taxes and of other charges to these accounts. Line Dr. No. $ (h) c. 31. Debit balance prepaid taxes at beginning of year. 32. Taxes paid during year: 33. State franchise tax on capital stock or dividends. 34. State franchise tax on gross earnings. 35. Special franchise tax. Taxes Levied DnB- ING Year Taxes Paid During Year Line No. Kind of ta^ Amount When due Amount When due Class ItolS (a) (b) (c) $ C. (d) (e) $ C. (f) 24i0 INVESTIGATION OF PuBLIC SeEVICE COMMISSIONS Line Dr No. $ (h)' c. 36. Corporate real property tax. 37. Taxes on lands. 38. Taxes on improvements on lands. 39. Taxes on personal property. 40. Other taxes — local. 41. Other taxes — State. 42. Other taxes — Federal. 43. Other charges (specified) : 44. 45. 46. 47. Tax liability at close of year. 48. Prepaid taxes at close of year. 49. Balance. 50. Footing. Tax payments not charged to Prepaid Taxes or Taxes Accrued should be explained hereunder. State hereunder the particulars of all taxes charged to Fixed Capital during the year. Cr. (i) Credit balance tax liability account at beginning of year. Taxes charged to street railway operations : State franchise tax on capital stock or dividends. State franchise tax on gross earnings. Special franchise tax. Corporate real property tax. Taxes on lands. Taxes on improvements on lands. Taxes on personal property. Other taxes — Local (detail below) Other taxes — State (detail below) Other taxes — Federal (detail below) Taxes charged to outside operations (detail below) Taxes charged to non-operating income (detail below) Other charges (specified) : Remarks. Footing. Final Eei^oet of Joint Legislative Coje.mittee 3441 C. Taxes Due and Unpaid Classify all taxes unpaid at the close of the year, in accord- ance with the directions on the preceding page. If any unpaid taxes are in dispute, indicate the same by means of footnotes. Following the total in column (d), show on separate lines what part of this amount is carried in the Tax Liability Account, what part is provided for in a reserve and what part, if any, has not been entered on the books. Amodnt Due and Unpaid Line No. Kind of tax Amount of Accrued in- TotaUjnount class 1 to 35 (a) (b) (c) (d) (e) Property to which appli- cable—de- scription (f) ' D. Estimated Values for Purposes of Taxation Show hereunder respondent's valuation of its property as re- ported to the State Board of Tax Commissioners, stating the same on the basis of (1) cost to reproduce new, and (2) such cost less accrued depreciation. Show also the assessed value of real estate, personal property, and special franchises. If respondent's property lies in different counties or boroughs, give also the par- ticulars for each borough or county. Line Basis of No. valuation (a) 51. Cost to reproduce, new. 52. Same, less depreciation 53. Borough 54. Borough 55. Borough 56. Assessed value. 57. Borough 58. Borough 59. Borough Tangible personal Real property outside property, materiala. streets and public supplies, etc. places Tangible property streets and publl places Date of valuation (b) (c) (d) (e) Special franchise iU 24:4:2 I.wKSTKJATit.v OF PrBLic Seevke Commissions Rents Accrued fro-m Lease of Road or Equipment Show hereunder the various particulars conceraing rc-ad or equipment of the respondent in the possession of others whereby rent accrued to the respondent during seme poitic u or all of the year. Give brief abstracts of the terms and conditions of the lease under which the rents are derived, showing particularly (1) the date of the grant, (2) the chain of title (and dates of transfers) connecting the original parties with the present parties. (3) the basis upon which the amount of the annual rent is deter- mined, and ( 4: ) the date of expiration of the lease. If any expense, taxes, or uncollectible accounts are chargeable against thes? rent revenues in respect of the year, they should also be stated here- under. Tj^ y Des ription and location of property and na-ne ot pres- ent leaseholder and terms of lease 1 to 10 (a) Rent ac:^rued during year Totals Miscellaneous Rent Revenues Give hereunder, a detail of the properties rents wherefroni are creditable to the account Miscellaneous Rent Revenues, describing separately each item of property the gross rent wherefroni is not less than ^rSO per month, and grouping the others in a single item " minor rents receivable." Show for each item the gross rent f^r the year (or for such portion ■ :f it as the reveiiue covered ), also the expense, the taxes (if any ) chargeable against the gross rent, and the amount chargeable to uncollectible accounts. The amount shown as "' iMiscellanems Rent Revenue "" in the Lie me account on page ."0 should be the total of column (f ). Line No. 11 to 28 Descriptign op Propebtt Location (c) (d) Name of (e) Gross rent diirng period (f) c. ^r^' Ta.es dur- period "S P«"«l l2> S " c. (h) S C. Uncollec- tible ac- counts (i) S c. Totals Miscellaneous Interest Revenues Show hereunder the interest receivable accrued to the respondent during the year in respect of miscellanemis loans, accounts, ad- vances, deposits at banks, etc., not includible in any foregoing Final Report of Joint Legislative Comiiittee 2443 statement, giving a description of each such loan, accomit, ad- vance, deposit, etc., showing the par amount held, the period dur- ing which held, the rate of interest, the interest receivable ac- crued thereon, and the amount actually received, showing sepa- rately each such loan, account, advance, deposit, etc., where from the interest during the said year or part thereof amounted to $100 or more, and grouping all the others in a single item, " minor loans and accounts." Line No. 40 to 50 penitions of Others — Profit or Loss Show hereunder the several separately operated properties of companies having a corporate existence separate and distinct from that of the respondent, the profits or losses resulting from the operation of which are receivable or payable in whole or in part by the respondent, the total amounts of such profits or losses for each such separately operated property accrued during the year, and the portions thereof accrued to the respondent. Xo dividends or other returns upon securities held should be shown hereunder nor should any interest upon construction advances or other loans be included. Pehiod Ccvered Interest BY Amount of Interest Lescription of loan, ac- count, advance, deposit, etc., amount and other cliaracteristics thereof and name of debtor Ci) From To (k) G) Rate% (m) Accrued Actually re- during ceived year during year (n) (0) Totals Total Result of Operation Accrued to Re- SP0^DBNT Line No Description and location Name of of property operated operator I to 5 (a) (b) Profit (c; Loss C. $ C. Profit 'e) Loss (f) Totals Give hereunder abstracts of the contracts, agreements or ar- rangements, whereby the respondent is entitled or bound to par- ticipate in the results of operation of the above-shown separately operated properties. MiscELLANEors Xon-Opeeatixg Revenues Show hereunder all items of non-operating revenue (classified in accordance with the nature thereof) which accrued to the re- spondent during the year, and are not provided for in any pre- -444 IxVESTIGATIOX OF PuBlIC SeEVICE CoxOIISSIOXS ceding statement. It is not intended tkat under this head shall be shown the results of any outside operation; nor any regularly recurring matters such as interest, being provided for in foregoing accounts. This account is intended for occasional matters only, such as the sale of materials and supplies, and should in the case of such sales include as revenue only the profit on the sale, the cost of the material and the expense involved in handling being credited to the appropriate materials and expense accounts. The total of the credits to revenue stated in this schedule should agree ■with the amount stated for Miscellaneous Xon-operating Revenue on page 50. Source and Amount credit- Amount credit- a mount credit- line No. character of Gross receipts ed to capital ed to expense ' ^ it^^ve^^' receipt accounts accounts ea to revenue 21 to 30 (e) (f) (g) Oi) (i) S C. S C. S C S C. Totals y cm-Operating Beremif DedacfiO'ns Show hereunder the detail of the non-operating revenue dediic- tions charged in the Income Acco\mt, page 50, and in cohimn (1) give an explanation of the various chai-ges. For the definition of this account see paragraph :20 of Schedule 1] in the Uniform System of Accounts for Street and Electric Kailways. Line Item Xo 41. Leasehold expense. 42. Other rent expense. 43. Interest expense. 44. Dividend expense. 45. Others' operations expense. 46. Miscellaneous non-operating expense. 47. ]N^on-operating taxes. 4S. Uncollectible non-operating revenues. 49. Total Eenti< Accrued for Lease of Other Eoad and Equipment Show hereunder the various particulars indicated by the head- ings concerning road and equipment held by the respondent under some form of lease during some portion or all of tUe year, the total amount of gross rent payable accrued against the respond- Amount during j'ear ExplanfitioD and remarks S c. U) Final Eepoet of Joint Legislative Coujiittee 2445 ent because of such holding, and the distribution of such total rent among the three heads - — Interest on Bonds Guaranteed, Dividends on Stocks Guaranteed, and Cash. Taxes paid or pay- able by respondent in respect of such roads should not be shown under this head but under the head of Taxes. In the column " Rent paid during the year " indicate by reference marks against each entry whether that amount (A) was paid to the lessor com- pany, or (B) was disbursed directly among individual bond- holders, stockholders, etc. Follow the statement of gross rents payable with another state- ment showing the rents accruing to associated companies and a third statement showing the net rentals carried to the Income Account of the respondent. Classification of Rent Accrued Name and descrip- Tnfol ,-.„» o»„r„orl Interest Dividends Rent paid Line No. tion of road and ju^f^„ ™or on bonds on stocks Cash during equipment ^ " guaranteed guaranteed year 1 to 18 (a) (b) (c) (d) (e) (f) $ c. $ c. $ c. $ c. $ c. Track and Terminal Privileges — Hire of Equipment Give hereunder abstracts of all contracts or arrangements gov- erning charges during the year to the above-named sub-accounts of the primary account (922) "Other Rent Deductions", show- ing' properties (including the location and extent of track rented), parties, terms, period of use or occupany by respondent, the ac- crued debits during the year, and the amount actually paid, if payments were less than the amounts accruing under the con- tracts. (Where the charge is based upon a proportion of operat- ing expenses and upon the value of the property, it should be shown under Joint Facilities, page 57.) Line No. Description A™™^-* ;™*^ <>'^'°« ^'''°'"" P^J^f d""=K 21 to 50 (g) (h; (i) $ c. $ c. $ c. (A) Paid to lessor companies. (B) Paid to security holder. Miscellaneo'us Rent Deductions Give hereunder a detail of the properties rents whereupon were charged to Income account by the respondent during or in respect of the year, under the head, " Miscellaneous rent deduc- tions," describing separately each item of property the gross rent 24-tti IxTESTIGATIOX OF PuBLIC SeKVICE ComMIS5IOX~ whereupon is not less than 820 per month, and gronping the others in a single item " miscellaneous rents payable." Shew for each item the rate of rent, the period of occupancy, and the t-otal charge therefor to IncMi.i.. Descbiptios of Paop- EBTT Rat nf t ^^' umber of Amount Line Xo. Name Location Name of lessor -"^^ "' ^^^ months occu- charged to in- per month p;„^ ^^ 1 to 20 (a) (b) (c) id) (e) (r") S C. S C. Miscellaneous Interest Dedudions Show hereunder the particulars called for regarding all interest charges except those of funded debt, and debenture stocks. This schedule covers all interest, exchange and discoimt on unfunded debt of whatever character, liut reference may le made to other schedules to avoid repetition of particulars. Ac:-' jTints payable in excess of Sl.J.OOO and all bills payable must be stated individtially. Line Xame of creditor and amount Xo. and description of debt 21. 22. 23. 24. 25. 26. 27. 2S. 29. 30. 31. 32. 33. 34. 35. 36. 37. Brought forward from page 34: 3S. Interest on obligations to associated companies. 39. Interest on receiver's certificates. PERliOD OF Time COTERED From To (W (i) Final Repokt ov Joi^t LK^iisi.Aiivi-; C'OMAriTTKK L*44-7 Interest Duuino Year Interest at Close of Ykar Rate % per annum Accrued Paid "^""^^taid"' °°* Matured and un- (j) (k) (1) (m) (n) S c. $ c. So. $ c. Shil-iiiff Fund Accruals Show lieieuiidcr the iiaiuos and purposes oi the several sinking funds which the respondent is required to accumulate through charges to Income account and the respective amounts charged to Incoiiie hy the respondent during the year. Line No. Name and purpose of sinliing fund ^">""°' '^^f^ '° '"" 1 to 5 (a) (b) $ C. r)mmoiiizcd Discovnt and Exfcuse Show liereunder the particulart; called for concerning each item or snb-acconnt of the respondent's ITnamortized Debt Dif-count and Expense as the account is defined in the ITniforni System of Accounts. In connection with the description of each of the items of the account, give tlie name and date of maturity of the debt to which it relates, and state the method of amortization, whether (a) Equal payments, with the number of such equal payments, (b) lUminishing balance, with the rate per cent, written off, or (c) Sinking fund, with the I'ate per t'cnt. at which compounded. Line No. Description of item and method of amortization Original .^a^°u°' °' Uto20 (e) (f) Amortization Pkriod .\MoLrxT Written Off From To '^™' *° beginning (g) (h) (i) 'uring year Unamortized bal- ance at close of year fj) (k) Ai.i. (VriiER CoNTEACTrAT. DEDU("riONs FROM Gross Ixcoiip: Show here under the several charges against Grross Income which were made by the respondent during or in respect of the year, and which are not classifiable under any of the foregoing accounts. This account includes only matters in the nature of contractual or otherwise compulsory deductions, and should not include anv appropriations or dispositions of net income that rest solely in the discretion of the respondent. Items amounting to $100 or more should be separately shown. Those less than $100 2448 Investigation of Public Service Commissions each may be grouped as " minor deductions." The total of the items here shown should agree with the amounts shown for " Guar- anties of periodic payments '' and " Other contractual deductions" on page 50. Line No. Description and purpose of deduction from gross income Amount 31 to 42 (1) (m) $ C. MlSCELLANEOirs MaTTER RELATING TO InCOME AcCOUNT FOR THE Year Give hereunder a full explanation of all amortization charges and credits made in income account under the heads of "Amortiza- tion of landed capital " and "Amortization on premium on debt — Cr." (P. 50, lines 44 and 46) ; also any additional statements or explanation that the respondent may desire to make in con- nection with the income account for the year. Operating Statistics Show hereunder for each month of the year, the earnings of regular passenger cars and of special and other ears; the number of revenue passengers (cash and ticket fares) with the maximum number for one day, the number of transfers collected, the number of persons carried free, and the car hours, car miles, and car- seat miles, classified in accordance with the definitions of the Uni- form System of Accounts for Street and Electric Railways. No°.' Month (a; Regular passenger car earnings (b) $ c. Other car earnings (c) 1 c. 1. July. 2. August. 3. September. 4. October. 5. ISTovember. 6. December. 7. January. 8. February. 9. March. 10. April. 11. May. 12. June. 13. Total. Final Report of Joint Legislative Committee 2449 Revendb Fassbnoebs Number each month (d) Greatest number in Number of transfers dumber of employees one day Ce) collected (f) and others carried free Car Hodrs ^""f^fH^"""^ Special passenger and idle) (h) (i) Mail car 0) Express, freight and mixed (k) Total (1) Passbnqer Cab Miles Line No. Month (m) 21. July. 22. August. 23. September. 24. October. 25. I^ovember. 26. December. 27. January. 28. February. 29. March. 30. April. 31. May. 32. June. 33. Total. Number of (active) car-seat miles (n) Active (o) Idle (P) Special car Mail car Express ca'" Freight ca^ Mixed car miles iqj miles (r) miles (3) miles (t) miles fu) Total revenue car miles (v) 34. Freight and express traffic: tons carried- one mile ; earnings, total, $ Non-rev- Electric enue car locomotive miles miles (w) (x) ; tons carried -; per ton mile, 35. Special or chartered cars: Number of trips made during year ■; earnings, total, $ ; per special car mile. $-- ; per special car hour, $ . 36. Special classes of tickets: State the rates at which tickets are sold and the number sold at each rate. 37. 2450 Investigation of Public Seevice Commissions 3S. State whether or not any passengers were carried by the re- spondent free of charge or at reduced rates not covered by tariffs during the year. 39. If so state the total number of passengers thus carried and name each such class, classifying them in accordance with sec- tion 33 of the Public Service Commissions Law. 40, 41, 42, 43, 44. This refers to transfers issued at the request of passengers and not to transfers necessitated by the substitu- tion of one car for another at an intermediate point on a route. Passenger Movement on Car Routes or Lines Show below, in the spaces provided; the particulars called for by the headings concerning the several car lines or routes operated by the respondent for any period within the year. G-ive (a J the desigTiation and description of each route (and if cars are operated over recognized branch or sub-routes, show such partial or short routes separately, giving the termini and the principal streets traversed, and if cars are operated for a part of the year between termini diffwrent from the usual ones, state the secondary termini and the distance between them) ; (b) the date within the year at which routes or sub-routes (if any) were withdrawn and (c) the date within the year at which new routes or sub-routes (if any) were begun, or discontinued routes, resumed; (d) the length of the route or sub-route (in miles and hundredths of a mile) , meaning thereby the operating distance between the termini or one-half the round- trip distance in case the " going " and "coming " routes are not identical; (e) the maximum number of cars required for use on each route at any one time, with (f ) the date of such maximum demand ; (g) the average number of cars per day operated on each route during the year; the number of (h) car trips specifying whether round trips or single trips, (i) of car miles (j) of car-seat miles, and (k) of car hours on each route during the year. For sub-routes the number of car trips, at least, should be given. Maximum Ncthber of Date When Operation Cabs Requihed at One Wa3 Time Tina Mn DesigDation Disoontin- Begun or Length of m ,™j,„. r^ * Line No. ^^ ^^^^^ ^^^ resumed route Number Date 1 to 39 (a) (b) fc) (d) (e) ff) Final Eepoet of Joint Legislative Committee 2451 Average number Total number of ^tJ^J'^^ien-''" Number of Cao- Number otpassen- ofcaFsperday car. trips dur- ge^ car miles run tive) car-seat ger car hours '"' ""-^ mg year during year '"''"^ durmg year during year (g) (h) (i) (J) (.k) On lines numbered to correspond with the line numbers on the preceding page show the particulars called for below concerning passenger movement on each route or sub-route during the year, stating the number of five-cent fares, of three-cent fares, of two and one-half cent fares, and of other fares (specifying the number .carried at each different rate, if there is more than one additional rate) with the aggregate amount thereof; the total number of passenger fares collected ■ndth the aggregate amount and the amount per car mile; the number of transfers collected (exclusive of involuntary transfers, necessitated by the respondent's substitu- tion of one car for another at an intermediate point on the route) ; and the number of passengers carried free. In case the number of passengers is represented by the number of fare tickets sold, each route should be credited only with the sales of stations exclusively on that route, and sales at stations common to two or more routes stated on a separate line of the report. Number of Reven-ub Passengers other Fares I^-'^No. ^ti^i St; Five cent Three cen* Two ™e- dumber Rate Amount lto36 Ca) (b) (c) (d) (e) (f) (g) $ C. Number of Revenue Passengers Passenger Receipts Total number Total number »,„,„„ „„ Number of ^T^L !r,T' of passenger of passenger Total amount ^ri^^-fj'^ transfers Pl°y?^= =:°/l. fares fares "'■' °"'« collected free (hi ,i) (i) (k) a) $ c. Production and Consicmption of Electric Energij Show hereunder the rated capacity of each power house operated by the respondent, the amount of electric energy generated by each during the year, stating alternating and direct current separ- ately and excluding energy furnished to power plant auxiliaries ; 2452 IsVESTIGATIO^J OF PuBLIC SeeVICE COMMISSIONS the quantities of coal and other fuel consumed, total and average cost thereof and average number of pounds per kilawotthour generated. Show also the maximum peak load (with respond- ent's definition of same) upon each of the respondent's several power plants, and the kilowatt-hours genefrated for each month of the year. Show finally the disposition of the electric energy produced or bought during the year. Kilowatt-hours gene- Line No. Designation and loca- Full load capacity tion of station (k. w.) rated during year (A. C. and D. C. on separate lines) (a) (b) (o) Coal Consumed Tons of 2,000 lbs. Line No. Bituminous AniJiracite Total Lbs. per K. W. H. lto9 (d) (e) (f) 'th of (Oath to be made by the officer in charge of the accounts, records and memoranda of the reporting corporation.) State of ] CorXTT OF J makes oath and says that he is the of ; that as such officer it is his duty to have charge of the accounts, records and memoranda of the said corporation ; that under his direction the following report has been compiled from the said account, records and memoranda, which are kept in accordance with the system of accounts prescribed by the Public Service Commission for the First District; that he has carefully examined this report and declares the same to be in accord with the said accounts, records and memoranda ; and that the all Rations of fact made herein are true as he verilv believes. Final Report of Joint Legislative Committee 2479 Subscribed and sworn to before me, a in and for the State and County above named, this day of 19... (Signature of officer authorized to administer oaths) (Signed) (Address) Statistical Summary of Operations Hereunder are shown statistical items of the respondent's opera- tions, the car miles and hours being classified in accordance with Schedule C of the Uniform System of Accounts of Street and Electric Railways. The track mileage reported corresponds with the definition on folio 51 of the Annual Report, first including (line 101) and secondly excluding (line 102) trackage rights actually exercised. M^NTH OF Line No. (a) Current y.ar (b) Last year (c) Increase^(decrease in 101 Since July Ist — to 147 (d) Item (e; Current year 'f) Last year Miles of revenue track operated Miles of revenue track maintained Average maximum number of cars operated Number of regular car trips ISTumber of special car trips Car Mileage Passenger car miles • — active . Passenger car miles — idle Special passenger car miles Mail car miles Express car miles Freight car miles Mixed car miles Total revenue car miles Ifon-revenue car miles Electric locomotive miles Car seat miles — active 2480 Investigation of Public Service Commissions Month of Line No. (a) Current year (b) Last year (c) Increase (decrease in red) Since July Ist (d) Item (c) Current year (f) Last year Cae Houes Passenger car hours (active and idle) Special passenger car hours Mail car hours Express, freight and mixed car hours Total revenue car hours Passengers Number of five-cent fares ]Sr umber of * fares Number of * fares Number of * fares Number of free transfers collected Passengers carried free Eleoteic Powee A. C. kw. hrs. general f D. C. kw. hrs. general by prime movers f Fuel consumed — cwt. of coal Pounds of coal per kw. hr. of output f A. C. kw. hrs. received from other companies D. C. kw. hrs. received from other companies A. C. kw. hrs. supplied to other companies D. C. kw. hrs. supplied to other companies A. C. kw. hrs. used for non-traction purposes, lost or unac- counted for D. C. kw. hrs. used for non-traction purposes, lost or unac- counted for Total kw. hrs. applied to respondent's street railway f Total car miles operated by respondent Deduct car mileage operated on other's power Add car mileage operated on respondent's power by others Net car miles operated on respondent's power (shown on line 142) Equivalent net kw. hrs. per car mile * Enter the several rates of fare other than five cents. t Exclusive of energy furnished to power plant auxiliaries. Final Report of Joint Legislative Committee 24'81 Comparative Income Statements Hereunder are stated particulars of the income account of the respondent as shown by its accounts, classified in accordance with the definitions in the uniform system of accounts for street and electric railways. Corrections of figures of previous months ab; sorbed in the cumulative figures of column (g) are special at the bottom of the page. Month of Current Year Line No. Amount st. ry. oper. Per car mile Last year ^Jj!,"^*?^ *fc, revenue crease m rea; 201 to 235 (aj (b) (c) (d) (.e) Item (f) Operating Income Passenger revenue Freight revenue Mail revenue Express revenue Other car revenue Total transportation revenue Advertising and other privileges Rent of land, buildings, etc. Rent of equipment Rent of tracks and terminals Sale of power Joint electric power revenue Miscellaneous revenue Total street railway operating revenue Maintenance of way and structure Maintenance of equipment Horse power — revenue car service Operation of power plant Operation of cars Injuries to persons and property Traffic expenses General and miscellaneous expenses Total street railway operating expenses Taxes assignable to street railway operations 2482 iNTESTIGATIOIf OF PuBLIC SeEVICE COMMISSIONS Month op Current Year Per cent of . , Line No. Amount st. ry. oper. Per car mile Laat year Increase (de- revenue crease m red (a) (b) (c) (d) (e) (Item) f Income from street railway operations Income from outside operations iN^ on-operating income Gross income applicable to corporate and leased properties Interest deductions Rent for lease of other roads ■ Other rent deductions Other deductions from income Total income deductions N^et corporate income From the Beginning of the Fiscal Year ( Months) Current Year Line No. Amount 'E'-'=-*,f,S;.,'T. oper. P^car j^,, y,„ Increase^ (decrease (g) (h) (i) 0) W D'etail of Operating Expenses .■501 to Item 337 (a) I. Maintenance of Way and Structures Superintendence of way and structures (701) Maintenance of roadway and track (704-712) Cleaning and sanding track (713) Removal of snow, ice and sand (714) Other maintenance of way (716-722) Maintenance of electric line Repairs of buildings — power plant Repairs of other buildings and structures Other operations — Dr. (726) Joint way and structures — Dr. (727) Other operations — Cr. (728) Joint way and structures — Cr. (729) Depreciation of way and structures (730) Total maintenance of way and structures Same per mile of track (line 102) Final Kepoet of Joint Legislative Committee 2483 Item (a) //. Maintenance of Equipment Superintendence of equipment (741) Repairs of power equipment (508-513—528) Repairs of cars and locomoti-ves (744-Y47) Repairs of car and locomotive electric equipment Miscellaneous equipment expenses (752-755) Other operations ^ — Dr. (756) Maintaining joint equipment — Dr. (757) Other operations — Cr. (758) Maintaining joint equipment — Cr. (759) Depreciation of equipment (760) Total maintenance of equipment ///. Horsepower — Revenue Car Service (781—785) IV. Operation of Electric Power Plant Power plant la'bor (501) Fuel for power (502) Other power plant supplies and expenses (503-5) Total — generating power plant Sub-station labor (525) Sub-station supplies and expenses (526) Total (lines 331-336) carried forward Fbom Beginning of Fiscal Year Amoiuit in current month Amount Per car mile (b) (c) (d) |) c $ c (cents) Item Operation of power plant, brought forward Power purchased (786) Jointly produced power — Dr. (787) Power exchanged ■ — balance (788) Other operations — Dr. (789) Other operations — Cr. (790) Jointly produced power — Cr. (791) Total operations of power plant 2484 Investigation of Public Seevicb Commissions Item (e) V. Operation of Cars Superintendence of transportation (780) Conductors, motormen and other trainmen (80i2— 3) Miscellaneous transportation expenses (805—815) Joint operation of cars — Dr. (816) Joint operation of cars — Cr. (817) Total operation of cars Same per car hour (line 123) VI. Injuries to Persons and Property Accidents and damages — actual (84:7a) Law expenses in connection with damages — actual (847b) Injuries to persons and property — reserved Total injuries to persons and property VII. Traffic Expenses (770) VIII. General and Miscellaneous Administration (833-836) Insurance (837) Relief department and pensions (839) Miscellaneous general expenses (841) General stationery and printing (848) Store and stable expenses (850-1) General amortization (842) Undistributed adjustments — balance (852) Other operations — Dr. (843) Joint general expense — Dr. (844) Other operations — Cr. (845) Joint general expenses — Cr. (846) Total general and miscellaneous Total operating expenses From Beginning of Fiscal Year Amount in current month Araoimt Per car mile (f) (g) (h) Final Report of Joint Legislative Committee 2485 Cae Lines and Routes Hereunder are stated the particulars called for by the headings concerning the several car lines and routes operated by the respond- ent for any part of the month. The designations of the routes are identical with those described in the Tariff Schedule filed by the respondent with the Public Service Commission, and separate report is made of recognized branch or short routes, wherever cars are switched back. The passenger car miles, seat miles and car hours are stated in accordance with the definitions contained in Schedule C of the Uniform System of Accounts for Street and Electric Railways. In case the number of passengers is repre- sented by the number of fare tickets sold, each route is credited with the passengers or sales at stations exclusively on that route and sales at stations common to two or more routes are stated on a separate line of the report. or Car Freqdenct Number of cars Headway Line No. Line route* Length Midday P. M. rush Midday P. M. rush 101 to 425 fa) (b) (c) (d) (e) (Active) Passenqee Car Miles (f) Number (round) car trips NiiinhPT Increase or de- Car seat miles creaset (active) Passenger car hours (g) (h) (i) (j) (k) Totals^ Line No. 401 to 425 NuMBEH OF Fare Passbngebs Other Than 5c. Five cents CD Number fm) Rate (n) Amount of fares. Increase or de- creas3 (q) Per Car Mile a Yeah Ago This Month (r) (s) Total (o) Transfers collected § ft) Total (p) Free passengers (u) * If any route was initiated or discontinued within the month give par- ticulars hereunder, t i. c, for this month over corresponding month a year ago. JAfter deducting miles for duplicated mileage (track for two or more routes). § Exclusive of involuntary transfers necessitated by the respondent's substi- tution of one car for another at an intermediate point of the route. 2486 Investigation of Public Service Commissions EXHIBIT NO. 25 THIRD AVENUE RAILWAY COMPANY REPOKT OF PRESIDENT FOR YEAR ENDED DECEMBER 31, 1912 DATED JANUARY i, 1913 THIKD AVENUE EAILWAY COMPANY, 130th Street and Thied Avenue, New Yoek New Yoek, January 1, 1913. To the Board of Directors of the Third Avenue Railway Company: The first calendar year of the Third Avenue Pailway Company ended on the 31st of December, 1912, and herewith is submitted a report of its position and operation during that year. The receivership of the Union Road was wound up on May 1, 1912, and that of the Forty-second Street Eoad on March 1, 1912, and the possession of the Yonkers and Westchester Railways was not obtained from the State receivers until July 13, 1912. The receivership of the Dry Dock Road has not yet been completed, but it is possible to present a statement of the operations of the entire system for the past twelve months. The Third Avenue Railway system consists of the following corporations : Third Avenue Railway Company; The Forty-second Street, Manhattanville & St. Nicholas Avenue Railway Company; The Dry Dock, East Broadway & Battery Railroad Company; Kingsbridge Railway Company ; Union Railway Company of New York City ; Third Avenue Bridge Company; Final Report of Joint Legislative Comaiittee 2-iS7 Xew York City Interborough Railway Company ; The Southern Boulevard Railroad Company ; jSTew York, Westchester i.^: Connecticut Traction Cqmpany; The Yonkers Railroad Company; Westchester Electric Railroad Company; The Bronx Traction Company. The Kingshridge Railway is operated by the Third Avenue Railway Company, and it is proposed to consolidate them. The Third Avenue Bridge Company is operated by the Forty-second Street Company. The Southern Boulevard and The Bronx Trac- tion Companies are operated by the Union Railway Company, and these should also be consolidated. The iSTew York, Westchester it Connecticut Traction Company is operated by the Westchester Electric Railroad Company. These companies own large amounts of real estate, a list of which is appended hereto, marked "A '", with the assessed value of each parcel, and they own all together 1,502 passenger cai-s, most of which are of the P. A. Y. E. type. The tracks ovmed by the companies are as follows : Miles Third Avenue Railway Company 35.47 Forty-second St, M. & S. X. Ave. Ry. Co 21 . 00 Dry Dock, East Broadway lV: Battery R. R. Co 16 . 02 2Sth and 29th Streets 4.15 Union Railway Company 91 . 77 Bronx Traction Company 21. 6S Xew York City Interborough Ry. Co 35 . 61 Southern Boulevard R. R. Co 9.02 Westchester Electric R. R. Co 40 . 63 Yonkers Railroad Company 38 . 65 Xew York, Westchester & Conn. Tract. Co 3 . 24 Total 317 . 24 This includes 13.31 miles of track which have been con- structed this year, making a total of 29.43 miles added to the sys- tem during the receiverships. During the year a contract for the purchase of the New York 2488 Investigation of Public Service Commissions City Interborough Eoad was approved by the Third Avenue Com- pany and a note for $1,350,000 was given to the Central Trust Company for the money necessary to purchase the securities offered for sale and to partially complete the road it was entitled to build under its franchises. Since that time the Third Avenue has pur- chased additional securities of this road at a cost of $229,375, for cash. The purchases of these securities, which include all the bonds and about four-fifths of the stock, have been approved by the Public Service Commission. For the past two or three years, I, as receiver of the Third Avenue Eoad, have been operating the 28th and 29th Streets Cross- town Road (since reorganized as the Mid-Crosstown Railway Com- pany, Inc. ) , and I proposed to purchase that property at a cost of $500,000. That proposition was not approved by the Public Serv- ice Commission, and I am bound to say that the receipts of the line since I took it have been disappointing, and that the Public Service Commission was justified in refusing to allow the pur- chase to be completed. Since the decision by the Commission another offer has been made to purchase the property, free of debt, for $250,000. Maintenance and Depeeciation The endeavor of the Company is to maintain the whole of this property in the highest state of efficiency. The condition of the buildings is shown by the fact that the insurance rates are less than one-half what they formerly were. The cars are cleaned and carefully inspected every day, washed once a week with a carbolic solution and at the end of every 10,000 miles taken into the shops, the motors taken off and everything thoroughly over- hauled, and whenever anything is found necessary to be done, it is done forthwith. The rails have not been replaced to the extent originally in- tended. It has been found that the surface of the rails laid within a year or two have become corrugated after very short use, which creates an odious noise much complained of by the public, and for which our only present remedy is to plane the surface of the rails. Similar conditions are apparently universal and conventions of engineers in Germany, Belgium and in this country have led to Final Eepoet of Joint Legislative Committee 2489 wide discussions and the greatest possible diversity of views among engineers and manufacturers as to the cause of this defect. One of the experts of the Public Service Commission once expressed to me the view " that there seemed to be a kind of a disease in the metal of which the rails were made." While that is neither scien- tific nor an explanation, it is a reason why as few new rails as possible should be laid until after the secret of the " disease " has been discovered. The amount of depreciation, of course, depends on the matter of maintenance, and exactly what provisions should be made for depreciation or replacement must be decided arbitrarily. I have accordingly set aside each month a certain sum, which varied as additional roads were taken into the system, but in this first year the amount so set aside for depreciation is $400,000, which has been deposited with the Central Trust Company at interest. As there is no likelihood that it will be necessary to use any portion of that depreciation fund immediately, I have invested the major part of it for the time being in the 4 per cent, refunding bonds of the Third Avenue Railway Company, of which $500,000 are to be purchased, the interest upon which will be added to the fund. These two subjects of maintenance and depreciation, together with " amorti- zation," have worried the Public Service Commission a good deal during the past year, and have led them to write some odd letters in reference to the " book entries " about them, and last February the Commission made a foolish and illegal order, since partially rescinded, which this company refused to accept, and a copy of the correspondence in respect thereto is hereto annexed and marked "B". Benefit Association: The Company assumed the obligations in respect to the main- tenance of this association, which was established during the re^ ceivership. This association, in brief, provides for a subscription by the employees of fifty cents a month, and as over 75 per cent, of the men joined, for every dollar contributed by the men, the com- panies have contributed another dollar. Several club rooms have been established for the use of the members and I believe the association has been of great benefit to the men and has tended to 2490 Investigation of Public Service Commissions make their employment satisfactory. Since the association was founded four years ago there have been contributed by the mem- bers $48,475.50 and by the companies $48,475.50 and there have been 1,400 cases of relief where the employee received $1.50 per day during his illness, 33 cases of death and 6,000 cases of free medical advice, and the association has now accumulated $50,000 which has been invested in ISTew York city 41/2 per cent, stock. Power Contract: After the purchase of the Metropolitan Street Eailway by the Tnterborough interests, it was apparently necessary to make «ome change in the conditions with respect to the supply of power, be- cause before that purchase the New York City Eailway and the Third Avenue Railway were interdependent in respect to power, and after that purchase had been made the Third Avenue was no longer necessary to the other company, but was itself dependent upon the New York City Company for a part of its power. To meet these changed conditions a contract has been made with the New York Edison Company by the terms of which the Third Avenue power house is turned over to the Edison Company, the Third Avenue obtains the use of the Edison substations and be- comes completely independent. By the operation of this contract, it is expected that we shall save upwards of $50,000 a year. FiTMnces: I add hereto a balance sheet as of the 31st of December, 1912, marked " C ", and a statement of the earnings for the year ended December 31, 1912, marked "D ", showing the net earnings for the year to be $1,318,909.77, after paying interest upon all the bonds of the subsidiary companies, and upon the 4 per cent, re- funding bonds and setting aside the depreciation fund. Ordinar- ily this would have been more than sufficient to pay the interest upon the 5 per cent, adjustment bonds, but this has not been a normal year. Large expenditures were necessary for the com- pletion of the reorganization, and I append hereto a list of the disbursements, marked " E ", which have been made under the authority of the Board, over and above the interest upon the under- Final Repoet of Joint Legislative Committee 2491 lying securities, operating expenses, taxes, depreciation and other expenses of an extraordinary nature. These have absorhed a large part of the net earnings shown in " D ". The cash on hand amounts to $2,556,756.52, of which $1,131,- 104 are allocated to tracks under the Eeorganization Plan; $35,- 329, together with 4.53 4 per cent, refunding bonds of the Third Avenue Railway Company are in the depreciation fund ; $1,024,- 270 are in the interest and tax account hereafter mentioned, and $385,719, are in the current account. The unpaid bills for paving reduce the amount of free cash on hand, but there remains sufficient to pay an installment of interest on the Adjustment Bonds on April 1st, the next interest date, amounting to 1^/4 P^r cent., which I recommend to be paid on that day. Taxes : The Third Avenue system pays the following taxes : The State tax of 1 per cent, on gross earnings; city and town taxes of from 2 per cent, to 8 per cent, on gross earnings; city of l^ew York car license fees of from $20 to $50 per car per annum paid by companies exempt from paying a percentage on gross earnings; 5 per cent, on the net earnings of the G-rand street extension ; real estate tax; personal tax; rentals for use of all bridges and ap- proaches thereto; corporation excise taxes payable to the United States Government, and on top of these the franchise tax. The administration of the law in respect to the franchise tax is nothing less than contemptible. I append hereto a communication ad- dressed to the State Board of Tax Commissioners, marked " F ," which states the situation in full. Pending the decision of the litigation in respect to the fran- chise taxes for the last three years, I have paid to the Comptroller of the City of ISTew York such amounts as we considered should be paid under any circumstances, and have also paid in to the account entitled " Interest and Taxes Account," the remainder of the amount claimed by the State authorities. This amounts to upwards of $275,000, and is deposited with the Central Trust Company, at interest. 2492 Investigation of Public Seevice Commissions Bridges: The Third Avenue Railway Company obtained a franchise for the Third Avenue Bridge Company across the Queensboro Bridge, on which during the receivership a considerable sum was expended and the Public Service Commission are expected shortly to authorize the issue of $20,000 stock representing a part of that expenditure- In conjunction with the JSTew York Railways Com- pany, the Brooklyn Rapid Transit and the Coney Island and Brooklyn Railroad Company, the Third Avenue Railway Com- pany has formed a company known as the Brooklyn and ISTorth River Railroad Company to operate over the Manhattan Bridge, which it is expected will earn a substantial revenue. Budget: There are large expenditures still necessary to be made upon the property, and for the purpose of informing ourselves and the security holders as fully as possible about them, I have had a care- ful budget prepared of all the expenditures which can be fore- seen during the next one or two years, a copy of which is ap- pended hereto marked " G." A considerable part of the expendi- ture upon the track and paving would be charged, under any circumstances, to operating expenses, and a large part of the balance together with nearly the whole of the expenditures called for by the other departments are properly chargeable to capital. Such expenditures could probably be met by the issue of addi- tional 4 per cent, refunding bonds. The company has, however, sufficient funds on hand to meet all these expenditures for the current year as well as to pay $350,000' on account of the pur- chase of the New York City Interborough and upwards of $100,000 which will be necessary to expend upon the Mid-Cross- town road, in case the owners of that property should conclude to accept our offer to purchase it. It may probably be desirable to apply to the Public Service Commission for consent to issue 4 per cent, refunding bonds for part of these capital expenditures. It will not be necessary to market such bonds, and it should be our policy, so far as possible, not to increase our fixed charges. Finally, I think it may be said, notwithstanding the large ex- penditures shown in this budget, and which will probably here^ Final Report of Joint Legislative Committee 2493 after be shown in similar budgets, that the outlook for the owners of Third Avenue securities is encouraging. The transfer difficulties which threatened our prosperity some months ago have been disposed of, I think, permanently, and under the circumstances satisfactorily, by means of a contract between the J^ew York Railways Company, the 59th Street Line and the Third Avenue Company, which has been accepted by the Public Service Commission, and by the public generally. All of the companies show a steady increase in gross receipts, except the Dry Dock Road, which is affected by the partial sus- pension of the Desbrosses Street Ferry, and the Westchester Road, which is affected by the beginning of operations on the Xew York, Westchester and Boston Railway. In this latter case I think the decrease is only temporary, as more people will be brought into the territory. The increased gross receipts for the year including these roads are in round numbers $520,000', and while a part of this is due to our having assumed the possession of the subsidiary companies and of the New York City Interborough Company, the increase upon the Union and the three Manhattan companies alone, of which you have heretofore been advised during the past twelve months, is $368,000^ an amount far in excess of the estimates originally made. (Signed) F. W. WHITRIDGE, President. 2494 Investigation of Public Service Commissions "A" Assessed Valuations of the Eeal Estate Holdings of thi Third Avenue Railway System Third Avenue Railway Company: On Bayard St. between Bowery & Elizabeth Sts, 3rd & 2nd. Aves, between 66th & 65th Sts. 3rd. Ave. to Lexington Ave. & 130th St. to 129th St. except S. E. Corner of Block. X. E. Corner of 129ith St. & 3rd Ave. Amsterdam Ave., between 128th & 129th Sts. 129th St., through to 130th St., between Amsterdam Avenue & Convent Avenue. S. W. Corner of Amsterdam Ave. & 186th St. On 216th St., between 9th Ave. & Harlem River. On 216th St. and bordering on Harlem River. On 217th St. between 9th & 10th Aves. 42nd St., Man. & St. Nich. Ave. Ry. Co.: No. 118-120 E. 42nd. St., 125 ft. west of Lexington Ave. On Manhattan St., through to 130th St. between Riverside Drive & 129th St. 1996 18 On 129th St., through to 130th St., between Broadway and Riverside Drive. Dry Dock, E. B'way & Battery R. R. Co.: On Avenue " B " between 14th & 15th Sts. On Corlears St., between Cherry & Monroe Streets, part bor- dering on Cherry Street. On Grand St. between Corlears & Jackson St. On Grand St., corner of Monroe St. On Grand St., between Monroe & East St. On Monroe & Corlears Sts., part running through to Cherry Street. On Monroe Street, between Jackson & Corlears Sts. On Monroe St., corner of Corlears St. Union Railway Company of New York City: Boston Road, between 175th & 176th Sts. to Crotona Parkway. Boston Road to Southern Boulevard on 175th St. E. Side Harlem River to Exterior St., between 192nd & 191st Sts. Between West Farms Road & Bronx River on 172nd St. On 138th St., through to 137th St. between Willow and Wal- nut Aves. On 3rd Ave., between Southern Boulevard and 134th St. On Southern Boulevard between 3rd & Lincoln Aves. Block Lot No. No. 202 32 1420 1 1778 20 1778 33, 34, 34i ,35 1968 1 1969 5 2156 48 2197 1 2196 18 2213 6 1296 61 1996 14 972 16 264 39 265 37 264 11 264 14 263 16 265 18 265 19 2984 46 2984 10 3244 62 3018 24 2589 16 2317 2 2317 23 EiNAL Repoet of Joint Legislative Committee 2495 Thied Avenue Railway System Block Lot No. No. Union Kailway Company of New York City: 2392 42 At intersection of Webster, Park & Lincoln Aves., Wolf's Lane & Boston Post Boad. Westchester Electric E. R. Company: 310 -| 401 }. South 5th Ave., Mount Vernon. 311cJ 546 North 3rd Ave., Mt. Vernon. South Pulton & South Columbus Avcs., ilount Vernon. 1269 Washington & Webster Aves., New Eochelle. Yonkers Eailroad Company: Buena Vista Ave. & Main St. Yonkers. Bronx Eiver Eoad. Assetse 1 Valuation AsdPf-s:d Valuation Total Assessed hi L n 1 i-f I . provcments Valuation $220,000 00 $185,000 00 $405,000 00 750,000 00 600,000 00 1,350,000 00 350,000 00 400,000 00 750,000 00 70,000 00 45,000 00 115,000 00 190,000 00 185,000 00 375,000 00 95,000 00 5,000 00 100,000 00 67,500 00 2,000 00 69,500 00 250,000 00 1,675,000 00 1,925,000 00 8,500 00 8,500 00 2213 6 260,000 00 120,000 00 380,000 00 92 130, 131, 138, 146 Block Lot No. No. 202 32 1420 1 1778 20 1778 33, 34 344, 35 1968 1 1969 5 2156 48 2197 1 2196 18 $2,261,000 00 $3,217,000 00 $5,478,000 00 1296 61 $140,000 00 $15,000 00 $155,000 00 1996 14 90,000 00 100,000 00 190,000 00 1996 18 38,000 00 27,000 00 65,000 00 $268,000 OO $142,000 00 $410,000 00 972 16 $330,000 00 $70,000 00 $400,000 00 264 39 35,000 00 30,000 00 65,000 00 265 37 15,000 00 1,000 00 16,000 00 264 11 15,000 00 5,000 00 20,000 00 264 14 18,000 00 10,000 00 28,000 00 263 16 125,000 00 100,000 00 225,000 00 265 18 12,000 00 1,000 00 13,000 00 265 19 55,000 00 10,000 00 65,000 00 $605,000 00 $227,000 00 $832,000 00 2496 Investigation of Public Service Commissions Block No. Lot No. 2984 46 2984 10 3244 62 3018 24 2589 16 2317 2 , 2317 23 2392 42 , 1269 310 1 401 \. 311cJ 546 \ 92 130, 138, 131, 146 Total . Assessed Valuation of Land $85,00'0 00 67,000 00 3,000 00 60,000 00 38,200 00 2,500 00 20,000 00 13,000 00 20,000 00 $5,325 00 1,500 00* 9,500 00 3,900 00 $20,225 00 $39,000 00 12,000 00 $51, 000 00 Assessed Valuation of Improvements $50,000 00 205,000 00 70,000 00 23,300 00 500 00 5,000 00 230,000 00 $22,750 00 50,000 00 $72,750 00 $235,000 00 50,000 00 $285, 000 00 3,513,925 00 $4,527,550 00 Total Assessed Valuation $135,000 00 372,000 00 3,000 00 130,000 00 61,500 00 3,000 00 25,000 00 243,000 00 20,000 00 $308,700 00 $583,800 00 $892,500 00 $5,325 00 24,250 00 59,500 00 3,900 00 $92,975 00 $274,000 00 62,000 00 $336, 000 00 8,041,475 00 "B" ISTew Yobk, December 14, 1912. Public Service Commission for the First District^ 154 Nassau Street, New YorTc City: Deae Sies. — I have your order in Case 1181 entitled, " Order changing Order filed February 3rd, 1912, as to amortization and depreciation funds." The position of this company in respect to the order of February 3, 1912, and the whole of it, is fully set forth in its letter to the Commission dated February 6th, and my personal letter to the members of the Commission dated Febru- * This property is not owned by the Westchester Electric R. E. Co., but is occupied under a long term lease from the Receiver of the New York City Railway Co. Final Kepoet of Joint Legislative Committee 249Y ary 7, 1912, and the order now served upon us is not therefore accepted and will not be obeyed unless you choose to accept the practice of this company, settled before you made any order in the premises, as a compliance therewith. I venture, however, to congratulate the Commission upon having waked to the fact that authority to prescribe a uniform system of accounts does not give to the Commission authority to make any appropriation of the company's money for amortization or for any other purpose which the Commission, in its wisdom, may imagine to be desirable. Accompanying this order the Commission has rendered an opinion — why will you write these opinions? Let me again com mend to you the advice of Lord Mansfield to the colonial judges on that subject — in which you reiterate the views ex- pressed at the time of your original order, that the bonds of these companies were issued at a discount and in excess of the value of the property. That opinion, I suppose, applies to the Third Avenue as well as to the New York City railroad, and in it you say, that after full consideration of the entire matter — why did you not give that consideration to the matter before you made any order at all? — you now find that you are "without authority" to order the amortization desired. The securities of this company were issued under the laws of the iState after a full hearing in the highest courts of every ques- tion you have raised about them. The directors of the Third Avenue corporation are of the very highest character and standing. They have not issued securities at a discount, they have not issued securities in excess of value, and the reiteration by you that such was the case is, to say the very least, entirely incorrect. It is a slander upon the securities of this company. I have already had occasion to admonish your chairman that observations of this kind could not be permitted to go unchal- lenged, and it is my duty, as the president of the Third Avenue company, to say to you that these statements are not true and that you have no business to make them. If you insist on clinging to views which are on the verge of contempt, I consider that until you get some court to pay some attention to them, it is your duty to keep those views to yourselves. The reiteration of them at this 79 2498 Investigation of Public Service Commissions time, for no apparent purpose, subjects you to the suspicion thai they are merely spiteful, and your notion that an order for amor- tization is justified because you made it, which I take to be the meaning of your expression "that notwithstanding a finding by the Commission that the face of the securities exceeds the value of the property by as much as $16,500,000 and the securities are, therefore, issued at a discount, etc.," is as pertinent as it would be for you to quote a finding of the Commission that the moon was made of green cheese, as proof of the desirability of an order compelling people to stop eating green cheese, lest the supply of moonshine should be exhausted. As you know, I have always shunned controversy with you un- less you forced it upon me, and I have tried to work with you in the public service. You have, therefore, nothing to fear from me except a correction of inaccuracies, but you must be made to understand the fact — of which you are apparently not aware — that people who own securities are extremely sensitive to things which are said about them, and it is quite possible that if you persist in your attacks on this corporation and its securities, you will put yourselves in some peril. In that connection I call your attention to section 926 of the New York Criminal Code, which provides " that a person who, with intent to affect the market price of public funds of this State * * * or of the stock, bonds or other evidences of debt of corporation or association * * * knowingly circulates any false rumor or intelligence, is punishable by a fine of not more than $5,000 or imprisonment of not more than three years, or both." I am. Yours sincerely, (Signed) F. W. WHITRIDGE. IN'ew Yoek, February 6, 1912. Mr. Teavis H. Whitney, Secretary, Public Service Commission, 154 Nassau Street, City: My Deajb Sie. — I have yours of the 3d instant, enclosing to me a copy of an order in Case 1181, directing this company " for the purpose of making up the difference between the value of the property mortgaged and the face value of the bonds which Final Eepoet of Joint Legislative Committee 2499 have been authorized by the Commission " to establish and main- tain an amortization fund by deducting the sum of $180,000 a year plus 4 per cent, on the previous deductions from the gross earnings of the company, and further directing that the company should set aside for maintenance, depreciation and renewals dur- ing each and every fiscal year a sum equaling 20 per cent, of the gross operating revenues for that year. This order, I beg to inform you, is without warrant of law, is apparently based upon a misstatement of fact and a misconception of the evidence before you in respect to valuations and other things, is illegal both in form and substance, and will not be obeyed by this company. I hope on reflection that the Commis- sion will rescind this order, but if they do not, and desire to test its validity, I. should be obliged if they would instruct their counsel to confer with our counsel, Messrs. Evarts, Choate & Sherman, as the most expeditious and economical method of making that test. If they do not desire to have the validity of the order tested, we must ignore it as a nullity and should the Commission hereafter sue for extravagant penalties, it will be subjected to renewed humiliation. If the Commission desires to discuss the contents or the purpose of the order some of our directors will be very happy to meet them for that purpose at any time which may suit your convenience. Very respectfully yours, (Signed) F. W. WHITRIDGE, President. Febeuaet Y, 1912. To the Memhers of the Public Service Commission for the First District, 154 Nassau Street ^ New York City: D'eab 'Sirs. — I have received your opinion expressing an ani- mated dissent from a recent opinion of the Court of Appeals in respect to the Third Avenue Reorganization and re^asserting your erroneous views which have been ignored or rejected by the highest' court, of this State. As you have ventured to put this dissent in the form of a separate order addressed to this company, I beg to say that I find nothing in the statute which authorizes you to order us to create any kind of a sinking fund. Yet I would be 2500 Investigation of Public Seevice Commissions willing to urge our directors to try to meet your desires, provided we could get some assurance from you that the senseless attacks which you have made upon this corporation should cease, so that the amount of about $100,000 a year which we have expended in litigation instituted by you, could be devoted to the creation of an amortization fund. I suggest to you, that in view of the fact that all such litigation has thus far proved entirely fruitless — I say entirely because you yourselves do not seem to have learned any- thing from it — it is a wrong thing to subject this company to the payment of a sum equal to the interest upon two or three million dollars a year. That is equivalent to the most iniquitous stock watering. In respect to the depreciation and maintenance, I might content myself with referring you to an extract from the last report of the Public Service Commission of the Second District appended hereto, which is sensible, but as the Commission has referred to my testimony, I have to say that at the time I testified fixing the amount tO' be set aside for depreciation at $300,000 a year, I explained the apparent discrepancy between that and my previous testimony. Moreover, I learn something almost every year. In order to prevent misunderstanding, I recapitulate the position: When the reorganization of this company is completed, it will have on hand in cash about two millions of dollars, one million of which is allocated to the repairs of tracks as the same may be necessary, $5O0',0OO is allocated to the cost of paving and adjusting the railways in the Bronx to the changes of grade as the same are made by the city, and about $400,000 is not allocated to any specific purpose. There is no such thing as a rule of depreciation, such as you wish to promulgate. Depreciation depends upon the manner in which a property, is maintained. If a perfect maintenance can be conceived of, there would be no depreciation. Considering this particular property, my judgment is that maintaining it as it is now being maintained, $300,000 a year for depreciation is suf- ficient, and the money set aside for that purpose will probably accumulate for two or three years. Similarly there is no general rule for maintenance. We spend whatever has to be spent for maintaining the property, and as a Final Report of Joint Legislative Committee 2501 matter of fact the ©xpendituxes for maintenance for the last six months together with the proposed appropriation for depreciation amounts to about 22 per cent, of our gross earnings. I am thus explicit because my conclusions have been reached conscientiously, and while I shall always welcome any advice from you or anybody else which is founded upon anything which exists, I give yo unotice no wthat I will not tolerate any interference by you outside of the law. At least, not until such time as you waive suggestion to the Legislature that the right of appeal from your decisions should be abolished, has been adopted and affirmed as constitutional. I greatly dislike this sort of controversy, especially with you who have such large powers over me, but I reiterate that you force it upon me. Whenever you are disposed to change your attitude, I shall be delighted to renew some of my rejected invitations — " scorned " I believe was your last word about them — and we can discuss things which concern the public interest as I have aways though it was our duty to do. Yours very sincerely, (Signed) F. W. WHITEIDG-E. (Extract from report of Public Service Commission of the Second District. ) Kates of depreciation must necessarily be based largely upon estimates, and the estimates in turn should be grounded upon past experience and the business policy of the corporation. Whether it is better to drive a machine to its fullest capacity and discard it when it reaches a certain stage of deterioration, or to prolong its life by prompt repairs and good care, is a matter of policy. The character and demand of the service to which a piece of property is devoted affect its life and vary with individual needs, climate, etc., but are factors that must be taken into account in arriving at a rate that is to be approximately correct. Manifestly the determination of the rates of depreciation can best be done by those who have the shaping of the policy and a knowledge of the experience and purpose of the corporation; and for the present, responsibility for making such rates has been left to the corpora- tions themselves. 2502 Investigation of Public Seeviob Commissions "C" Thied AvEisrui! Eailway Company Balance Sheet — December 31, 1912 Assets Floating capital: Cash $1,771,628 65 Deposit for depreciation, renew- als and contingencies: Cash $38,403 52 Securities 370,576 48 408,980 00 Deposit to pay coupon interest 508,816 62 Other deposits 500 00 Notes of controlled companies 17,876,227 91 Accounts receivable: controlled companies $2,180,486 27 Others 142,969 25 2,323,455 52 Interest receivable: Notes of controlled com- panies $2,618,613 73 Securities owned 362,533 99 2,981,147 72 Material and supplies 314,310 11 Investments : 'Securities of controlled companies 12,769,541 33 Keceiver's certificate of Dry Dock, E. B'way and Battery E. E. Co 100,000 00 New York City Gold Exempt Corporate Stock 2,500 00 Fixed capital : Eoad, equipment, buildings, etc 33,796,008 06 Prepayments : Insurance and rents 57,173 49 Suspense : Capital items awaiting distribution 234,275 83 $73,144,565 14 Final Eepoet of Joint Legislative Committee 2503 Liabilities Unfunded debt: Taxes accrued $275,360 85 Deposits by controlled companies for interest and taxes 339,939 26 l^otes payable 1,350,000 00 Accounts payable 133,622 68 Interest accrued: On funded debt $508,225 00 On notes payable 22,050 00 530,275 00 Due employees: For wages $13,756 20 For deposits for badges, etc 2,835 48 16,591 68 Funded debt: First mortgage, 5 per cent, gold bonds- — Third Avei- nue E. E. Co $5,000,000 00 First refunding mortgage 50-year 4 per cent, gold bonds 15,790,000 00 Adjustment mortgage, 50- year, 5 per cent, income gold bonds 22,536,000 00 43,326,000 00 Eeserves : For adjustment of stocks and obligations of con- trolled companies and other capital adjust- ments $9,000,000 00 For depreciation, renewals and contingencies 156,960 00 For unpresented claims against receivers 92,141 78 3504 Investigation of Public Service Commissions For water rates — power station $31 68 Reserve for loss or gain on operation of controlled companies 12,174 Y4 $8,261,308 20 Capital stock: Common stock, issued and outstanding. . . . 16,590,000 00 Corporate surplus: N'et income January 1, 1912, to December 31, 1912 $1,318,909 17 Add adjustments affecting operations prior to Janu- ary 1, 1912 2,557 70 ■ 1,321,467 47 $73,144,565 14 "D" Consolidated Statement of Income of the Third Avenue Railway System for the Year Ending December 31, 1912 Operating Revenue Transportation $9,188,405 41 Advertising 87,399 98 Rents 152,074 51 Sale of Power 119,649 55 Total operating revenue $9,547,529 45 Operating Expenses Maintenance of way structures. $875,322 41 Maintenance of equipment. . . . 617,493 76 Power supply 745,472 01 Operation of cars 2,459,815 36 TiNAL Report of Joint Legislative Committee 2505 Injuries to persons and prop- erty $472,407 09 General and miscellaneous ex- penses 678,632 61 Total operating expenses $5,849,143 24 Net operating revenue $3,698,386 21 Taxes 675,607 42 Operating income $3,022,778 79 Interest revenue 51,477 78 Gross income $3,074,256 57 Deductions Interest on first mortgage bonds $576,727 02 Interest on first refunding mort- gage bonds 631,600 00 Interest on adjustment mort- gage income bonds Interest on second mortgage in- come bonds 1,130 00 Interest on certificates of indeb- tedness Interest on receiver's certificates 18,999 52 Interest on notes payable 63,455 62 Interest, miscellaneous 1,67868 Track and terminal privileges. 13,611 58 Miscellaneous rent deductions. 18,144 38 Sinking fund accruals 80,000 00 Depreciation 400,000 00 1,755,346 80 Net income $1,318,909 77 2506 Investigation of Public Seevice Commissions 42d St., M. & St. Nioh. ave. Ry. Co. $24,334 30 Dry Dock, E. B. &B. B. R. Co. $57,247 40 16,645 73 "E" STATEMENTS OP DISBURSEMENTS (NOT INCLUDING OPERATING EXPENSES, INCOME DEDUCTIONS, OR RESERVES FOR INTEREST, TAXES AND DEPRECIATION) JX)R THE PERIOD FROM JANUARY 1, 1912, TO DECEMBER 31, 1912. Third ave. Railroad Company Construction and equipment.. $133,080 03 Organization expenses 71,330 90 Securities of controlled corpora- tions acquired 236,503 64 Advances to controlled corpora- tions 104,460 69 Securities acquired for depre- ciation fund 370,576 48 Expenses of receiverships 250,348 25 Settlement of claim of Metro- politan Street Railway Co.. 46,401 44 Purchase of claims against con- trolled corporations 785,021 75 Expenditures in connection with contract with N. Y. Edison Company 25,982 22 Prepaid insurance 88 , 750 00 Advances to Brooklyn and North River Railroad Co... 19,615 06 Advances to Brooklyn, Manhat- tan Bridge, North River Line 8,775 15 Payment of claims arising prior to receiverships Extension of first mortgage of 42d St., M. & St. N. Ave. Ry. Co Retirement of 113 second mort- gage bonds of 42nd St., etc., Ry. Co Settlement with city of New York — old paving claims . . . Total disbursements $2,140,845 60 41,278 31 60,000 00 152,512 33 $294,770 67 $57,247 40 Construction and equipment. . . Organization expenses Securities of controlled corpora- tions acquired Advances to controlled corpora- tions Union Railway Company Southern Boule- vard R. R. Co. Westchester Electric R. R. Co. $51,645 70 $19,205 42 $21,496 77 6,393 27 Final Kepoet ov Joint Legislative Committee 2507 Union Railway Company Southern Boule- vard R. R. Co. Westchester Electric R. R. Co. Securities acquired for depreci- ation fund : Expenses of receiverships $6,489 38 Settlement of claim of Metro- politan Street Railway Co . . Purchase of claims against con- trolled corporations Expenditures in connection with contract with New York Edi- son Co Prepaid insurance Advances to Brooklyn and North River R. R. C!o Advances to Brooklyn, Man- hattan Bridge, North River Line Payment of claims arising prior to receiverships 40,088 64 Extension of first mortgage of 42d St., M. & St. N. Ave. Ry. Co Retirement of 113 second mort- gage bonds of 42d St., Etc., Ey. Co Settlement with city of New York — old paving claims.. 90,000 00 Total disibursements $154,616 99 $19,205 42 $21,496 77 Construction and equipment Organization expenses Securities of controlled corporations acquired . . Advances to controlled corporations Securities acquired for depreciation fund Expenses of receiverships Settlement o'f claims of Metropolitan Street Railway Co Purchase of claims against controlled corpora- tions Expenditures in connection with contract with New York Edison Co Prepaid insurance Advances to Brooklyn and North River R. R. Co Yonkers Railroad Total Company $4,766 28 $311,776 20 71,330 90 236,503 64 110,853 96 370,576 48 273,483 36 46,401 44 785,021 75 25,982 22 88,750 00 19,615 05 2508 Investigation of Public Seevice Commissions Yonkers Railroad Total Company Advances to Brooklyn, Manhattan Bridge, North River Line $8, 775 15 Payment of claims arising prior to receiverships 81,366 95 Extension of first mortgage of 42d St., M. & St. N. Ave. %. Co 60,000 00 Retirement of 113 second mortgage bonds of 42d St., etc., Ry. Co 152,512 33 Settlement vrith city of New York — old pav- ing claims ■•■•• 50,000 00 $4,766 28 $2,692,949 43 1 'ash set aside for payment of special franchise taxes ac- crued prior to January 1, 1912 289,000 UO Total $2,981,949 43 New York, December 17, 1912 State Board oe Tax Commissioners, Albany, New York: Dear Sirs : I have this day filed with you formal complaints against the tentative assessments placed by you upon special franchises of the several surface railroad companies in Manhattan and The Bronx which are under my control. Those companies are as follows : Third Avenue Railway Company. Forty-second Street, Manhattanville & iSt. Nicholas Avenue Eailway Company. Dry Dock, East Broadway & Battery Kailroad Company. Kingsbridge Railway Company. Union Railway Company (Bronx). Union Railway Company (Manhattan). Third Avenue Bridge Company. New York City Interborough Railway Company (Bronx) . New York City Interborough Railway Company (Manhattan). Southern Boulevard Railroad Company. New York, Westchester & Connecticut Traction Company. Final Eepoet of Joimt Legislative Committee 2509 And I desire to supplement my formal complaint by this brief history of these companies' experience and to make a final appeal to you for relief from what is obviously a glaring injustice. The special franchise tax law was passed in 1899, and the first assessments were placed on these companies in the year 1900. Since that time they have, with one exception, either remained substantially stable or show slight increases — although with the electrification of the elevated roads and the operating of the sub- ways every one knows that street railroad franchises in this city are not of great value, and their value has, speaking generally, fallen since 1901. You have now announced practically the old figures as the tentative assessments for 1913. JFrom 1901 to 1909 the companies did not pay any special franchise taxes. In 1901 the companies were solvent. In 1907, together with all the other surface railroads in New York city, these companies all becam0 financially involved, and at the be- ginning of 1908 were placed in the hands of myself and others as receivers, and the receiverships continued for several years. In spite of this insolvency your predecessors in office never made any reduction in their valuations. When I took charge of these companies in 1908, I found that very little intelligent effort had been made — on behalf of the companies or the State — to settle the correct amount of the over- due taxes, although certioraris to review the assessments had been taken out each year. Accordingly I set about to see what I could do. In conjunction with the other roads, we decided to make the assessment on the Third Avenue Railroad Company for 1901 a test case and had it carried up to the Court of Appeals. The Court of Appeals cut the assessment practically in half and laid down clear rules for future assessments. With the result of that case to go by, I then set about settling all the arrears of franchise taxes, and I had lawyers and account- ants working on this matter for months. Finally a settlement (for all years up to 1910) was made which was, generally speak- ing, on the basis of this test case, and I paid up all the arrears. The companies in my charge were then reorganized, and I became the president of the reorganized companies. I decided I would not again permit any such situation to arise. I instructed 2510 INVESTIGATIO^' OF PuBLIC SeRVICE COMMISSIONS my lawyers and the people in charge of the matter to make regu- lar reports and honest reports to the Tax Commissioners from that time and keep the matter np to date. I was optimistic enough to think that, inasmuch as the legal questions had been threshed out, there never would be any difference between me and the State Board, that the corporations in my charge could pay their taxes every year just as an honest, Christian citizen would. I expected that the State Board would follow the law laid down by the Court of Appeals ; would make reasonable assessments, and that I could pay the taxes promptly without anybody's time in needless legal controversies. I regret that this fond hope of mine has not been realized, nor anywhere near realized. I found the State Board of Tax Com- missioners continued the old assessments without change, although they knew that they were not following the law laid down by the courts, but were merely guessing at their valuations. Apparently the iState Board was afraid to make the reductions. Under those circumstances I have had to continue to go to the courts. There were the usual delays and bickerings, but finally the cases as to the 1910 taxes were presented to the Supreme Court of New York county last spring, and are still awaiting decision. I need not point out to you how difiieult it was to present all the statistics involved to the court and what a load of work it involved for the justice who has to pass on them. "Within the last year there has come a change in the personnel of the State Tax Board, and with that change I took fresh hope that something would now be done. I gave instructions to my lawyers to present fully to you the facts in regard to these com- panies and to try to avoid all the trouble of litigatibn. It seemed to me that they had presented the facts to you fully and without any r^ervations, and it was therefore a good deal of a shock to me to find that the tentative assessments which your Board made for the coming year were along the same old lines. When one realizes that the companies in question are recently out of bankruptcy, and realizes that the Board has never applied any definite legal rule at all in their valuations, but have simply been guessing — and this in spite of the fact that the courts have laid down clear rules for the valuations — • I am reluctantly driven Final Eepokt of Joint Legislative Committee 2511 to the conclusion that the State Board of Tax Commissioners have in the past been doing their thinking in some vacuum where a bad argument weighs just as heavily with them as a good argument. And now it seems your honorable Board, with all this tradition of stupidity behind it, is about to follow the same course again. It is for that reason that I am making an appeal to you once more, asking you to make valuations of the special franchises of these properties in accordance with the rules laid down by the court, and I am asking that, not only so that money may be saved for the companies under my charge, but also because it seems to me highly important that when corporations are conducted hon- estly and try to do their part and make honest tax reports, they should get fair treatment from the State officials. If it be the view of the State Tax Board that it is your duty to attempt, by making over-valuations, to get as much money as possible from the cor- porations and put them to all the trouble and expense possible, then of course no argument of mine can have any effect ; but if, on the contrary, you desire to deal with the corporations of the State fairly and honestly, promptly and efficiently, so that they can know what their taxes are each year without interminable lawsuits, I beg you to read again the papers which the companies in my charge have put before you. I have so much confidence in the people of the State of New York that I think they, too, would prefer to see their tax officials make reasonable assessments on the various franchises of the public service corporations each year and have the taxes promptly paid without fuss and litigation. The courts have trouble enough without becoming tax assessors. I am not unaware of the technical difficulties of your position ; I am not unaware that the questions before you are tedious and often involved, nevertheless, to any reasonable man who has read the decisions of the Court of Appeals in these special franchise tax cases and then read over the list 'of your assessments on the special franchises of the corporations which are in my charge, for 1901 to 1913, it becomes as clear as daylight that the State Tax Commission has, in the past, made no serious attempt to administer the law in accordance with the decisions of the courts. Your assessment for this year aggregates $20,000,000, sub- stantially the same figure you fixed thirteen years ago. It was, 2512 Investigation of Public Seevice Commissions as I state, cut in half for the first ten yeare, nevertheless you have continued to make the assessment of about $20,000,000, thus presuming " to recall " the decision of the Court of Appeals and compelling me to begin a separate set of actions for each of the last three years. Is this fair from any point of view ( Especially, is it fair when you consider that all our theorists hold, under the Public Service Law, that on a reorganization of these companies, the whole $20,000,000 is lopped off from the supposed value of the properties ? I submit to you that you are doing me a grave injustice and I ask for relief. I am, Yours very respectfully, (Signed) F. W. WHITEIDGE. " G " Estimate of Requirements foe 1913 Third Avenue BaiJwaii Gompamj J'xpen^ For air brake equipments For 100 pairs of tracks for cars 201 to 300 with material required for installation For sprinkler system, Kingsbridge car house. . . For 129th St. building extension — balance due . For rotary converters installed and to be installed in substations of New York Edison Company, together with necessary switchboard appliances Union BaUway Company For air brake equipments For 350 fare boxes and frames For rebuilding 220 G. E. 57 motors For two emergency wagons For renewing 35 miles of trolley wire and reinsu- lating feeder cables, and for one high-tension cable $43,025 60 Final Eepoet of Joint Legislative Committee 2513 Westchester Electric B. B. Co. For renewing trolley wires, cables, etc Auto repair wagon and new office building New York City Interborough Bailway Co. For removing 10 miles of trolley wire and for additional poles, etc $8,250 00 For air brake equipments Total $115,888 60 For maintenance of way department as per annexed schedioles: Third Avenue Eailway Company $54,040 00 42d St. Man. & St. K Ave. Ry. Co 32,300 00 Union Railway Company of New York City. . . 312,650 00 Southern Boulevard Railroad Company 65,940 00 Bronx Traction Company ISTew York City Interborough Railway Company. 2,500 00 Westchester Electric R. R. Co 102,100 00 Yonkers R. R. Co 30,970 00 Total track construction and maintenance. $600,500 00 Grand total $716,388 60 Third Avenue Bailway Company Capital For air brake equipments $87,935 00 For 100 pairs of trucks for cars 201 to 300 with material required for installation 55,600 00 For sprinkler system, Kingsbridge car house. . . . 44,500 00 For 129th St. building extension, balance due . . 6,033 00 For rotary converters installed and to be installed in substations of New York Edison Company, together with necessary switchboard appliances 38,320 00 2514 IxTESTiGATiox OF Pfblio Sekvice Commissioks Union Railway Company Capital For air brake equipments $30,475 00 For 350 fare boxes and frames 23,500 00 For rebuilding 220 G. E. 57 motors 44,000 00 For two emergency wagons 7,200 00 For renewing 35 miles of trolley wire and reinsu- lating feeder cables, and for one bigh-teusion cable Westcliesier Electric B. B. Co. For renewing trolley wires, cables, etc., auto re- pair wagon and new office building $55,074 00 New York City Interhorough Bailway Co. For renewing 10 miles of trolley wire and for additional poles, etc For air brake equipments $10,600 00 Total $338,624 25 For maintenance of way departments as per annexed schedules: Third Avenue Railway Company 42d St., Man. & St. IST. Ave. Ey. Co Union Railway Company of New York City $160,260 00 Southern Boulevard Railroad Company 38,610 00 Bronx Traction Company 23,550 00 New York City Interhorough Railway Company. 89,540 00 Westchester Electric R. R. Co 122,040 00 Yonkers R. R. Co 107,640 00 Total track construction and maintenance. . $541,640 00 Grand total $880,264 25 Final Report of Joint Legislative Committee 2515 Third Avenue Railway Company Total For air brake equipments For 100 pairs of trucks for cars 201 to 300 with material required for installation For sprinkler system, Kingsbridge car bouse. . . For 129tb St. building extension — balance due . For rotary converters installed and to be installed in substations of New York Edison company, together with necessary switchboard appliances. $232,388 00 Union Railway Company For air brake equipments For 350 fare boxes and frames For rebuilding 220 G. E. 57 Motors For two emergency wagons For renewing 35 miles of trolley wires and rein- sulating feeder cables, and for one high-tension cable 148,200 60 i ' ;,' ■ r^, ;}'^. Westchester Electric R. R. Co. For renewing trolley wires, cables, etc., auto re- pair wagon and new office building 55,0Y4 25 New York City Interborough Railway Co. For renewing 10 miles of trolley wire and for additional poles, etc, For air brake equipments 18,850 00 Total $454,512 85 For maintenance of way departments as per annexed schedules: Third Avenue Railway Company $54,040 00 42d St., Man. & St. N. Ave. Ry. Co 32,300 00 Union Railway Company of New York City. . . 472,910 00 Southern Boulevard Railroad Company 104,550 00 Bronx Traction Company 23,550 00 New York City Interborough Railway Com- pany 92,040 00 2516 Investigation of Public Seevioe Commissions Total Westchester Electric E. E. Co $224,140 OC Yonkers E. E. Co 138,610 00 Total track construction and maintenance. $1,142,140 00 Grand total $1,596,652 85 THIRD AVENUE RAILWAY SYiS'I"EM Maintenance of Way Depabtments Budget, 1913 CLASSIFICATION OF EXPENMTUEES SHOWN ON ANNEXED SCHED- ULES LIABLE TO BE REQUIRED OUTSIDE OF ORDINARY CURRENT REPAIRS. Paving required Company by city Union Railway $205,730 Southern Boulevard Railroad 103,010 Bronx Traction 23,550 New York City Interborough Railway 92,040 Weatchester Electric Railroad 132,370 Yonkers Railroad 16,750 Third Avenue Railway 26,200 Forty-second Street Railway 25,500 Rctieing or recon- New Welding struction York $86,750 $107,100 $54,470 1,540 35,740 28,990 25,600 95,640 ' 'ejsoo Totals $625,150 $124,030 $163,930 $182,510 28,990 '27 ,'840 Union Railway Southern Boiilevard Railroad Bronx Traction New York City Interborough Railway. Westchester Electric Railroad " Yonkers Railroad Third Avenue Railway Forty-second Street Railway Miscel- laneous $18,860 1,440 26,220 Total- $472,910 104,550 23,550 92,040 224,140 138,610 54,040 32,300 Paving included comoleted in 1912 but not yet paid $91,590 37,772 2,000 55,800 48,070 '2,'so6 25,500 Totals Item No. 300 301 302 303 304 305 306 $46,520 $1,142,140 $263,23 THIRD AVENUE RAILWAY COMPANY Maintenanoe of Wat Depaetment Budget, 1913 Street Bowery Chatham Square curve 125th Street Third Avenue Third Avenue Manhattan Street From To Houston Street Third Avenue Item No. 300 301 302 303 304 306. Eighth Avenue Manhattan Street 9th Street 23rd Street 116th Street 125th Street 125th Street Amsterdam Avenue Manhattan Street Amsterdam Avenue Broadway Operating Kind of work Reconstruction. Reconstruction . Reconstruction. Repaying Repaying Repaying Repaying Total. expenses $10,160 3,680 14,000 15,300 8,400 *700 *1,900 $54,040 Capital Amount $10,160 3,680 14,000 15,300 8,400 *700 *1,800 $54,040 L -fKaf. Tijr\rV ia'i»nmT»lfitp/l. Final Report of Joint Legislative Committee 2517 THE FOKTY-SECOND STREET, MANHATTAJSTVILLE & ST. NICHOLAS AVENUE RAILWAY OOMPAiNY Maintenance of Way Department Budget, 1913 Item No. Street From To 350 125th street Hancock place connecting tracks, double track slot to double track surface 351 Broadway 59th street 92nd street 352 Manhattan Broadway 12th street 353 42nd street Various blocks Operating Item No. Kind of work expenses Capital Amount 350 Repaving »6,800 $6,800 351 Repaving *17.000 *17,000 352 Repaving +2.500 *2,500 353 Repaving t6,000 fS.OOO Total $32,300 $32,300 UNION RAILWAY COMPANY OF NEW YORK CITY Maintenance of Way Department Budget, 1913 Item No. Street From To 1 3rd avenue 138th street 150th street 2 3rd avenue 150th street 177th street 3 3rd avenue 150th street 177th street 4 3rd avenue 177th street Fordham road 5 Westchester avenue 3rd avenue Southern boulevard 6 "Westchester avenue Southern boulevard Bronx river 7 Westchester avenue Bronx river Classon Point road 8 Westchester avenue Clason Point road Beach avenue 9 Westchester avenue Beach avenue Theriot street, S. B. Tr. 10 Westchester avenue Beach avenue Theriofc street N. B. Tr. 11 Westchester avenue Theriot street Tremont avenueS. B. Tr. 12 Westchester avenue Theriot street Tremont avenueN.B. Tr, 13 Westchester avenue Tremont avenue Unionport road S. B. Tr. 14 W^tehester avenue Tremont avenue Unionport road N. B. Tr. 15 Westchester avenue Unionport road Royland street 16 Bc^OD road 3rd avenue Southern boulevard 17 Boston road Southern boulevard Tremont avenue 18 Lincoln avenue 133rd street 135th street 19 Willis avenue 134th street 149th street 20 Morris avenue 156th street 161st street 21 Morris avenue 161st street 167th street 22 Melrose avenue 163rd street Brook avenue 23 Webster avenue 171st street Wendover avenue 24 Webster avenue 200th street 202nd street 25 Webster avenue 202nd street Gun Hill road 26 Jerome avenue Tremont avenue Kingsbridge road 27 White Plains avenue Bm-ke street Gun Hill road 28 White Plains avenue Gun Hill road 227th street, E. B. Tr. 29 White Plains avenue Gun Hill road 227th street, W. B. Tr. 30 White Plains avenue 227th street 233rd street 31 Locust avenue 138th street 136th street 32 138th street Matt avenue 3rd avenue 33 138th street 3rd avenue Brook avenue 34 16l3t street Park avenue east Park avenue we,3t 35 167th street Jerome avenue Webster avenue 36 177th street Webster avenue 3rd avenue 37 Tremont avenue 3rd avenue Boston road 38 230th street Bailey avenue Broadway 39 230 Cedar avenue Sedgwick avenue Bm-nside avenue 40 Bumside avenue Cedar avenue Aqueduct avenue 41 Burnside avenue Jerome avenue Webster avenue (except Concourse) 42 Port Schuyler road Westchester avenue Eastern boulevard 43 Clason Point road Crossing '. White Plains avenue 44 161st street Jerome avenue Walton avenue 45 161st street Jerome avenue Walton avenue 46 Power house At Bronx river 47 Two pairs Kerwin ijortable crossovers 48 Goldschmidt rail grinder * Indicates that work is completed. t Indicates that work is partly completed. 2518 Investigation of Publio Seevioe Oommissions Item No. Kind of work expenses 1. Joint Eepairs $3,560 2. Repaving *45, 860 3. Joint repairs 15) 660 4. Joint repairs 4, 160 5. Joint repairs Ij 680 6. Joint repairs and paving 16,440 7. Joint repairs and paving 13, 680 8. Joint repairs and resurf 6, 110 9. Joint reipairs and resurf 710 10. Reconstruction 1 , 930 11. Reconstruction 3, 850 12. Joint repairs 1 . 150 13. Reconstruction 8,090 14. Joint repairs 2, 420 15. Reoonstiuotion 26,870 16. Joint repairs 2,410 17. Joint repairs 1,920 18. Joint repairs 1 ,340 19. Joint repairs 9 , 140' 20. Repaving 6, 160 21. New construction 22. Repaving 1,830 23. Repaving *2, 350 24. Paving 25. Paving 26. Retieing 34, 130 27. Retieing 1 ,000 28. Repaving 7, 320 29. Retieing 2,060 30. Retieing 11,310 31. Retieing 1 ,000 32. Joint repairs 600 33. Joint repairs 2,780 34. Repaving *1,600 35. Paving 36. Repaving 10,920 37. Repaving 33,920 38. New construction 39. Paving 40. Paving 41. Joint repairs 2,990 42. Retieing 10,060 43. Sewer work 1 ,240 44. Retieing 6, 800 45. New construction 46. Repairing wall 700 Capital $30,360 * 15, 300 39, 240 •26, 480 6,510 11,260 13,510 17,600 * Indicates that work is completed. Final Report of Joint Legislative Committee 2519 operating Item No. Kind of work expenses Capital 47. Track equipment $4,400 48. Track equipment 2, 500 $312,650 $160,910 312,650 Total $472,910 THE SOUTHERN BOULEVARD RAILROAD COMPANY Maintenance op Way Department Budget, 1913 Item No. Street From To ^0 Southern boulevard 3rd avenue Alexander avenue ^1 Southern botdevard Lincoln avenue Alexander avenue ^2 Southern boulevard Alexander avenue Willis avenue ^3 . . . . i . . . Southern boulevard Willis avenue 138th street 54 Southern botilevard Barretto street Westchester avenue ^5 Southern boulevard Westchester avenue Jennings street 06 Southern boulevard. Jennings street Boston road Operating Item No. Rind of > work expenses Capital 50 Repaving.^ *S4,300 *$1.700 51 Joint repairs . 1 , 540 52 Hepaving and reconstruction 5,230 6,430 53 Repaving and reconstruction *14,000 54 Repaving and recoiatruction *9,370 8,400 55 Repaving and reconstruction 17,800 12,470 56 Repaving and reconstruction 13 , 700 9 , 610 $65,940 $38,610 65.940 Total $104.550 THE BRONX TRApanif arijd 'iMbjeet 770. (10-T-OS.) Union Eailwaj CompaiLv. ApgiicatiatL far determination o£ crossing of street railroad extenaan at 230tiL street with tracks of Xew York Central and IlTii^:ii Eivec Eail- road Company. Order artd Disposition 4r-18— 13. Opinion and order directing constraetioiL of street railroad extension above tracks of !J7ew York Central and HmfecHL Eiver Eailroad Company. 'No acceptance required. Order com;- plied with. MiscELLAiTEGrs Appij:catio>""s Case No.; Date Commenced; Company\ and Subject 1654. (3-12-13.) Belt Line Eailway Corporation. Appli- cation for approval of increase of capital stock from $200,000 to $600,000. Order and Disposition 3—12—13. Resolution approving increase of capital stock. 3—14^13. Substitute resolution autliorizing increase of capital stock. 3—12—13. Xo acceptance required. Case ^0.; Date Commenced; Company and Suhject 1509. (1-3-13.) City Island Eailroad Company. Applica- tion for approval of change of gauge of railroad track. Order and Disposition 1—31-13. Order consenting to change of gauge from 3^/2 feet to 4 feet 8% inches. Case No.; Date Commenced; Campany and Subject 1707. (7-12-13.) Long Island Eailroad Company. Appli- cation of A. J. Van Siclen & Son for establishment of side track and switch connection at Jamaica. Final Eepoet of Joint Legislative Committee 2539 Order and Dispasition 7-23-13. Order granting application. No acceptance re- quired. Order complied with. Case No.; Date Commenced j Company and Subject 1709. (7-22-13.) Long Island Eailroad Company. Appli- cation of B. E. Clayton for establishment of side track and switch connection at Jamaica. Order and Dispasition 7—24-13. Order granting application. 9-31-13. Order extend- ing time to November 25. Order complied with. No acceptance required. Case No.; Date Commenced; Company and Subject 1705. (7-18-13.) New York and Long Island Railroad Com- pany. Application of August Belmont et al., as surviving trus- tee, for certificate of public convenience and advantage for com- pletion of underground railway. Order and Disposition 7-24r-i3. Opinion, finding and resolution granting applica- tion. No acceptance required. Case No.; Date Commenced; Company and Subject 1732. (9-13-13.) New York and Eockaway Beach Eailway Company. Application for approval of condemnation of real property in Ozone park, borough of Queens. Order and Disposition 12-23-13. Opinion and order consenting to acquisition of real property. No acceptance required. Case No.; Date Commenced; Company and Subject 1716. (7-31-13.) New York Connecting Eailroad Company. Application for approval of condemnation of real property in bor- ough of Queens. 2540 iNnESTiUATioiT xxF Pu:BLrc Sbetice Cdmmisstons Order and Disposition 9-16-13. Besolution consenting to acquisition of real prop- erty. No acceptance required. Case No. J Date Commenced; Company and Subject 1617. (1-13-13.) New York Consolidated Eailroad Com- pany. Application for approval of assumption of bonds of New York Municipal Railway Corporation and of execution of mort- gage therefor. Order and Disposition 3-28-13. Order consenting to mortgage and guaranty of $40,000,000 bonds of New York Municipal Railway Corporation by New York Consolidated Railroad Company upon certain con- ditions. 3-28-13. Acceptance of order. Conditions of order complied with. Case No.; Date Commenced; Company and Subject 1635. (2-9-13.) New York, Westchester and Boston Rail- road Company and New York, New Haven and Hartford Railroad Company. Application for approval joint operation with New York, Westchester and Boston Railroad Company of line from lYith street to Harlem river. Order and Disposition 1 1 14. Opinion and order approved subject to conditions. No acceptance required. Order complied with. Case No.; Date Commenced; Company atid Subject 1711. (8-19-13.) New York, Westchester and Boston Rail- road Company. Proposed abandonment of Throgg's Neck branch. Order and Disposition 9-16-13. Resolution favoring grant of application by Second District Commission for abandonment of portion of route. No acceptance required. Case No.; Date Commenced; Company; and Subject 1687. (6-3-13.) Staten Island Rapid Transit Railway Com- pany. Application for approval of condemnation of parcels of land in borough of Richmond. EmuLL Rebobt of Joint Legislative Committee 2S41 Order and Disposition 7-15-13. Opinion and order denying application. Alteration of Grade Crossings Case No.; Date Commenced; Company; a-)id Subject 1258. (7-22-10.) Long Lsland Railroad Company. Altera- tion of grade crossing at 18th., Whitestone. Order and Disposition 12—31—13. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of elimination. Case No.; Commenced; Company and Subject 1259. (7-22-10.) Long Island Railroad Company. Alter- ation of grade crossing at Fifth avenue, Whitestone. Order and Disposition 12-31-13. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of elimination. Case No.; Commenced; Company and Subject 1260. (7-22-10.) Long Island Railroad Company. Altera- tion of grade crossing at Merrick road, Springfield. Order and Disposition 12-31—13. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of elimination. Case No.; Commenced; Company and Subject 1261. (7-22-10.) Long Island Railroad Company. Altera- tion of grade crossing at Fresh Pond road and Metropolitan ave- nue. Bushwick Junction. Order and Disposition 11-21-13. Order amending Final Order with determination made 12-8-11 and directing elimination by overhead highway bridge. No acceptance required. Work was started but was de- layed owing to railroad's lack of funds to pay cost of work. Work to be resumed at earlv date. 2542 Investigation or Public Sebvice Commissions Case No.; Commenced; Company and Subject 1263. (7-22-10.) Long Island Eailroad Company. Alter- ation of grade crossing at Hamilton street, HoUis. Order and Disposition 12—31-11. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of eliminatira. Case No.; Commenced; Company and Subject 1265. (7-22-10.) Long Island Eailroad Company. Altera- tion of grade crossing at Lawrence, Old Lawrence and Bridge streets, Flushing. Order and Disposition 12-31-13. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of elimination. Case No.; Commenced; Company and Subject 1236. (7-22-10.) Long Island Eailroad Company. Altera- tion of grade crossing at Lawrence street and other streets on ISTorthside Division, Flushing. Order and Disposition 4-8-15. Order denying application for modification of Final Order made 12-13-10 which determined method of elimination. Case No.; Comme^iced; Company and Subject 1384. (8-16-11.) Long Island Eailroad Company. Altera- tion of grade crossing at Collins avenue and nine other streets on Montauk Division, Borough of Queens. Order and Disposition 7-22-13. Order after rehearing denying application for modi- fication of Order made 12—8-11 determining method of elimina- tion of grade crossing at Laurel Hill boulevard. Case No.; Commenced; Company and Subject 1445. (12-30-11.) Long Island Eailroad Company. Altera- tion of grade crossing at Grafton avenue and other streets in Ozone Park. Final Report of Joint Legislative Comjiittee 2543 Order and Disposition 12-31-13. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of elimination. Case A^o.; Commenced; Company and Subject l-iY6. (2-12-12.) Long Island Eailroad Company. Altera- tion of grade crossing at Atlantic avenue and nine other crossings at Far Eockaway. Order and Disposition • 12-31-13. Order discontinuing proceeding in view of lack of appropriation of State's one-quarter share of cost of elimination. Case No. J Commenced; Company and Subject 1612. (4—18-13.) Long Island Railroad Company. Altera- tion of grade crossing at Norwood avenue and twenty-one other grade crossings on Atlantic Division. Order and Disposition 9—30-13. Order and determination as to alteration in grade crossing at Railroad avenue and providing for pedestrian subway. No acceptance required. Order complied with 12-31—13 ; Order discontinuing proceeding as to other grade crossings in view of lack of appropriation of State's one-quarter share of cost of work. Case No.; Commenced; Company and Subject 1271. (9-9-10.) Staten Island Railway Company. Altera- tion of Clove avenue at Grasmere and closing and diverting Sheri- dan avenue and other crossings. -'&" Order and Disposition 12-31-13. Order discontinuing proceeding as to other grade crossings in view of lack of appropriation of State's one-quarter share of cost of work. Rates, Fares and Charges Case No.; Commenced; Company and Subject 1651. (3-14-13.) Informal proceeding in Case 1651 (3-27-13). Brooklyn Borough Gas Company. Gas rates in 31st ward, Brooklyn. 2544 Investigation of Public Seevice Commissions Order and Disposition , 7-8-13. Opinion and Final Order reducing gas rate from 10-1,'-15 to 12-31-14 \to 95 cents per thousand cubic feet; 8-14-13, acceptance of Order, taking exception to features of decision. Case No.; Commenced j Company and Subject 1351. (5-25-11.) Edison Electric Ilkiminating Company of Brooklyn. Special j^tes for electricity. Order and Disposition 4-1-13. Order discontinuing proceeding without prejudice to renewal. Case No.; Commenced; Company and Subject 1571. (10-18-12.) Edison Electric Illuminating Company of Brooklyn. Complaint of Holbrook, Cabot and KoUins Cor- poration, et al., as to maximum demand charge for electric cur- rent. Order and Disposition 4-22-13. Opinion and Order dismissing complaint, in view of adjustment between parties. Case No.; Com,m,enced; Company and Subject 1588. (11-22-12.) Long Island Kailroad Company. Bate of fare on Atlantic avenue division express trains between East New York station and Flatbush avenue station. Order and Disposition 4-11-13. Opinion and order discontinuing proceeding, in view of agreement by company to establish commutation fare providing for reduced fare. Case No:; Commenced; Company and Subject 1651. (3-18^13.) Long Island Eailroad Company. Com- plaint of Frank L. Holmes et al. as to rates of fare between Forest Hills and Pennsylvania station. Final Report of Joint Legislative Committee 2545 Order and Disposition Y— 22-13. Opinion and order reducing monthly commutation rate from $6.80 to $6. 50. 8-16-13. Acceptance of order. Order complied with. Case No.; Comonencedj Company and Subject 1752. (10-24^-13.) Long Island Eailroad Company. Com- plaint of Progress Society of the Eockaways et al. as to commuta- tion and round trip rates to and from Far Rockaway. Order and Disposition 12—31—13. Opinion and Order dismissing complaint for lack of merit. Case No.; Com^nienced; Company and Subject 15Y0. (10-18-12.) New York Edison Company. Complaint of Holbrook, Cabot and Rollins Corporation, et al. as to maximum demand charge for electric current. Order and Disposition 4r-22-13. Opinion and Order dismissing complaint in view of adjustment between parties. Case No.; Commenced; Company and Subject 1629. (2-7-13.) New York Edison Company. Complaint of Saks & Co., as to discrimination in rates and charges for electric current. Order and Disposition 4-1-13. Opinion and Order directing cancellation of sub-sta- tion service rider which provided for a reduction of rate from price of current, the consumer receiving current directly from sub-station. 4-15-13. Application for rehearing. 2-6-14. Order confirming original Order. No acceptance received, com- pany having given informal notice that it would review Order in Certiorari proceeding. Order not complied with. 2546 Investigation of Public Sbevioe Commissions Case No. J Oorrmienced; Company and Subjecb 1643. (2-21-13.) New York Edison Company. Complaint of Thomas Dimond as to refusal to extend conjunctional service rate. Order and Disposition 4-18-13. Opinion arid Order dismissing complaint in view of fact that rate in respect of " inter-communicating buildings " to which complaint related, had never embodied a rate schedule of company. Ca^e No. J Comonencedj Company and Svhjeci) 1653. (3-11-13.) ISTew York Edison Company. Complaint of Roes and Eees as to charges for breakdown of auxiliary service. Order and Disposition 4—25—13. Order discontinuing proceeding in view of adjust- ment between parties. Case No. J Commenced j Com^pany and Subject 1661. (3-28-13.) New York Edison Company. Complaint of Frankel Brothers in regard to breakdown of auxiliary service. Order and Disposition 5—27—13. Opinion and Dismissal Order. 6—27-13. Order denying rehearing. 7-22-13. Writ of certiorari. 4—17—14. Resolution authorizing Counsel to consent to dis- continuance of certiorari proceeding. Case No.; Commenced; Company and Subject ^751. (10-24-13.) New York Edison Company. Complaint of Stillwell Company as to refusal to extend conjunctional service rate. Order and Disposition Order discontinuing proceeding upon withdrawal of complaint. Case No.; Cormnenced; Conrnpany and Subject 1735. (9-23-13.) New York Central and Hudson River Rail- road Company. Rates of fare in Manhattan and The Bronx. Final Report or Joint Legislative Committee 2547 Order and Disposition ll-14r-13. Opinion and Order directing reduction in rates on Harlem division and Hudson division betvreen Grand Central terminal and certain points. 11—25—13. Acceptance by company with reservation of claim that mattesr was without jurisdiction. Case No.; Commenced j Company and Subject 1626. (2-7-13.) New York and Queens County Railway Company. Complaint of H. H. Arthur as to transfer between cars of Jackson avenue and Corona lines. Order and Disposition 2-25—13. Order dismissing complaint on ground that transfers were not justified. Case No.; CoTwrnenced; Company and Subject 1610. (1-7-13.) N"ewtown Gas Company. Complaint of A. Hermann et al. as to rate for gas in Second Ward, borough of Queens. Order and Disposition 5—2—13. Order discontinuing proceeding upon reduction of gas rate from 5—1—13 to 5—1-14 to 95 cents per thousand cubic feet. Case No. J Comonencedj Company and Subject 1572. (10-25-12.) United Electric Light and Power Com- pany. Complaint of Pittsburgh Contracting Company, as to max- imum demand charge for electric current. Order and Disposition 4—22—13. Opinion and Order dismissing complaint in view of adjustment between parties. Case No. J Commenced; Company and Subject 1638. (2-18-13.) United Electric Light and Power Com- pany. Complaint of Alonzo B. Knight as to refusal to extend con- junctional service rate. Order and Disposition 8-11-13. Opinion and Order directing cancellation of rate schedules designating " 20. Conclusion of tenants' consumption, 2548 iNVESTiGATiojsr OF Public Seevice Commissions wholesale rate." " 22. Conjunctional service." " 24. Conclusion of tenants' consumption — joint rate." 7-26-13, 11-14-13, Or- ders extending time for compliance to 2-2-14. 8-30-13. Ac- ceptance of Order. Case No. J Commenced j Com^pany and Subject 1589. (11-22-13.) United States Express Company. Hand- ling and transportation of baggage checks. Order and Disposition 2-6-13. Opinion and Order directing cessation of charge of 25 cents for transportation of baggage checks between points in first district. 2-10-13. Acceptance of Order. Case No.; Comm,enced; Com,pany and Bvbjecb 1641. (2-18-13.) Westchester Electric Eailroad Company. Complaint of Mark T. O'Reilly as to alleged excess fare on line from Mt. Vernon to West Farms. Order and Disposition 4-14^13. Opinion and Order dismissing complaint in view of franchise provisions. ANNUAL AKD Other Eepoets and Infoemation Reqtjieed to BE Filed by Coepoeations Case No.; Date Commenced; Company and Subject 1683. (5—23—13.) Baggage Companies and Transfer Com- panies. Filing of franchise and corporate documents. Order and Disposition 5-23-13. Order requiring filing of franchise and corporate documents. Acceptance not required. Order being complied with. Case No.; Date Commenced; Company and Subject 1142. (8-27-09.) Common carriers, Railroad and Street Railroad Corporation. Accident reports. Final Report of Joint Legislative Committee 2S49 Order and Disposition 6-24-13. Order amending filing Order of 8-27-09 and direct- ing reports to be made of accidents at times and in manner pre- scribed. 12-26-13. Report by electrical engineer as to failune of Manhattan and Queens Traction Corporation to comply with Order on 11-12-13 and 12-24-13 in failing to report accident promptly. 6—5—14 report from electrical engineer as to failure of East River Terminal Railroad and Brooklyn Eastern Dis- trict Terminal to report accidents happening on certain railroad tracks. Investigation otdered in Case 1852, as a result of which companies agreed to make reports as to accidents happening on certain railroad tracks the Commission's jurisdiction over which was disputed. There was no acceptance of this Order required, but the companies are complying with the Order except as above noted. Case No.; Date Commenced; Company and Subject 1671. (4-18-13.) Corporations and Persons Subject to Juris- diction of Commission. Filing of information as to ofiBcers and directors and as to succession. Order and Disposition 4—18—13. Order requiring filing of information mentioned. Acceptance not required. Companies complying with Order. Case No.; Date Commenced; Connpany and Subject 1631. (2-11-13.) Dry dock. East Broadway and Battery Railroad Company. Information as to depreciation charges. Order and Disposition 2-11-13. Filing Order. 2-12-13 reply by company. Case No.; Date Commenced; Company and Subject 1700. (6-24-13.) Fifth Avenue Coach Company. Annual report for 1912-1913. Order and Disposition 6-24-13. Order prescribing form of report and requiring filing. Acceptance not required. Order complied with. 2550 Investigation of Public Service Commissions Case No.; Date Commenced; Com,pany and Subject 1632. (2-11-13.) 42nd Street, Manhattanville and St. Nich- olas Avenue Railway Company. Information as to depreciation charges. Order and Disposition 2-11-13. Filing Order. 2-12-13 reply by company. Case No.; Date Commenced; Com,pany and Subject 1713. (12-29-13.) Gas Corporations, Electrical Corpor- ations and Steam Railroad Corporations. Accident reports. Order and Disposition 12-29-13. Order requiring reports to be made of accidents at times specified and in manner prescribed. Acceptance not required. 9-28-14 report by electrical engineer as to failure of Richmond Light and Railroad Company to give immediate tele- phonic notice of accidents. 10—21—14 report by electrical engineer recommending no action pending result of efforts by Richmond Light and Railroad Company to comply with Order. Case No.; Date Commenced; Company and Subject 1776. (12-23-13.) Gas Corporations and Electrical Corpo- rations. Annual Report for 1913. Order and Disposition 12—23—13. Order prescribing form and requiring filing of annual reports. 1-9-14, 3-3-14, 3-6-14. Orders extending time for filing report. No acceptance required. Order complied with. Ca^e No.; Date Commenced; Company and Subject 1636. (2-18-13.) New York City Interborough Railway Company. Information as to fixed capital and bonds. Order and Disposition 2-18—13. Order requiring filing of information. 3—14-13, 3—25-13 and 4—18^13. Orders extending time for compliance. No acceptance required. Order complied with. Final Report of Joint Legislative Committee 2551 Case Xo.j Date Commenced; Company and Subject lYOl. (6-27-13.) New York Edison Company, investiga- tion as to compliance with Order in Case 823 as to filing of schedules of rates and forms of contracts. Order and Disposition 12—5^13. Opinion and Order discontinuing proceeding, no further Order being necessary. Ca^e No. J Date Commenced; Company and Subject 1694. (6-17-13.) Street and Electric Eailroad (operating) Corporations. Annual report for 1912—1913. Order and Disposition 6^17—13. Order prescribing form and requiring filing of reports. 10-7-13, 10-10-13, 10-21-13. Orders extending time for filing reports, 11—21—13. Resolution directing counsel to com- mence penalty action against Richmond Light and Railroad Com- pany, Southfield Beach Railway Company and Staten Island Midland Railway for failure to file report, 1—9—14. Resolution authorizing discontinuance of penalty action, companies having filed report. ISTo acceptance required. Order complied with, except as above noted. Case No.; Date Commenced; Company and Subject 1676. (5-13-13.) Stage Coach Corporations. Regulations as to tariff schedules for passenger service. Order and Disposition 5-13-13. Order prescribing regulations for tariff schedules. No acceptance required. Order being complied with. Case No.; Date Commenced; Company and Subject 1695. (6-17-13.) Railroad and Street Railroad (Inchoate and D'ormant) Corporations. Annual report for 1912-1913. 2552 Investigation of Public Sebvice Commissions Order and Disposition 6-17-13. Order prescribing form and requiring filing of re- port. 10-7-13. Order extending time for filing report. Ifo acceptance required. Order complied with. Case No.; Date Commenced; Company and Subject 1682. (5-23-13.) Eailroad Corporations and Street Railroad Corporations. Information as to contracts with baggage com- panies and transfer companies. Order and Disposition 5—23—13. Order requiring filing of information. No accept- ance required. Order complied mth. Case No.; Date Commenced; Company and Subject 1698. (6-24-13.) Steam Railroad (operating) Corporations. Annual report for 1912-1913. Order and Disposition 6-24r-13. Order prescribing form and requiring filing of re- port. No acceptance required. Order complied with. Case No.; Date Commenced; Company and Subject 1699. (6-2'4^13.) Steam Railroad (lessor) Corporations. Annual report for 1912-1913. Order and Disposition 6-24^13. Order prescribing form and requiring filing of report, No acceptance required. Order complied with. Case No.; Date Commenced; Company and Subject 1633. (2-11-13.) Southern Boulevard Railroad Company. Filing of information as to depreciation charges. Order and Disposition 21-11-13. Filing Order, 2-12-13 reply by company. Final Eepoet of Joint Legislative Committee 2553 Case No.; Date Commenced; Company and Subject 1684. (5-23-13.) Steam Kailroad Corporations. Fran- chise and corporate documents. Order and Disposition 5—23—13. Order requiring filing of documents, Si-l- 13, 10—7—13. Orders extending time for compliance. ISTo acceptance required. Order being complied with. Case No.; Date Commenced; Company and Subject 1779. (12-31-13.) Steam Corporations. Annual report for 1913. Order and Disposition 12-31-13. Order prescribing form and requiring filing of re- port. No acceptance required. Order being complied with. Case No.; Date Commenced; Company and Subject 1696. (6-17-13.) Street and Electric Eailroad (lessor) Cor- porations. Annual report for 1912-1913. Order and Disposition 6—17—13. Order prescribing form and requiring filing of re- port. No acceptance required. Order being complied with. Case No.; Date Commenced; Company and Subject 1670. (4-25-13.) Street railroad corporations. Regulations as to schedules for passenger service- Order and Disposition 4-25-13. Order adopting regulations governing tariff sched- ules. No acceptance required. Order being complied with. Case No.; Date Commenced; Company and Subject 1630. (2-11-13.) Third Avenue Eailway Company — Fil- ing information as to depreciation charges. Order and Disposition 2-11-13. Filing Order. 2-12-13, reply by company. 2554 Investigation of Public Service Commissions Case No.; Date Commenced; Company and Suhj&ct 1634. (2-11-13.) UniocQ Eailway Company of New York city. Filing information as to depreciation charges. Order and- Disposition 2—11-13. Filing Order. 2—12-13, reply by company. Safety Precautions Case No.; Date Commenced; Company and Subject 1628. (2-7—13.) Corporations subject to jurisdiction of commission. Safe^guarding employes from injury by higb tension electrical apparatus. Order and Disposition 4-25-13. Opinion and order requiring certain equipment to be provided and regulations to be enforced in connection with the use of high tension electrical apparatus. 5-9-13, order extend- ing to 5-17-13 time of Interborough Rapid Transit Co., ISTew York Eys. Co., N. Y. & Queens County Ey. Co. and Long Island Elec. Ky. Co. for compliance. The following extensions of time were granted by orders issued on the dates specified. Date — Company July 22, 1913. Bridge Operating Company; Coney Island & Gravesend Ey. Company; Brooklyn Heights E. E. Company; Brooklyn, Queens County and Suburban Eailroad Company; New York Consolidated Eailroad Co. ; Nassau Electric E. E. Co. ; South Brooklyn Eailway Company; Coney Island and Brooklyn Eailroad Company; New York Central & Hudson Eiver E. E. Co. Extended to August 1, 1913. To notify the Commission whether the pro- visions of the amended order of June 27, 1913, were accepted and would be obeyed. Date — Company . September 9, 1913. Long Island Eailroad Company; New York and Queens Electric Light and Power Company; Queens- borough Gas and Electric Company. Final Repobt of Joint Legislative Committee 2555 Extended to October 1, 1913; October 15, 1913. To comply with require- ments of Amending Order of June 27, 1913, other than filing rules and regulations and notifying Commission as to acceptance. Dwte — Company October 7, 1913. United Electric Light and Power Company. Extended to January 1, 1914. To comply with paragraph 1 of Amending Order of June 27, 1913. Date — Company October 14, 1913. New York Eailways Company. Extended to September 1, 1914. To comply with paragraph 8 of the Amending Order of June 27, 1913, in regard to its 96th street power house. Date — Company October 24, 1913. Richmond Light and Railroad Company. Extended to 11—15—13. To file with the Commission copies of its rules and regulations. Case 1627. Guarding employees from injury by high tension electrical apparatus. Order adopted April 25, 1913, and amended on June 27, 1913. The Bridge Operating Company, Coney Island and Gravesend Railway Company, Brooklyn Heights Railroad Company, Brook- lyn, Queens County and Suburban Railroad Company, South Brooklyn Railway Company and Coney Island and Brooklyn Railroad Company did not accept, and on May 5, 1913, asked for a rehearing which was denied by the Commission on June 27, 1913. These companies afterward, together with the Nassau Electric Railroad Company, wrote on July 31, 1913, that they did not accept the provision of this Order that there should be at least 2556 Ihvestigatioit of Public Sekvice Commissions two operators on duty in rotary transformer stations delivering current at 500 volts or higker vyhen the same were in operation, but stating that they would accept and obey the Order in all other respects. A further hearing was thereupon directed by the Commission to be held on October 28, 1&13. As a result of this further hear- ing a new Order was adopted on January 13, 1914, requiring the diiferent companies named, using high tension electrical ap- paratus on or before September 1, 1913, to comply with certain requirements in respect thereof; by March 1, 1913, to adopt and promulgate and thereafter enforce rules and regulations to govern their employee-s in the handling of high tension apparatus and in the handling of steam and mechanical apparatus in power sta- tions and by that date to file with the Commission copies of such rules and thereafter to notify the Commission of any change therein. The companies subsequently accepted the Order on January 28, 1914. Further Memorandum in Case 1628 August 5, 1913. Wrote to New York and Queens County Rail- way Company calling attention to certain details in Flushing sub- station as to special equipment. August 14, 1913. Received letter from New York and Queens County Railway Company stating it has remedied conditions as to rails being insulated, etc., at Flushing substation as per our letter of 8-5-13. September 30, 1913. Wrote L. U. R. R. Co. calling attention to lack of lighting facilities at Dunton Station. September 30, 1913. Wrote New York Consolidated Railroad Company calling attention to defective conditions for substation located at corner of White and Centre streets. October 1, 1913. Wrote Brooklyn Rapid Transit Company and New York, New Haven and Hartford Railroad Company calling attention to non-filing of rules and regulations as to high tension apparatus- October 2, 1913. Wrote Long Island Railroad Company call- ing attention to certain ladders in company's substation considered dangerous. Final Eeport of Joint Legislative Committee 2557 October 2, 1913. Wrote Hew York Central and Hudson Eiver Railroad Company and JSTew York, Westchester and Boston Rail- road Company calling attention to non-filing of rules and regula- tions as to high tension apparatus. October 3, 1913. Wrote JSTew York and North Shore Traction Company, Richmond Light and Railroad Company and Riverside Light and Power Company calling attention to non-filing of rules and regulations as to high tension apparatus. October 8, 1913. Received letter from L. U. R. R. Co. reply- ing to ours of September 30, 1913, and stating the matter of lighting facilities at Dunton is receiving attention. October 11, 1913. Wrote New York and Queens County Rail- way Company asking when company will place diagrams of sta- tion wiring in each of its substations. October 17, 1913. Received letter answering ours of October 2, 1913, from Long Island Railroad Company asking why certain ladders at substations are considered unsafe. October 22, 1913. Wrote to Long Island Railroad Company as to theirs of 10-16-13, giving reasons in detail why ladders at substations are considered unsafe. November 8, 1913. Wrote to N. T. Rys. Co. calling attention to defective conditions on second floor of car barn at 99th street and Lexington avenue. November 10, 1913. Letter from Hudson and Manhattan Rail- road Company respecting conditions at substations 1 and 3 and requesting permission to operate same between 1 and 6 o'clock in the morning. November 24, 1913. Wrote to Third Avenue Railway Com- pany calling attention to defective condition of car house at 129th street. November 22, 1913. Received letter from Long Island Rail- road Company in answer to ours of 10—7—1913 stating that com- pany had designed a safety tread satisfactory to the Commission. November 29, 1913. Wrote to Long Island Railroad Company acknowledging receipt of letter of 11-20-13 and asking for draw- ings of safety tread. November 3, 1913. Received letter from New York Consoli- dated Railroad Company, enclosing for approval blue-print 2372, 2558 Investigation of PtrBLic Service Commissions showing proposed methods of installing railings around rotary con- verters at substation at Centre and White streets. December 3, 1913. Wrote to New York Consolidated Eailroad Company stating that method of installing railings at substation at Centre and White streets appears to be satisfactory and making certain suggestions in regard to same. December 5, 1913. Received letter from Long Island Railroad Company enclosing drawings showing proposed treads for exist- ing ladders in company's substation. December 6, 1913. Wrote to Long Island Railroad Company .that tread as per drawing submitted is satisfactory. November 13, 1913. Wrote to Transit Development Company stating investigation of accident at Myrtle Avenue substation No. 8 wherein a man was killed while wiping oil switches shows that no disconnecting switches are back of the oil switches and that same should be installed near stations and commission be advised of company's decision. December 6, 1913. Wrote to Third Avenue Railway Company calling attention to incomplete equipment at Manhattan Street car house. December 11, 1913. Wrote to Brooklyn Rapid Transit Com- pany calling attention to incomplete equipment at 52d Street shop. December 10, 1913. Received letter from Third Avenue Rail- way Company acknowledging ours of December 6, 1913. December 11, 1913. Wrote to Brooklyn Rapid Transit Com- pany calling attention to incomplete equipment at 5 2d Street shop. December 20, 1913. Received letter from Long Island Rail- road Company acknowledging ours of September 30, 1913, and stating that company has arranged to install lights at Dunton station as suggested. December 31, 1913. Received letter from Transit Develop- ment Company in answer to ours of November 13, 1913, that installing of disconnecting switches suggested would be imprac- ticable and suggesting our engineers take matter up with Mr. Roehl of Transit Development Company. Januai-y 2, 1914. Wrote Third Avenue Railway Company FixAL Report of Joint Legislative Committee 2559 calling attention to insufficient protection at elevator openings at Grand and Colier streets power house. January 2, 1914. AVrote to New York Eailways Company calling attention to the fact that no action had been taken by com- pany toward installing safety appliances at substation 32 as per inspection made December 29, 1913. January 2, 1914. Wrote to Interborough Rapid Transit Com- pany calling attention that company had. taken no action toward installing safety appliances at substation No. 4 as per inspection made December 29, 1913. January 3, 1914. Received letter dated January 2, 1914, from Third Avenue Railway Company in answer to ours of January 2, 1914, stating company would install automatically operated gates at Colier Street building if insisted upon by the Commission. January 8, 1914. Wrote to Third Avenue Railway Company in answer to ours of January 2, 1914, stating that chains at elevator openings at Colier Street building are of little use and that gates should be installed. January 9, 1914. Received letter from Interborough Rapid Transit Company in answer to ours of January 2, 1914, stating that company is installing safety appliances at substation No. 4. January 14, 1914. Received letter from New York Railways Company in answer to ours of January 2, 1914, stating that work of installing safety appliances is, now going on. January 29, 1914. Wrote to Coney Island and Brooklyn Rail- road Company stating that company did not comply with Order in certain respects as per inspection by Commission to furnish doors and latches. February 2, 1914. Received acknowledgment of above letter from company. February 11, 1914. Wrote to New York Railways Company calling attention to compliance with Order as regards gate equip- ment of bam at 50th street and Sixth avenue. March 4, 1914. Wrote to New York Railways Company calling attention to ours of February 11, 1914, and asking for prompt reply to same. February 13, 1914. Received letter from Coney Island and Brooklyn Railroad Company in answer to ours of January 29, 2560 Investigation of Public Service Commissions 1914, stating that matter mentioned therein was being given ai tention and that work would be completed in ten days. February 20, 1914. Wrote to Interborougb Eapid Transit Con pany calling attention to minor details overlooked in compliane with Order as per inspection. January 11, 1915. Wrote Kew York Railways Compan; stating inspection of car elevators at 50th street and Sixth avenu car house shows violations of Order and requesting to be informer when compliance with Order will be made. March 19, 1914. Wrote to Third Avenue Railway Compan; calling attention to protection of car elevators openings at 65t] Street Third Avenue car barn as per inspection of March 5, 1914 May 13, 1914. Wrote to Edison Illuminating Company a Brooklyn calling attention to section three which relates to pro viding substations with diagram showing location of bams, etc. as per recent inspection. June 5, 1914. Received letter from Edison Electric lUumi nating Company of Brooklyn in answer to ours of May 13, 1914 stating that posting of diagrams in substations had begun anc would be completed within a week. June 9, 1914. Received letter from !N^ew York Railways Com pany asking for Commission's approval of elevator shaft doori in car house at 14th street and Avenue B, as per inspection b] our Mr. Mason on May 4, 1914. June 24, 1914. Received letter from Third Avenue Railway Company in answer to ours of June 24, 1914, stating that.ele vator gates in car houses had been installed with exception oJ Corlier Street building, which will be completed in a short time also that company has no Grand street barn which it is occupying July 17, 1914. Wrote to Transit Development Company ii addition to ours of December 11, 1913, to Mr. Calderwood asking what action has been taken regarding elevator openings at 52c Street shop. August 24, 1914. Wrote to Transit Development Company further in relation to ours of July 17, 1914, requesting a prompi reply. August 28, 1914. Received letter from Transit Developmeni Company in answer to ours of July 17, 1914, stating safety gates Pinal Uepoet of Joint Legislative Committee 256i would be installed within two weeks after receipt of their request for same. September 11, 1914. Wrote to Transit Development Company requesting information as to progress in installation of safety gates. September 18, 1914. Eeceived letter from Transit Develop- ment Company stating work on installation of safety gates will be started not later than first of next week. October 1, 1914, Wrote to Transit Development Company requesting to be informed what action has been taken regarding our suggestion to install disconnecting switches. October 5, 1914. Wrote to Transit Development Company requesting them to inform Commission of action they will take to eliminate dangerous conditions in elevator wall in carpenter and machine shops on first floor of 5 2d Street shop to safeguard the safety of employees as required by the Order. October 22, 1914. Eeceived letter from Transit Development Company stating the suggestions mentioned in our letter of Oc- tober 1, 1914, is impracticable and dangerous and that the type " B " switch used in the present construction is safe. October 23, 1914. Wrote Transit Development Company to be informed as to reason for considering suggestion of disconnect- ing switches dangerous. Ifovember 7, 1914. Eeceived letter from Transit Development Company stating arrangements are being made for installation of safety gates at 52d Street shop and that the other matter men- tioned in our letter of 22d is being checked by the mechanical department and Commission will be informed of action to be taken. November 7, 1914. Eeceived letter from Transit Development Company in answer to ours of October 23, 1914, stating reasons for considering dangerous the proposed installation of disconnect- ing switches referred to in their letter of October 21, 1914. November 10, 1914. Wrote Eichmond Light and Eailroad Company calling attention to insufficient safe operating clearance provided by new switchboard and suggesting improvement. November 14, 1914. Wrote to New York Eailways Company calling attention to elevator wall openings which are not protected 81 2562 Investigation of Public Seevice Commissions as required by Order, at 99th Street and Lexington Avenue an 50th Street and Sixth Avenue car barns. November 18, 1914. Wrote to Transit Development Compan in answer to theirs of the 4th inst., that conditions mentione were carried out at Myrtle and Tompkins Avenues substation and requesting to be informed of the reason for not installin, switches in remaining six old substations. l^ovember 25, 1914. Received letter from Transit Develof ment Company stating that installation of safeguards on machi nery mentioned heretofore has been authorized and Commissioj will be informed when work is completed. November 27, 1914. Eeceived letter from New York Railway Company in answer to ours of November 14, 1914, stating tha necessary safety appliances requested will be installed. December 3, 1914. Wrote Transit Development Company stating that a reply has not been received to ours of Novembei 18, 1914. December 1, 1914. Received letter dated December 4, 1914 from Transit Development Company in answer to ours of Novem ber 18, 1914, transmitting copy of letters from their electrica engineer answering our inquiries. January 11, 1915. Wrote to New York Railways Companj stating inspection of car elevator at 50th Street and Sixth Avenut car house, shows violation of Order and requesting to be informed when compliance of Order will be made. January 21, 1915. Wrote to Transit Development Companj requesting to be further advised in the matter mentioned in theii letter of January 11, 1915. January 25, 1915. Wrote Third Avenue Railway Companj stating that during a general inspection of car bams an elevatoi gate was found open at 129th street and Amsterdam avenue and at Manhattan street, and requesting repairs to the gate in Man- hattan Street barn. January 27, 1915. Wrote Third Avenue Railway Company stating that during a recent inspection of Corlier Street car barn an elevator gate was found tied up in violation of Order, and requesting that this matter be given attention. Final Repokt of Joint Legislative Committee 2563 Safety Peecautions — ( Continued) Case No.; Commenced; Company and Subject 1471. (3-1-13.) Long Island Railroad Company. Com- plaint of P. P. 'Farley, Deputy Fire Commissioner, boroughs of Brooklyn and Queens, as to safety precautions at Atlantic avenue and Euclid avenue gi-ade crossings to protect fire department apparatus. Order and Disposition (4-8—13.) Order discontinuing proceeding in view of improve- ments specified in complaint. Case No.; Commeticed; Company and Subject 1678. (4-25-13.) Long Island Eailroad Company. Addi- tional safety precautions at Flushing avenue and thirteen other grade crossings. Order and Disposition 6-6-13. Order "A" directing crossing gates, signs and auto- matic bells. 6-20-13. Order modifying Order "A" of 6-6-13. 6-20-13. Order " B " directing Long Island Railroad Company to con- struct bridge over tracks of railroad company at Thompson avenue. 6-24-13. Acceptance of Modifying Order "A" of 6-20-13. ^o acceptance required of Order " B " of 6-20-13. Orders complied with. Case No.; Commenced; Company and Subject 1736. (9-23-13.) Long Island Eailroad Company. Train collision on Whitestone branch. Order and Disposition 11-21-18. Order directing installation of block system between JC tower and Whitestone. Acceptance of Order 12-23-13. 4-3-14. Order modifying Order of 11-21-13 in respect of details of signal system. 4-17-14. Modifying Order accepted. Order complied with. 2564 Investigation of Public Sekvice Commissions Safety Peecautions — (Continued) Case No.; Commenced; Company and Subject 1725. (8-19-13.) New York, New Haven and Harlem Kail- road Company. Protection of employees from contact with over- head electric equipment. Order and Disposition 11-11-13. Order prescribing regulations as to riding of em- ployees on tops of cars, posting of signs and enforcement of regu- lations to protect such employees. 12-19-13 and 4r-3-14. Orders modifying previous Order in certain details. 1_2-14 and 4-22-14. Acceptance of Orders. Orders com- plied with. Case No. J Commenced; Company and Subject 1645. (2-25-13.) Staten Island Ry. Co. Safety pre- cautions at Washington and Lincoln avenues, grade crossings and lack of waiting room at Washington avenue, Gtant City, borough of Richmond. Order and Disposition 3-14-13. Opinion and Order discontinuing proceeding in view of installation of crossing gates and construction of waiting room on northbound platform at Grant City. Case No.; Commenced; Compwny and Subject 1679. (4-25-13.) Staten Island Ry. Co. and Staten Island Rapid Transit Ry. Co. Additional safety precautions at Clove avenue, and 10 other grade crossings. Order and Disposition 5—27—13. Order directing installation of crossing gates and crossing bells on various grade crossings. 6-20-13. Order deny- ing application for modification of Order and extending time to 7-15-13 for compliance. Acceptance of Order 6-2-13. Order complied with. FiNAX Eepoet of Joint Legislative Committee 2565 Fenders, Wheel Guaeds and Safety Devices Case No. ; Date Commenced — Company and Subject 1048. (1-22-09.) Brooklyn Heighte Eailroad Company and other companies of the Brooklyn Rapid Transit System. Fender and wheel guards. Order and Disposition 11—14—13. Opinion and Order after rehearing directing equipment of cars with wheel guards and fenders, with exceptions enumerated. 11-26—13. Acceptance of provisions and Order conditional upon modifications in certain respects. (See 1914 for continuation. ) Case No. ; Date Commenced — Company and Subject 1369. (7-7-11.) Street Eailroad Corporations. (Second Avenue Eailroad Company.) Brakes on surface cars. Order and Disposition 7-15-13. Order amending Order of 10-10-11 as amended, as to Second Avenue Eailroad Company, pursuant to its application, and directing equipment of cars with power brakes and geared hand brakes. ~No acceptance received. Order complied with. Matters Eelating Mainly to Operation Case No.; Date Commenced — Company and Subject 1548. (7-26-12.) Long Island Eailroad Company. Through operation of trains on northside division to and from Pennsyl- vania Terminal. Order and Disposition 12-31-13. Order discontinuing proceeding in view of the electrification of northside division and operation of all trains directly to and from Pennsylvania Terminal. Case No. ; Date Commenced — Company and Subject 1659. (3-20-13.) ISTassau Electric Eailroad Company. Complaint of Central Citizens' League as to redesignation of " Flatbus'h-Seventh Avenue" cars. 2566 Investigation of Public Seevice Commissions Order and Disposition 4-25-13. Order dismissing complaint as satisfied by the issuance on Flatbush-Seventh Avenue line of continuing trip tickets for the Flatbush Avenue line. Case No. ; Bate Commenced — Compaivy and Subject 1642. (2-18-13.) New York Consolidated Kailroad Com- pany and Nassau Electric Eailroad Company and South Brook- lyn Railway Company. Cutting off trains at points on the Bay Ridge, Sea Beach, West End and Culver lines and extension of Parkville short line. Order and Disposition 12-31-13. Order discontinuing proceeding, it appearing that conditions affecting the subject matter of the proceeding had changed materially. Case No. J Date Commenced; Company and Subject 1758. (11-11-13.) New York Consolidated Railroad Com- pany. Service on the Brighton Beach and Fulton Street elevated lines. Order and Disposition 12—19—13. Order discontinuing proceeding so as to include matter of operation of trains marked " Park Row " to destination, on all lines. Case No.; Date Commenced; Company and Subject 1602. (12-17-12.) New York, New Haven and Hartford Railroad Company. Stopping of trains at Hunts Point, Casanova and Port Morris stations on Harlem River branch. Order and Disposition 4-4-13. Opinion and order directing the stopping of certain trains at Hunts Point, Casanova and Port Morris stations on the Harlem River branch, and the construction of shelters at West- chester avenue station. 5-27-13. Order extending to June 30, 1913, time for completing the shelters at Westchester Avenue station. No acceptance required. Order complied with. Final Eepost of Joint Legislative Committee 2567 Case No.; Date Commenced; Company and Svhject 1734. (9-16-13.) New York Eailways Company. Service and transfer regulations on Broadway-Seventli Avenue line. Order and Disposition 10-10—13. Order discontinuing proceeding in view of arrange- ment for transfer of passengers between 8 p. m and 1 a. m. and on Sundays and holidays between cars on the Seventh Avenue line and cars of the Broadway line either at 53d street or at 50th street and Seventh avenue without extra charge. Case No.; Date Commenced; Company and Svhject 1689. (6—11—13.) Railroad corporations, street railroad cor- porations and common carriers subject to the jurisdiction of the Commission. Smoking on passenger cars and stations. Order and Disposition 8—1—3. Opinion and order prohibiting smoking in stations and cars except open cars having running boards along sides, on the four rear seats of which, including the back platform seats, smoking was permitted. 9-16-13. Order amending Order of 8-1-13 so as to extend time for compliance and denying applications for rehearing. 9-30-13. 10-17-13. 11-7-13. Orders extending to ISTovem- ber 13, 1915, time of Interborough Rapid Transit Company, Long Island Electric Railway Company, New York and Long Island Traction Company, New York and Queens County Rail- way Company and New York Railways Company for acceptance of Order. 10—11—13. Received petition from United Cigar Stores Company that smoking cars or cars with compartments be oper- ated by all street railroad companies. 10—14—13. Rehearing ordered. 10-17-13. Order for rehearing rescinded. 10-17-13. Hearing order with reference to operating smoking cars or cars containing smoking compartments on street railroads as peti- tioned for by United Cigar Stores Company. 5-1-14. Order adopted amending Order previously adopted suspending for a period of six months from 5-1-14 insofar as the same affected convertible cars operated by the Third Avenue Railway Company, 2568 Investigation of Public Service Commissions Dry Dock, East Broadway and Battery Kailroad Company and the Forty-eecond Street, Manhattanville & St. Nicholas Avenue Eailway Company providing that during such time companies enforce certain regulations. 5-13-14. Eeceived letter froir George Gordon Battle requesting certain modifications of Order: 5-24-14. Wrote George Gordon Battle in answer to his letter oi May 12, 1914, stating that Commission did not deem a modifica- tion of the Order advisable at that time. 6-16-14. On petition from Brooklyn Heights Railroad Company, Nassau Electric Rail- road Company, Brooklyn, Queens County and Suburban Railroad Company and Coney Island & Brooklyn Railroad Company and Coney Island & Gravesend Railway Company, Order suspended to 10— i— 14 insofar as the same affected the convertible cars oper- ated by said companies provided that during the said time en- force certain requirements of the Commission relating to this Order. 6-5-14. Received letter from Interborough Rapid Transit Company asking for a modification of order so as tc except prohibition of smoking on Third Avenue " L " and cer- tain surface cars. Petition of Interborough Rapid Transil Company for modification considered and not granted. 11—20-13. Wrote to Interborough Rapid Transit Company and allied companies calling attention to the non-acceptance of order. 11-24—13. Communication from Mr. Shonts, President of Inter- borough Rapid Transit Company in answer to letter of 11-20-13. stating that matter of acceptance would be taken up by Chairman McCall. 2—3—14. Communication to Pelham Park and City Island Railroad Company, Incorporated, as to smoking on cars. 2—18—14. Reply from Pelham Park and City Island Railroad Company, in- corporated, stating that signs were posted in cars and conductors were instructed to request passengers to stop ismoking. 2—27—14. Wrote Interborough Rapid Transit Company and allied compan- ies calling attention to non-acceptance of order. 10—8-13. Report of Transit Bureau as to violations of smoking order on elevated trains in that passengers were observed smoking on elevated plat- forms. 10-10-13. Similar report from Transit Bureau. 10-21-13. Similar report from Transit Bureau. 9-29^14. Wrote New York Railways Company suggesting " No Smoking " signs in- stalled in center-entrance cars for purpose of avoiding altercations Final Repoet of Joint Legislative Committee 2569 between conductors and passengers who desired to smoke. 10-21-14. Received letter from ]^ew York Railways Company in reply to ours of 9—29—14, stating that matter mentioned re- ceived consideration and that further information would be sent in March, 1915. Practically all the companies have accepted the order of the commission with the exception of the Interborough Rapid Transit Company and several allied street surface railroads. The order is being complied with except for spasmodic reports of passengers carrying lighted cigars or cigarettes who' are not as vigorously suppressed by the employees of the railroads as anti-smokers would like. In all ims-tances the companies have claimed that there lias been no modifications of their requirements of employees to en- force the anti-smoking order. Case No.; Date Commenced j Company and Subject 1748. (10—17—13.) Street railroad corporations. Operation of smoking cars or cars containing smoking compartments. Order and Disposition 12—23-13. Order discontinuing proceeding. Commission being of opinion that it would not be reasonable to require operation of smoking cars or ears containing smoking compartments for use of passengers. Case No.; Date Commenced; Company and Subject 1484. (3^29-12.) Staten Island Rapid Transit Railway Company. Complaint of E. G. Bridgman as to movement of locomotives and trains at Clifton yard, borough of Richmond. Order and Disposition 12-31-13. Order dismissing complaint, improvements having been made at the Clifton yard. Matteb Relating Mainly to Sebvice Case No.; Date Commenced; Company and Subject 160'3. (12-20-12.) Fifth Avenue Coach Company. Service on Seventh Avenue route north of 110th street. 2570 Investigation of Public Service Commissions Order and Disposition 2-28-13. Order prescribing headway for service on Seventh avenue between 110th street and 145th street during the period from 7:30 a. m. to 12 midnight. 3-13-13. Acceptance of Order. Case No.; Date Commenced; Company and Subject 1291. (11-22-10.) Interborough Kapid Transit Company. Service on subway line and Broadway line. Order and Disposition 1—7—13. Order after rehearing directing operation on express and local tracks in each direction past every two successive sta- tions on express tracks and every three successive stations on local tracks in each 20-minute period, a sufEcient number of trains and cars to provide a number of seats at least equal to th« number of passengers or the maximum number of trains and cars that could be operated, and directing whether operation on local tracks shall be commenced during certain hours of the day. 1—10-13. Ac- ceptance of Order of 1-7-13. 8-19-13 to 1-18-15. Corre- spondence with company as to observations of service and non- compliance with Order. 12-8-14. Eeport from Transit Bureau as to violations and recommending penalty proceedings against company. 12-18-14. Matter referred to counsel 1-15-15. Resolution directing mandamus proceedings to compel compliance with Order. Case No.; Date Commenced; Company and Subject 1393. (9-15-11.) Interborough Eapid Transit Company. Eight-car trains on elevated lines. Order and Disposition 12-31—13. Opinion and Order discontinuing proceeding, in view of changes contemplated on elevated lines in connection with rapid transit railroads. Case No.; Date Commenced; Company and Subject 1599. (12-10-12.) Hay Street Connecting Eailroad. Com- plaint of E. W. Bliss Co. as to failure to furnish railroad service. ' Final Eepoet of Joint Legislative Committee 2571 Order and Disposition 5—13-13. Opinion and Order directing exercise of franchise, construction of tracks and rendering of service. 5-20-13. Order denying rehearing. 6-13-13. Writ of certiorari presented. 2—24—13. Second Order denying rehearing. Order was not ex- pressly accepted, but the court confirmed the Order of the Com- mission and compliance with it was therefore made mandatory. Order complied with. Case No. J Date Commenced; Company and Subject 1559. (8-14-12.) Long Island Railroad Company. Ferry service between 34th street and Long Island City and train con- nections at Long Island City. Order and Disposition 12—31—13. Order discontinuing proceeding in view of changes in the ferry service and pendency of Case 1753 covering other features of the service. Case No. J Date Commenced; Company and Subject 1595. (11-26-13.) ISlassau Electric Railroad Company. Service on Ocean Avenue Elevated. Order and Disposition 12-31-13. Order discontinuing proceeding in view of agree- ment by company to provide additional service on Ocean Avenue line. Case No.; Date Commenced; Company and Subject 1686. (6-3-13.) ]SI"assau Electric Railroad Company. Serv- ice on Ralph-Rockaway line. Order and Disposition 10-17-13. Order directing increase in service by operation of not less than 25 cars in the direction of trafiic past any point of observation between Dumont avenue and Brooklyn Plaza of Williamsburg bridge during the half hour period between 6:30 and 7 a. m. and 7 a. m. and 7 :30 a. m. 10-28-13. Order ex- 2572 InvestigatioIs-' of Public Service Oommissioi^S tending time for acceptance. 11-18-13. Order modifying Order of lO'-lY-lS, changing limits to Liberty avenue and Brook- lyn plaza of Williamsburg bridge. 11-24-13. Acceptance of modifying Order. 12-9-13. Eeport from supervising transit inspector reporting non-compliance with amendatory Order. 12—10—13. Communication to company as to non-compliance. 12-13-13. Reply from company that on account of time required to construct new schedule it was unable to put into effect service required by the Order until 12-3-13. 12-23-13. Communica- tion to company as to non-compliance with Order on 12—9-13. 1—2—14. Communication from company referring to passenger count on 12-29-13 showing that during period from 5 :30 a. m. to 8 :30 a. m. there were 48 standing passengers carried and cou- tending that " imless the Commission rescinds their Order and allows us to make adjustments to accommodate our patrons in this case, I do not see what else we can do only to operat-e a sur- plus of seats during a part of the period and have a large number of standing passengers during the other part ". 8—6—14. Com- munication to company as to non-compliance with Order. S-18- 14. Reply that in the future proper number of ears would be operated. 8—28—14. Communication to company as to non- compliance with Order. 9-9-14. Reply stating that " every effort is being made to operate service in accordance with your order but there are unavoidable occurrences that interfere at times with our compliance. The failure of crews to show up makes it impossible to get the cars out on the schedule time. This is par- ticularly true during periods of heavy traffic when the men are worked to the limit. Every effort is being made to operate this service in accordance with the Commission's Orders but in the case of failure of men to report to take out cars and others not being available, irregularity in service is unavoidable." Subse- quent checks showed that the Order was complied with. Case No. J Date Commenced j Company and Subject 1161. (9-14-09.) New York Central and Hudson River Railroad Company and New York and Harlem Railroad Com- pany. Complaint of Taxpayers' Alliance of the Bronx as to traiu service in Bronx and rates of fare. Final Report of Joint Legislative Committee 2573 Order and Disposition T-22-13. Opinion and Order dismissing complaint in view of failure to show that service on Harlem Division was inadequate or that rates of fare were unreasonable. Case No. J Date Commenced; Company and Subject 1706. (7-15-13.) JSTew York Consolidated Railroad Com- pany. Service and equipment on Sea Beach and West End lines. Order and Disposition 12—26-13. Opinion and Order A as to service on Sea Beach Shuttle line, transfers to and from Sea Beach Shuttle line and shelters at certain points on the line, and Order B directing serv- ice on West End line by operating in accordance with the schedule prescribed. 1-24-14. Notification of Acceptance of Order, upon conditions (1) of procuring space or permission at 60th street and Ft. Hamilton Parkway for shelter house on Sea Beach Shuttle line at Ft. Hamilton Parkway; (2) that requirements for operation of a number of cars or trains on a given headway should be construed to mean that the company should " schedule to operate " such service and failure to so operate due to unavoid- able delay or unusual conditions that could not reasonably be anticipated should not be deemed violations of the Order and (3) that destination signs on short line trains operated on the West End line as applied to certain trains should be confined to the front and rear end destination signs, as only a temporary service was to be operated. Extension Orders as to providing certain shelters pending conclusion of reconstruction work. Re- port by companies as to irregularities of service, dated 1-31-14, 2-5-14, 1-26-14, 2-2-14, 4-17-14 and 11-28-14. Reports as to non-compliance with order made by Transit Bureau. 12-11-14. Matter laid before Commission. 12-18-14. Matter referred to counsel, 1-15-15. Resolution directing mandamus proceeding. Case No.; Date Commenced; Com,pany and Subject 1593. (12-3-12.) New York Railways Company. Service on Fourth and Madison avenue line. 2574 Investigation of Public Sekvice Oommissions Order and Disposition 5-20-13. Eesolution discontinuing proceeding, improvements in service having been made. Case No. J Date Commenced; Company and Subject 1644. (2-15-13.) J^ew York KaUways Company. Service of the 86th Street Crosstown line. Order and Disposition 5-2-13. Opinion and order discontinuing proceeding, in- creased service having been provided and transfer arrangements for through transportation having been put into effect. Case No. j Date Comm£)ncedj Company and Subject 1590. (11-22-12.) United State Express Company. Col- lection and delivery of express packages and freight at Great Kills, Staten Island. Order and Disposition 12-5-13. Opinion and Order. Commission being of opinion that the amount of business does not warrant the maintenance of a pick-up service at that point. Matters Eelating Mainly to Equipment Case No. j Date Commenced; Company and Subject 1449. (1-5-12.) Long Island Electric Eailway Company. Additions and repairs to rolling equipment. Order and Disposition 12-31-13. Order discontinuing proceeding, company having agreed to equip cars with circuit breakers and properly to main- tain equipment and to acquire additional cars. 11-11-13. Order directing company not to operate wooden cars in electrically driven trains. Order not accepted but application for rehearing made, 2—6—14. Order after rehearing modifying original orders in certain details. 2-6-14. Order accepted, " in so far as it is physically possible to do so," and upon the assumption that an extension of time for compliance would be granted. 10'-28-14. Final Kepokt of Joint Legislative Committee 2575 Communication to company as to non-compliance with Order pro- hibiting operation of wooden cars in trains made up in part of steel cars except when necessary to maintain schedule. 11-11-14. Communication from the company explaining the steps taken by it in compliance with the Order and asking that in view of the conditions the Commission change the Order " in so far as it re lates to the 53 (wooden) cars in question, until such time as the company was financially able to purchase additional equipment."' 12-11—14. Order denying application. 12-21-14. Report by Electrical Engineer of Commission that company was complying with terms of Commission's Order but suggestion inquiry' (no doubt with reference to pending case) as to whether the company was reducing its service in order not to operate wooden cars as prohibited. Case No. j Date Commenced; Company and Subject 1702. (7-1-13.) Long Island Eailroad Company and New York Consolidated Company maintenance on cars, stations and roadway of fire extinguishing apparatus. Order and Disposition 7-15-13. Order directing equipment of cars with chemical fire extinguishers. 7-19-13. Acceptance by Long Island Rail- road Co. 7-9-13. Acceptance by Long Island Railroad Co. 7-9-13. Notification of prospective acceptance by New York Con. R. R. Co., and request for extension of time to give formal acceptance in view of contemplated application for modification of order. 8-22-13. Order modifying Order, 8-19-13, 8-22-13. Acceptance by N. Y. Con. R. R. Co., 8-25-13. Acceptance by L. I. R. E. Co., 12-31-13. Extension of time for compliance granted. Order complied with. tj Case No. J Date Commenced; Company and Subject 1698. (6-20-13.) New York & Queens County Railway Com- pany. Equipment and service. Order and Disposition 7-1-13. Order directing overhauling of cars, 7-2-13. Accept- ance of Order. Order complied with. 2576 Investigation of Public Sekvice Commissions Case No. ; Date Commenced; Company and Subject 1370. (7-7-11.) Street railroad corporations. Height and character of steps used in closed surface cars. Order and Disposition, 2—28—13. Opinion and Order directing JSTew York & Queens County Railway Co., New York and Long Island Traction Co., Long Island Electric Railway Co. and New York Railways Co. and companies of Brooklyn Rapid Transit System to reconstruct closed cars so that steps should not exceed 15 inches in height, 3-4-13, 3-10-13. Order accepted. 10-14-13, similar order as to Ocean Electric Railway Co., 10—15-13. Acceptance of Ocean Electric Ry. Co., 4^28-14. Extension to October 1, 1914, of time of Ocean Electric Ry. Co. to comply. Order complied with. Case No. J Date Com,mencedj Company and Subject 1746. (10-10-13.) 'Street railroad corporations. Brakes and brake-shoes on street surface cars for mitigating noise. Order and Disposition 12-12-13. Opinion and Order directing equipment of surface cars with brake^shoes containing an insert of lubricant or other device equally efficient, 9-11-14. Order extending time of New York Railways Co. and subsidiaries for compliance. Order ac- cepted by companies and complied with. Stations and Station Platforms CUise No. J Date Commenced; Company and Subject 1418. (11-14-11.) Interborough Rapid Transit Company. Improvements to ears, tracks and stations on elevated lines. Order and Disposition 12-31-13. Opinion and Order discontinuing proceeding in view of changes contemplated in elevated lines in connection with rapid transit railroad improvements and extension. Final Eepoet of Joint Legislative Committee 2577 Case No.; Date Commenced; Company and Subject 1582. (11-19-12.) Interborough Eapid Transit Company, Complaint of Claflin, ot al., as to station at 38th street and Sixth avenue on Sixth avenue line. Order and Disposition 2-3-13. Order directing construction of new station. 2-11- 13. Acceptance of Order. 12-19-13. Order extending time for compliance. Order complied vnth. Case No.; Date Commenced; Company and Subject 1627. (2-7-13.) Interborough Eapid Transit Company. 'New station on Ninth avenue line at 99th street and Columbus avenue. Order and Disposition 5-7-13. Order directing construction of station. 6-9-13. Acceptance of Order. 12-31-13, 1-30-14, 7-1-14, 11-6-14. Orders extending time for compliance. Order complied with. Case No.; Date Commenced; Company and Subject 1600'. (12-10-12.) Long Island Eailroad Company. Com- plaint of Flushing Association as to baggage transfer facilities at Pennsylvania station. Order and Disposition 4-18-13. Opinion and Order directing provision of facilities. 4r-23-13. Acceptance of Order. Order complied with. Case No.; Date Commenced; Company and Subject 1604. (12-23-12.) Long Island Eailroad Company. Acci- dent at ISTostrand avenue on Atlantic avenue. Division and con- dition of stations. Order and Disposition 4-18-13. Order discontinuing proceeding, accident having been fully investigated and changes at stations and stairway hav- ing been reconstructed. Case No.; Date Commenced; Company atid Subject 1681. (5-16-13.) Long Island Eailroad Company. Com- plaint of Flushing Association as to baggage transfer facilities at Murraj Hill Station, Flushing. 2578 Investigation of Public Service Commissions Order and Disposition 10-14-13. Order dismissing complaint, company having agreed to provide facilities for handling baggage after completion of new station at Murray Hill. Case No.; Date Commenced; Company and Svhject 1Y54. (10-24-13.) Long Island Kailroad Company. Station approach to Jamaica station. Order and Disposition 12-2-13. Order directing constraction of suitable approach from north and south sides of right-of-way. 12—13—13. Notifi- cation of non-acceptance and purpose to apply for rehearing. 1-10-14. Eeport as to non-compliance. 1-29-14. Communica- tion as to delay in making application from company for rehearing, explaining that it was due to injunction proceed- ings interfering with changes at the station. 3-17-14. Reso- lution directing counsel to commence proceeding to enforce order. 3-20-14. Communication from company stating that work has been commenced and the order will be obeyed. 3-31-14. Report by counsel that action be postponed until further report from Transit Bureau. 3-27-14. Communication to company as to non-compliance with order. 4-2-14. Communication from com- pany as to work done and asking for modification of order in cer- tain particulars. 4-7-14 and 1-19-15. Order extending to 4-19—15, time for compliance with original order upon condition of maintenance of an approach already constructed and of pro- tection of certain grade crossing, pending outcome of litigation already mentioned. Case No.; Date Commenced; Company and Subject 1591. (11-22-12.) Nassau Electric Railroad Company. Waiting room at 74th street station on West End line. Order and Disposition 12-31-13. Order discontinuing proceeding, conditions affect- ing subject matter having materially changed since close of hear- ing. Final Eepokt of Joint Legislative Committee 2579 Case No. J Date Commenced; Company and Svhject 1322. (3-28-11.) E". Y. Consolidated E. E. Co. Station facilities at Covert avenue station on Myrtle avenue elevated line. Order and Disposition 12-31-13. Order discontinuing proceeding, as elevated rail- road was in course of construction between Wyckoff avenue and Metropolit-an avenue, and that new station was to be erected on Covert avenue. Case No. J Date Commenced; Company and Subject 1622. (1-21-13.) ISr. Y. Consolidated E. E. Co. Station and station stairway at 36tli & Fifth avenue, Brooklyn. Order and Disposition 12-31-13. Order discontinuing proceeding, changes in the facilities at the station having been made. Case No.; Date Commenced; Company and Subject 1691. (6-17-13.) N. Y. Consolidated E. E. Co. Lack of guards at Eastern Parkway station on Fulton street elevated line. Order and Disposition 7-1-13. Order directing maintenance of guards at station platform. 10-24-13. Order suspending Order of 7-1-13, upon conditions as to maintenance of station guards and male ticket agents at Eastern Parkway station during certain hours. 11-3-13. Acceptance of latter Order. Order complied with. Case No.; Date Commenced; Company and Subject 1771. ,(12-9-13.) ]Sr. Y. Consolidated E. E. Co. Changes in stairway facilities at Flatbush avenue station on Fulton street elevated line. Order and Disposition 12-19-13. Order requiring removal of stairway on north side of Fulton street at Flatbush avenue station and construction of new stairway so as not to obstruct street traffic. 12-31-13. Order extending time for acceptance. 1-14-14. Acceptance of Order. Order complied with. 2580 Investigation of Public Sbkvice Commissions Case No.; Date Commenced; Company and Subject 1781. (12-12-13.) New York Consolidated Kailroad Com- pany. 'New station at Cumberland street and Myrtle avenue on Myrtle Avenue elevated line. Order and Disposition 12-21-13. Order directing construction of new station. 3—20—14. Order confirming original Order. 4—2-14. Accept- ance upon condition as to obtaining property owners' consents and including cost of construction under Dual System subway contract. 10-9—14. Chief Engineer reports cost to be so in- eluded. 10-20-14 and 12-8-14. Orders extending time to March 31, 1915, for compliance in view of delay necessitated by rapid transit subway construction work. Case No.; Date Commenced; Company and Subject 1621. (1-21-13.) New York and Queens County Ky. Com- pany, New York and Long Island Traction Company, and Long Island Electric Eailway Company. Investigation as to compli- ance with order in Case 1463, requiring waiting room at Wash- ington and Fulton streets, Jamaica. Order and Disposition 12-31-13. Order discontinuing proceeding, as investigation had been closed. 1-20-15. Resolution directing counsel to com- mence mandamus proceeding to enforce Order in Case No. 1463. Case No.; Date Commenced; Company and Subject 1454. (1-26-12.) Sea Beach Railway Company, South Brooklyn Railway Company, Nassau Electric Railroad- Company and Brooklyn Union Elevated Railroad Company. Toilet facili- ties in stations on elevated lines. Order and Disposition 1'2-31-13. Order discontinuing proceeding in view of various changes contemplated in facilities at stations on elevated lines in connection with rapid transit railroad improvements. Final Eepoet of Joint Legislative Committee 25 §1 Other Matters Eelating to Electrical Corporations Case No.; Date Commenced; Company and Subject 10'99. (4-21-09.) Electi'ical corporations. Specifications for electric current energy meters. Order and Disposition 9—30-13. Opinion and order repealing order of June 25, 1909, and prescribing new specifications, rules and regulations. Acceptance of order not required. Order being complied with. Case No.; Date Commenced; Company and Subject 1154. (8-20-09.) Electrical corporations. Standard form of reports on testing of electric meters. Order and Disposition 4—22-13. Order adding type of meter to those previously in- cluded for reporting tests. 5—27—13. Order modifying previ- ous orders and directing monthly reports of tests of electric meters. Order accepted by companies. 9-25-13 to 6-5-15. Wrote on 14 different occasions to companies requesting filing of reports which had not been filed promptly. With this excep- tion order being complied with. Case No.; Date Commenced; Company and Subject 1451. (1—12—12.) Electrical corporations. Certification of attachment to electric current energy meters and standard form of report on tests. Order and Disposition 1-21-13, 2-21-13, 5-16-13, 7-15-13, 8-9-13, 9-30-13, 11- 7-13, 11-14-13. Eesolutions certifying additional attachment to meters. 7-30-13. Kesolution rescinding resolution of 2-21- 13. No acceptance required. Order complied with. Other Matters Relating to Oas Corporations Case No.; Date Commenced; Company and Subject 1344. (5-5-11.) Astoria Light, Heat and Power Company and other gas corporations subject to the Commission's jurisdiction. Setting of indeixes upon meters. 2582 Investigation op Ptjblio Service CoMMtssioNs Order and Disposition 12-12-13. Order amending order 6-2-11 and directing indexes of gas meters removed from consumer's premises to be set at zero before meter is again placed in use and submitted to Commission's inspectors for testing. Order accepted by com- panies and being complied with. Case No.; Date Commenced; Company and Subject 1623. (1-24-13.) Gas corporations. Information as to de- posits by consumers. Order and Disposition 1-24-13. Order directing filing of information. 1-24—13. Resolution extending time for compliance to Marcb 4, 1913. ]^o acceptance required. Order being complied witb. Case No.; Date Commenced; Company and Subject 1577. (11-8-12.) Gas corporations in Brooklyn. Gas pres- sure regulation. Order and Disposition 1—24-13. Opinion and order requiring installation of gas pressure gauges in compliance with certain regulations as to gas pressure. 7-9-13. Similar order as to gas corporations supplying gas in 31st ward in Brooklyn. Order accepted and being com- plied with. Case No.; Date Commenced; Company and Subject 1579. (11-8—12.) Gas Corporations in Borough of Queens. Gas pressure regulations. Order and Disposition 1-24—13. Opinion and order requiring installation of gas pressure gauges in compliance with certain regulations as to gas pressure. Order accepted by companies and being complied with. Final REpoat of Joint LEoistATivE Committee 2583 Othee Matters _Relatin-g to Steam Coeporations Case No.; Date Commenced; Company and Subject 1708. (7-22-13.) New York Steam Company. Complaint of 39-41 W. 55th Street Realty Co., Inc., as to refusal to furnish steam. Order and Disposition 11—18—13. Order discontinuing proceeding, complainant hav- ing withdrawn complaint. Tracks and Switches Case No.; Date Commenced; Company and Subject 1568. (10-15-12.) New York Railways Company and Cen- tral Cross-Town Railroad Company. Roadbeds and tracks on I7th and 18th streets. Order and Disposition 12—31—13. Order discontinuing proceeding in view of order of Commission granting application for abandonment of portion of route. Case No.; Date Commenced; Company and Subject 1533. (7-2-12.) Nassau Electric Railroad Company and Brooklyn Heights Railroad Company. Tracks and car operation in the vicinity of Bergen street and Kingston avenue. Order and Disposition 12-81-13. Order discontinuing proceeding in view of im- provements in crossing by special work on Kingston avenue and Bergen street. Case No.; Date Commenced; Company and Subject 1527. (6-28-12.) New York and Queens County Railway Company. Tracks and switches on Main street, Steinway avenue and other streets. Order and Disposition 4—18-13. Order discontinuing proceeding in view of repairs to tracks. S584 IinrESTiGATiON oi' Public Seevioe Commissions Oase No.; Date Commenced; Company and Subject 1469. (2-20-12.) Eichmond Light and Eailroad Company. Double tracking of Castleton avenue line across Jersey street at !N^ew Brighton. Order and Disposition 12—31-13. Order discontinuing proceeding in view of con- struction of double tracking connection at Brock car barn. Case No.; Date Commenced; Company and Subject 1601. (12-10-12.) Eichmond Light and Eailroad Company. Double tracking Castleton avenue or Brighton Heights line. Ordef and Disposition 3-5-13. Order directing construction of double tracks. 6—27—13. Order after rehearing confirming original order. 6—6—13. Order denying application for rehearing. 6—19-13. Writ of certiorari issued by Supreme Court, ISTew York County. Matter pending. Case No.; Date Commenced; Company and Subject 1537. (7-12-12.) Third Avenue Eailroad Company. Con- dition of roadbed and tracks on 125th Street Crosstown line. Order and Disposition 12—12—13. Order discontinuing proceeding in view of repairs to the satisfaction of complainant and engineers of this Com- mission. Mattees Eelating to Accounts Case No.; Date Commenced; Company and Subject 1743. (9-30-13.) Baggage Companies. Preparation of uniform system of accounts. Order and Disposition 9-30—13. Order requiring filing data as to accounts. No ac- ceptance required. Order complied with. FniTAL Report of Joint Legislativ:e Committee 2585 Case No.; Date Commenced; Company and Subject 1741. (9-30-13.) Steam Corporations. Preparation of uni- form system of accounts. Order and Disposition 9—30—13. Order requiring filing data as to accounts. 10—7—13. Order extending time for compliance. No acceptance required. Order complied with. Case No.; Date Commenced; Company and Subject 1742. (9-30-13.) Transfer Companies. Preparation of uniform system of accounts. Order and Disposition 9-30-13. Order requiring filing of data as to accounts. ISTo acceptance required. Order complied with. EXHIBIT No. 28 The following is a statement of the orders adopted by the Public Service Commission for the First District, during the year 1914, which directed that certain acts be done, or which closed proceed- ings, together with a note as to whether the orders have been accepted and complied with. Applications fok Authokity to Issue Stocks, Bonds and Secueities Case No.; Date Commenced; Company and Subject 1717. (7-31-13.) Astoria Light, Heat and Power Company. Application for approval of issue of $5,000,000 bonds and $9,500,- 000 capital stock. ^ _ , „. ... Order and Disposition 5-4-14. Opinion and order authorizing execution of mort- gage and issue of $5,000,000 bonds and $9,500,000 capital stock, upon certain conditions. 10-9-14. Acceptance of order. Condi- tions complied with. Case No.; Date Commenced; Company and Subject 1833. (6-11-14.) Broadway and Seventh Avenue Railroad Company. Application for approval of issue of $500,000' bonds. 2586 Investigation of Public Sebvioe Commissions Order and Disposition 6-23-14. Order authorizing issue of $500,000 bonds upon con- ditions. 6-27-14. Acceptance of order. Conditions complied with. Case No.; Date Commenced; Company and Subject 1869. (9-15-14.) Brooklyn Borough Gas Company. Appli- cation for approval of issue of $125,000 additional capital stock. Order and Disposition 10-30^14. Order authorizing issue of $125,000 additional capital stock upon certain conditions. 11-17-14. Amendatory order correcting order of 10-30i-14. 11-11-14. Acceptance of order. 1-15-15. Order extending time to July 31, 1915, for issuance of stock. Conditions of order being complied with. Case No.; Date Commenced; Company and Subject 1823. (5-18-14.) Consolidated Gas Company. Application for approval of issue of $25,000,000 convertible debenture bonds and $25,000,000 additional capital stock. Order and Disposition 12-1-14. Order granting application upon certain conditions. 12-8-14. Order extending time for issuance of bonds. 12-9-14. Acceptance of order. Conditions being complied with. Case No.; Date Commenced; Company and Subject 1715. (7-31-13.) Dry Bock, East Broadway and Battery Railroad Company. Application for approval of mortgage and of issue of $2,800,000 bonds. Order and Disposition 4-28-14. Order denying application. 12-11-14. Confirma- tory denial order. 12-29—14. Service of writ of certiorari to re- view determination of Commission. 9-22-14. Case No.; Date Commenced; Company and Subject 1866. (9-9-14.) Dry Dock, East Broadway and Battery Eail- road Company. Application for approval of supplemental mortgage. Final Report of Joint Legislative Committee 2587 Order and Disposition 9-22-14. Order granting application. No acceptance re- quired. Case No.; Date Cmnmenced; Company and Subject 1845. ('6-29-14.) Hudson and Manhattan Railroad Com- pany. Application for approval of issue of $202,500 additional bonds. Order and Disposition 7-31-14. Order granting application upon certain conditions. 8-8-14. Acceptance of order. Conditions complied with. Case JSio.; Date Commenced; Company and Svhject 1805. (3-4-14.) Hudson and Manhattan Railroad Company. Application for approval of issue of $154,000 bonds. Order and Disposition 4-7-14. Order granting application upon conditions. 6-23- 14. Order extending time for issue of bonds. 12-11-14. Order modifying order of 4-7-14 so as to authorize issue of bonds at eighty and extending time for issue of bonds. Acceptance of order 12—15—14. Conditions being complied with. Ca^e Ao.y Date Commenced; Company and Subject 1802. (2-18-14.) Manhattan Bridge Three Cent Line. Application for approval of issue of $260,000 additional capital stock. Order and Disposition 3—13—14. Order gTanting application upon certain conditions. 6-23-14. Orders extending time for issue of stock. 3-17-14. Acceptance of order. Conditions being complied with. Case No.; Date Commenced; Company and Subject 1728. (8-28-13.) Mid-Crosstown Railway Company, Inc. Second application for approval of issue of capital stock and bonds. Order and Disposition 1-23-14. Opinion and order denying application for issue of bonds and authorizing Mid-Crosstown Railway Company to 2588 Intestigation op Public Service Commissions issue $150,000 capital stock. 4-23-14. OrdcT modifying order of 1-23-14 so as to change certain details of order. 5-25-14. Acceptance of order. Order complied with. Case No.; Date Commenced j Campany and Subject 1650. (3-8—13.) Manhattan and Queens Traction Corpora- tion. Application for approval of issue of $1,500,000 stock and $1,500,000 bonds. Order and Disposition 2-5-14. Order authorizing issue of $765,000 stock upon certain conditio^ns. 2—20—14. Order extending time for accept- ance. 3-10-14. Order abrogating Order of 2-5-14 discontinuing proceeding, upon request of applicant. Case No.; Date Commenced; Company and Subject 1770. (12-6-13.) l^ew York and North Shore Traction Company. Application for approval of issue of $115,464 addi- tional capital stock. Order and Disposition 1—9—14. Order authorizing issue of $81,850 stock upon certain conditions. 1—15-14. Acceptance of Order. Conditions complied with. Case No.; Date Commenced; Company and Subject 1810. (3-20-14.) New York Connecting Railway Company. Application for approval of $5,000,000 additional bonds. Order and Disposition 4—14^14, Order authorizing issue of $5,000,000 bonds upon certain conditions. 4-18—14. Acceptance of Order. Conditions complied with. Case No.; Date Commenced; Company and Subject 1718. (8-1-13.) New York Edison Company. Application for approval of issue of $15,800,000 capital stock. Final Eepoet of Joint Legislative Committee 2589 Order and Disposition 5— 4r-14:. Order authorizing issue of stock, upon certain con- ditions. 10-9^14. Acceptance of Order. Conditions complied with. Case No.; Date Commenced; Company and Subject 1830. (6-3-14.) ISTew York Railways Company. Applica- tion of approval of acquisition of capital stock of 23rd Street Rail- way Company and of issue of bonds in .payment thereof. Order and Disposition 10-30-14. Opinion and Order authorizing 'New York Rail- ways Company to acquire 6,000 shares of stock of 23rd Street Railway Company and issue of $2,100,000 bonds therefor, upon certain conditions. 11-10—14. Order extending time for accept- ance. 11-30-14. Order amending Order of 10-30-14 in respect of amount of discount upon sale of bonds to be amortized. 11—30-14. Acceptance of Order. Conditions complied with. Case No.; Date Commenced; Company and Subject 1778. (12-24-13.) Third Avenue Railway Company. Ap- plication for approval of issue of $6,650,000 bonds. Order and Disposition 2-20-14. Order authorizing issue of $4,000,000 bonds upon certain conditions. 2-23-14. Acceptance of Order. Conditions complied with. Case No.; Date Commenced; Company and Subject 1714. (7-31-13.) Third Avenue Railway Company. Second application for approval of acquisition of stock of Mid-Crosstown Railway Company and issue of $500,000 bonds to pay therefore. Order and Disposition 1-23-14. Opinion and Order authorizing Third Avenue Rail- way Company to acquire $150,000 capital stock of Mid-Crosstown Railway Company and it issue $187,000 four per cent, bonds in payment thereof, upon certain conditions. 5-26-14. Acceptance of Order. 6-23-14. Communication to Company as to distribut- 2590 IXTESTIGATIOX OF PuBUtC SeEVICE COMMISSIONS ing cost of property in accordance with classification of Uniform System of Accoimts ia pursuance of requirement of Order of 1—23—14. Conditions of Order complied with. Ca^e Xo.j Date Comvienced; Company and Subject 15S4. (11-11-12.) 23rd Street Eailway Company. Applica- tion for approval of issue of $1,500,000 mortgage and to issuance of $1,500,000 bonds. Order and Disposition 5—28—14. Order authorizing execution of mortgage and issu- ance of bonds upon certain conditions. 6—8—14. Acceptance of Order. Conditions complied with. Case So. J Date Commenced j Company and Subject 1SS7. (11-10-14.) Staten Island Midland Railway Company. Application of approval of issue of $135,000 Equipment Trust Certificates. Order and Disposition 12—22—14. Opinion and Order granting application upon certain conditions as to amortization. Company refused to accept Order and asked for rehearing. 1-22-15. Order modifying Order of 12-22—14 upon certain conditions as to amortization. 1-2 7-15. Acceptance of modifying Order. Order complied with. Applications toe Ceetis-icates of Co]!^^E^^E^'^CE jlNd Xecessitt Case Xo.; Date Commenced; Company and Subject 1786. (1-6-14.) D'egnon Terminal Railroad Company. Ap- plication for certificate of public convenience and necessity for railroad in 1st ward. Borough of Queens. Order and Disposition 1_27-14. Order granting application for railroad between one- half and one mile iu length between Davis street and a point near School street in the 1st ward, borough of Queens. Acceptance not required. Final Kepoet of Joint Legislative Committee 2591 Applications foe Appeoval of Consteuction and Exeecise OF Feanchise Theeefoe Case No. J Date Commenced; Company and Subject 1843. (6-29-13.) Degnon Terminal Kailroad Company. Ap- plication for determination of grade of crossing Pearson street and other streets, in 1st ward, borough of Queens. Order and Disposition Y-16-14. Order granting application. Acceptance not required. Case No.; Date Com,menced; Compaivy and Subject 1859. (Y-30-14.) Long Island Eailroad Company. — Appli- cation for approval of exercise of franchise of side-track across Borden avenue and on Fox street. Long Island city, and for determination of manner of crossing tracks of New York and Queens County Kailway Company on Borden avenue. Borough of Queens. Order and Disposition 9—11—14. Order approving construction of side track and exercise of franchise and determining that side track be con- structed at grade at expense of Long Island Eailroad Company. Acceptance not required. Applications foe Appeoval of Teacks and Ageeements Case No.; Date Com,nienced; Com,pany and Subject 1834. (6-11-14.) Long Island Eailroad Company and Penn- sylvania Tunnel and Terminal Eailroad Company. Application, for approval of agreement for trackage rights and use of Pennsyl- vania station to July 1, 1916. Order and Disposition 6-23-14. 6-25-14. Acceptance of order. Order complied ■with. 2592 Investigation of Public Service Commissions Case No.; Date Commenced j Cotrvpawy and Subject 1860. (7-31-14.) Marine llailway Company. Application for approval of supplemental contract with Long Island Railroad Company for use of tracks. Order and Disposition 7-31-14. Order granting application. Acceptance not re- quired. Case No.; Date Com/menced; Com,pa,ny and Subject 1639. (2-13-14.) ISTew York Railways Company and Cen- tral Crosstown Railway Company of N'ew York. Application for approval of operating agreement for 1913. Order and Disposition 2—3—14. Order discontinuing proceeding in accordance with request of applicants. Case No.; Date Commenced; Compwwy and Subject 1793. (1-30-14.) New York Railways and Central Cross- town Railway Company of New York. Application for approval of operating agreement for 1914. Order and Disposition 4-7—14. Order approving agreement. Case No.; Date Commenced; Company and Subject 1803. (2-25-14.) Pennsylvania Tunnel and Terminal Rail- road Company. Application for approval of fifth operation agree- ment. Order and Disposition 3-3-14. Resolution approving agreement for term from March 1, 1913, to February 1, 1915. Case No.; Date Com/menced; Company and Subject 1766. (11-26-14.) Third Avenue Railway Company and Kingsbridge Railway Company. Application for approval of agreement for merger and consolidation. Final Report of Joint Legislative Committee 25&3 Order and Disposition 2-6—14. Opinion and Order denying application on ground that procedure requirements of law have not been followed. Applications fob Appeoval of Teansfer of Purchase ob" Stock Case No. J Date Co-mmencedj Company and Subject 1554. (8—12-13.) Edison Electric Illuminating Company of Brooklyn. Application for approval of acquisition of stock of Amsterdam Electric, Limited, Heat and Power Company. Order aoid Disposition 7-30-14. Order approving acquisition of 122 shares upon certain conditions. 8-7-14. Acceptance of Order. Conditions complied with. Case No. J Date Co^nmenced; Company and Subject 1822. (5-13-14.) Metropolitan Street Eailway Company and ]^ew York Railways Company. Application for approval of transfer to E'ew York Railways Company of rights across Wil- liamsburgh Bridge and of 500 shares of Bridge Operating Com- pany stock. Order and Disposition 6—2—14. Opinion and Order granting application. Acceptance not required. Applications foe. Appeoval of Abandonment of Routes Case No.; Date Commenced; Covipamj and Subject 1640. (2-11-13.) Central Crosstown Railroad Company of I^ew York. Application for approval of abandonment of street railroad in east 17th and east 18th streets. Borough of Manhattan. Order and Disposition 2-27—14. Order after rehearing granting application for ap- proval of abandonment of portion of street railroad mentioned, omitting condition as to removal of tracks and restoration of sur- face. Acceptance not required. 82 2594 Investigation of Public Sbbvice Commissions Case No.; Date Commenced; Com-pamy and Subject 1863. (8-18-14.) Long Island Electric Eailway Company. Application for approval of abandonment of portion of route on Liberty avenue from Eockaway Plank road westerly to division line between boroughs of Queens and Brooklyn. Order and Disposition 11—17—14. 0*der denying application. Case No.; Date Commenced; Coinpany and Subject 1862. (8-14-14.) New York Railways Company. Applica- tion for approval of abandonment of route on South street, James Slip and New Chambers street. Order and Disposition 9-22—14. Order granting application upon condition that com- pany remove tracks and restore surface of street. 9—22—14; 10-6-14; 11-6-14; 1-5-15. Orders extending time to 3-5-15 to accept. Application for Appeoval oe Change of Motive Powek Case No.; Date Commenced; Company and Subject 1782. (12-30-13.) Dry Dock, East Broadway and Battery Railroad Company. Application for approval of change of motive power on Canal street east of Bowery, from horses to underground current of electricity. Order and Disposition 2—20—14. Order granting application. Acceptance not re^ quired. Applications as to Grade Crossing Case No.; Date CoTnmenced; Comvpany and Subject 1844. (6-29-14.) Degnon Terminal Railroad Corporation- Application for determination of grade of crossing Pearson street and other streets, borough of Queens. Order and Disposition 7—16—14. Order determining comstructiofn of railroad at grade of street. Final Report of Joint Legislative Committee 2595 Case No; Date Commenced; Company and Subject 1826. (5-23-14:.) Long Island Railroad Company. Appli- cation of the city of New York for determination of grade of Ziegler avenue, to be opened across North Side Division tracks. Order and Disposition 8-21-14. Order discontinuing proceeding upon request of City. Case No.; Date Commenced; Company and SiAject 1382. (7-11-11.) New York and Harlem Railroad Com- pany. Application of city of New York for determination as to grade of Gunhill Road to be widened across company's tracks. Order and Disposition 7-23-14. Opinion and Order discontinuing proceeding for lack of jurisdiction. Case No.; Date Com,menced; Company and Subject 1769. (12-29-13.) New York Consolidated Railroad Com- pany. Application of city of New York for determination of grade of President street, Brooklyn, to be opened across company's tracks. Order and Disposition 1-23-14. Order determining method of crossing of bridge over railroad tracks. 7-31-14. Order abrogating Order of 1-23- 14 at request of City. Miscellaneous Applications Case No.; Date Commenced; Company and Subject 1864. (8-11-14.) Central Railroad Company of New Jersey. Switching of trolley cars at and near Third avenue and 133d street, the Bronx. Order and Disposition 8-21-14^ 9_11_14. Orders permitting service of switching without publication and filing of tariff schedule.- 2596 Investigation of Public Service Commissions AiTEEATION OF GrADE CROSSINGS Case No.; Date Commenced; Company and Subject 1262. (T-22-10.) Long Island Eailroad Company. Altera- tion of grade crossing at Fanners avenue, HoUis. Order and Disposition 2—6—14. Order directing elimination of grade crossing by depression of Farmers avenue and elevation of railroad. No acceptance required. Obligation of company to construct man- datory under Eailroad Law. Case No.; Date Com/menced; CoTnpany and Subject 1756. (10-28-13.) Staten Island Eapid Transit Eailway Company. Alteration of grade crossing at Pennsylvania avenue, Eosebank, borough of Eicbmond. Order and Disposition 7—1—14. Order determining elimination by raising certain portion of Pennsylvania avenue and depressing railroad tracks, and making other changes at an estimated cost of $69,500. IsTo acceptance required. Obligation of company to construct man- datory under Eailroad Law. Case No.; Date Commenced; Com^pany and Subject 1797. (2-17-14.) Staten Island Eapid Transit Eailway Coanpany. Alteration of grade crossing at Clifton and Maryland avenue, Eosebank, borough of Eichmond. Order and Disposition 7—1—14. Order determining elimination of grade crossing. Acceptance not required. Obligation of company to construct mandatory under Eailroad Law. Eates, Fares and Charges Case No.; Date Commenced; Company and Subject 1375. (7-18-11.) South Brooklyn Eailway Company, Brooklyn Union Elevated Eailroad Company, Sea Beach Eailway Final Ebpokt of Joint Legislative Committee 2597 Company, JSTassaii Electric Railroad Company, Brooklyn Heights Railroad Company, and Brooklyn, Queens County and Suburban Railroad Company. Fares to and from Coney Island. Order and Disposition 2—10—14. Order discontinuing proceeding upon rehearing in view of extension of five-cent rate under commutation plan. Case No. J Date Commenced j Company and Subject 1538. (7-16-12.) ISTassau Electric Railroad Company, Brooklyn Heights Elevated Company, exchange of transfers. Order and Disposition 7—30—14. Order discontinuing proceeding in view of Order in Case 1801, providing for comprehensive transfer system in Brooklyn. Case No.; Date Commenced j Cmnpany and Subject 1646. (2-25-13.) Nassau Electric Railroad Company, and Brooklyn Heights Railroad Company. Transfers between Bergen street, 16th avenue and Greenpoint lines, and between Vanderbilt and Gates avenue lines. Order and Disposition 7—30—14. Order discontinuing proceeding in view of Order in Case 1801, providing for comprehensive transfer system in Brook- lyn. Ca^e No.; Date Commenced j Company a,nd Subject 1688. (6-6-12.) Coney Island and Brooklyn Railroad Com- pany, Coney Island and Gravesend Railway Company, Brooklyn Heights Railroad Company, Brooklyn, Queens County and Sub- urban Railroad Company, Nassau Electric Railroad Company, and New York Consolidated Railroad Company. Through routes and joint rates in boroughs of Brooklyn and Queens. Order and Disposition 11-13-14. Order discontinuing proceeding in view of Order in Case 1801, providing for comprehensive transfer system in Blrooklyn. 2598 Investigation of Public Seevice Commissions Case No. J Date Commenced; Coinpawy and Subject 1724. (8-19-13.) Adams Express Company. Eates between Sheepsliead Bay and Brighton Beach. Order and Disposition 7—31—14. Order discontinuing proceeding on account of lack of jurisdiction. Case No.; Date Commenced; Company and Subject 1750. (10-24-13.) IsTew York Consolidated Eailroad Com- pany and Long Island Railroad Company. Passenger rates on Pockaway Beach line. Order and Disposition 7—31-14. Order fixing passenger fare over line via Chestnut street junction between Eockaway Park and points west of Chest- nut street junction in either direction at not exceeding fifteen cents, whether passengers are provided with tickets or not. 8—26— 14. Order extending time for acceptance. 8-26-14. Acceptance by companies, Order complied with. Case No.; Date Cotnmenced; Company and Subject 1792. (1-24-14.) Union Eailway Company of New York city. Third avenue Eailway Company, 42d street, Manhattanville and St. Nicholas Avenue Eailway Company. Exemption from exchange of transfers on 125th street and other streets in Man- hattan. Order and Disposition 2-6-14. Opinion and communication to Board of Estimate and Apportionment stating if Union Eailway Company of New York city present formal application after obtaining franchise from City, application for which was pending before the Board of Estimate and Apportionment, for street railroad extension to connect company's Bronx lines with Willis avenue bridge and to extend service over Willis avenue bridge to 125th street and on 125th street to the North Eiver, favorable action would be taken by the Commission to exempt company from obligation to exchange transfers with 42d street, Manhattanville and St. Nicholas Avenue Final Rbpoet of Joint Legislative Committee 2599 Railway Company and Third Avenue Railway Company at certain intersecting points on 125tli street and other points in Manhattan. Case No. J Date Commenced; Company and Subject 1801. (2-18-14.) Coney Island and Brooklyn Railroad Com- pany, Coney Island and Gravesend Railway Company, Brooklyn, Queens County and Suburban Railroad Company, Nassau Electric Railroad Company, Brooklyn Heights Railroad Company. Rates of fares and transfers. Order and Disposition 3-17-14. Order directing inauguration of present system of transfers. 3—27—14. Order modifying Order to make correction. 5—1—14. Order extending time for compliance. 3—30—14. Ac- ceptance of Order. Order complied with. Case No.; Date Commenced; Company and Subject 1820. (5-12-14.) New York Railways Company and Belt Line Railway Corporation. Service and transfers on 23d Street Crosstown, 9th Avenue, Broadway-Columbus, Broadway-Amster- dam and 59th Street Crosstown lines. Order arid Disposition 5-26-14. Order directing New York Railways Company and Belt Line Railway Corporation to provide transfers from 9th Ave- nue line in connection with Broadway-Columbus, Broadway- Amsterdam Avenue lines, and 6th Avenue and Amsterdam Ave- nue lines of New York Railways Company and 59th Street Cross- town line of Belt Line Railway Corporation, or vice versa, and from 9th Avenue line in connection with Broadway-Columbus Avenue line, Broadway-Amsterdam Avenue line and 6th Avenue and Amsterdam Avenue line and 59th Street Crosstown lines, and re-transfer northbound to Madison Avenue or Lexington Avenue line of New York Railways Company, or vice versa, for one fare. 5-29-14 and 6-4—14. Acceptance of Order by Companies. Order complied with. Case No.; Date Commenced; Company and Subject 11_6_14_ Order directing that Van Brunt Street and Erie Basin Railroad Company be made a feeder line of lines of the 2600 Investigation of Public Service Commissions other companies. Van Brunt Street and Erie Basin Eailroad Company accepted Order. Other companies notified Commission that they would not accept Order and thereupon further hearings were held. 2-5—15, new Order issued directing transfers, limited to certain lines. 2-8-15, Brooklyn Eapid Transit Companies notified Commission they would not accept Order. Van Brunt Street and Erie Basin Railroad Company notified Commission accepted Order. 2-9-15, matter referred to Counsel. Case No.; Date Commenced j Company and Subject 1853. (Y— 16— 14.) Adams Express Company Rates for trans- portation of horses within First District. Order and Disposition 12—21-14. Opinion requiring reduction of rate during racing season. 1-8—15. Communication from company assenting to plan. Annual and Other Reports and Information to be Eiled BY Corporations Case No. J Date Commenced; Company and Subject 1Y95. (2-5-14.) Gas Corporations. Information as to de- posits made by consumers. Order and Disposition 2-5-14. Resolution requiring filing of information. 2-17-14. Resolution extending time for filing of information. No accept- ance required. Order complied with. Case No.; Date Commenced; Company and Subject 1828. (5-27-14.) South Shore Traction Company. Investi- gation as to failure to file annual report for 1912-1913. Order and Disposition 7—30—14. Order closing record of proceeding. Case No.; Date Connmenced; Company and Subject 1829. (5-27-14.) Van Brunt Street & Erie Basin Railroad Company. Failure to file accident reports. Final Eepoet of Joint Legislative Committee 2601 Order and Disposition 7—30—14:. Order closing record of proceeding, company having complied with Order. Case No.; Date Commenced; Company and Subject 1835. (6-23-14.) Street and Electric Kailroad (operating) Corporations. Annual report for 1913-1914. Order and Disposition 6-23—14. Order prescribing form and directing filing of report. 10-6-14. Order extending time for filing report. Ac- ceptance not required. Order complied vdth. Case No.; Date Commenced; Company and Subject 1837. (6-23-14.) Eailroad and Street Kailroad (inchoate and dormant) Corporations. Annual report for 1913—1914. Order and Disposition 6-23-14. Order prescribing form and directing filing of re- port. 10-6-14. Order extending time for filing report. Ac- ceptance not required. Order complied with. Case No-.; Date Commenced; Company and Subject 1838. (6-23-14.) Steam Railroad (operating) Corporations. Annual report for 1913-1914. Order and Disposition 6-23-14. Order prescribing form and directing filing of re- port. 11-6-14. Order extending time for filing report. Ac- ceptance not required. Order complied with. Case No.; Date Commenced; Company and Subject 1839. (6-23-14.) Steam Eailroad (lessor) Corporations. Annual report for 1913-1914., 2602 Investigation of Public Seevice Cosimissions Order and Disposition 6-23-14. Order prescribing form and directing filing of re- port. 10-6-14. Order extending time for filing report. Accept- ance not required. Order complied with. Case No.; Date Commenced; Company and Buhject 1840. (6-23-14.) Fifth Avenue Coach Company. Annual report for 1913-1914. Order and Disposition 6-23-14. Order prescribing form and directing filing of re- port. Acceptance not required. Order complied with. Case No.; Date Commenced; Company and Subject 1841. (6-23-14.) Stage Coach (dormant) Corporations. Annual report for 1913-1914. Order and Disposition 6—23—14. Order prescribing form and directing filing of re- port. Acceptance not required. Order complied with. Case No.; Date Commenced; Company and Subject 1842. (6-27-14.) Baggage Corporations and Transfer Cor- porations. Annual report for 1913—1914. Order and Disposition 6— 2Y— 14. Order prescribing form and directing filing of re- port. Acceptance not required. Order complied with. Case No.; Date Commenced; Company and Subject 1867. (9-11-14.) Eailroad and Street Eailroad Corpora- tions. Notice of proposed acquisition or putting into operation of cars or car equipment. Order and Disposition 9-11-14. Order directing filing of information within five days after entering into agreement for requisition of new or addi- Final Report of Joint Legislative Committee 260S tional cars or car equipment and not less than ten days before commencing work on cars or car equipment to be manufactured or reconstructed. Acceptance not required. Order complied with. Case No.; Date C ommeiiced ; Company and Subject 1870. (9-15-14.) Brooklyn Heights Eailroad Company, ISTassau Electric Eailroad Company, New York Consolidated Eail- road Company, South Brooklyn Eailway Company, Brooklyn, Queens County and Suburban Eailroad Company, Coney Island and Gravesend Eailway Company, and Coney Island and Brook- lyn Eailway Company. Information as to passengers on surface and elevated lines from January 1, to June 30, 1914. Order and Disposition 9-15-14. Order directing filing of information. 9-29-14. Order abrogating Order of 9-15-14. Case No.; Date Commenced; Company and Subject 1883. (10-27-14.) Stage Coach Corporations. Franchise and corporate documents. Order and Disposition 10—27—14. Order requiring filing of documents. Acceptance not required. Order being complied with. Case No.; Date Commenced; Company and Subject 1889. (11-24-14.) Baggage and Transfer companies. Regu- lations as to filing of rates and schediiles. Order and Disposition 11-24-14. Order prescribing regulations for filing rates and schedtdes. Acceptance not required. Order being complied with. Case No.; Date Commenced; Comnpany and Subject 1890. (11-24-14.) Steam Corporations. Eegulations as to filing of rates and schedules. 2604 Investigation of Public Sehvice Commissions Order amd Disposition 11—24—14. Order prescribing regulations as to filing rates and schedules. Acceptances not required. Order being complied with. Case No. ; Date Commenced; Company and Subject 1897-A. (12-22-14.) Gas and Electric Corporations. An- nual report for 1914. Order and Disposition 12-22-14. Order prescribing form and directing filing of re- port. Acceptance not required. Time for compliance has not expired. Case No.; Date Commenced; Company and Subject 1899. (12-29-14.) Steam Corporations. Annual report for 1914. Order and Disposition 12—29—14. Order prescribing form and directing filing of re- port. Acceptance not required. Time for compliance has not expired. Safety Pkecautions ,Case No.; Date Commenced; Compaivy and Subject 1441. (12-19-11.) jSTew York and Queens County Eailway Company et al. Automatic electric block signals on single track lines. Order and Disposition 1-13-14. Order amending Order of 3-5-12 so as to require ISTew York and Queens County Eailway Company to equip auto- matic electric block signals on Flushing and Jamaica lines only. 9-29-14 and 10-23-14. Orders extending time of JSTew York and Queens County Eailway Company for equipping lines with signals. 1-14-14. Acceptance of Order of 1-13-14. Order complied with. Case No.; Date Commenced; Com,pav/y and Subject 1725. (8-19-13. ) New York, New Haven and Hartford Eail- road Company. Protection of employees from contact with over- head electrical equipment. Final Report of Joint Legislative Committee 2605 Order and Disposition 4-3-14. Order modifying Order of 12-19-13 so as to change in certain details, the protection of employees working on tops of cars and locomotives. 4-29-14. Acceptance. Order complied with. Case No: J Date Commenced; Company and Subject 1765. (11-25-13.) New York Consolidated Eailroad Com- pany. Additional safety precautions at grade crossings on Can- arsie line. Order and Disposition 3-20-14. Order directing installation of crossing gates, sta- tioning of flagman and installation of automatic bells at various grade crossings. 6—5—14. Order modifying original Order in certain particulars. 4^3—14. Order extending time for accept- ance of Order of 3-20-14. 6-13-14. Acceptance of Order. 10- 13—14, 11—6—14 and 12—8—14. Extensions of time for compliance with certain provisions. 1—7—15. Communication to company inquiring why provisions of Order as to flagman during 24 hours of day at Flatlands avenue and Avenue " L " crossings were not complied with. 1—16—15. Reply from company stating that there was no necessity for keeping flagmen during entire 24 hours of day ; that company had understood that stationing flagmen during certain periods of day would be sufEcient and asking for modiflca- tion of Order. 2—5—15. Order denying application for modifica- tion. Order complied vsdth except during part of time above noted. Case No. J Date Commenced; Company and Subject 1872. (9-22-14.) New York Central and Hudson River Railroad Company. Improvement of West 132d street crossing over company's tracks. Order and Disposition 12—4—14. Opinion and Final Order directing installation of crossing gates and planking of crossing. 12-9-14. Acceptance of Order. Order complied with. 2606 Investigation oj' Public Seevice Commissions Case No.; Date Commenced; Compan/y and Subject 1881. (10-23-14.) Long Island Eailroad Company. Safety precautions at Channel avenue grade crossing, Far Kockaway. Order and Disposition 12-4-14. Order requiring construction of overhead footbridge. 12-31-14. Acceptance of Order. Fenders, Wheelguaeds and Safety Devices Case No.; Date Commenced; Connpany and Subject 1048. (1-22-09.) Street Eailroad Corporations in Brook- lyn and Queens. Fenders and wheelguards. Order and Disposition 2-5-14. Amendatory Order directing New York Consolidated Eailroad Company and other companies of the B. E. T. system to equip street railroad cars with wheelguards, and within a defined territory, with fenders. 2-17-14. Order extending time of companies for acceptance of Amendatory Order. 2-5—14. Ac- ceptance of Order under certain conditions and requesting exten- sion of time for compliance. 7-31-14. Extensions of time for compliance granted. 10-29-14. Wrote to Brooklyn Heights Eail- road Company stating inspection showed that wheel guard gates were set at 7 inches above rail, which did not comply with Order. Companies complying with Order, except as above noted, insofar as time for compliance has already expired. Matters Eelating Mainly to Operation Case No'.; Date Commenced; Company and Subject 1674. (4-22-13.) Fifth Avenue Coach Company. Opera- tion of motor busses to announced destination points and to termini of routes. Order and Disposition 1-9—14. Order discontinuing proceeding in view of improve- ments. Case No.; Date Commenced; Company and Subject 1693. (6-17-13.) Interborough Eapid Transit Company, ISTew York Consolidated Eailroad Company, ITassau Electric Final Report of Joint Legislative Committee 2607 Kailroad Company and South Brooklyn Railway Company. Standing of passengers on rear platfcams of end cars of trains. Order and Disposition 7-23-14. Order directing New York Consolidated Railroad Company, Nassau Electric Railroad Company and South Brook- lyn Railway Company to provide guards on rear platforms on elevated trains during specified hours. 8—21—14. Order extend- ing time for accepting Order of 7-23-14. Application from com- panies for rehearing and rehearing held and closed 9—29—14. Matter pending undetermined. Case No.; Daie Commenced; Company and Subject 1784. (1-6-14.) Interborough Rapid Transit Company. Operation of through trains of Third avenue elevated line to and from Harlem River or Willis Avenue Station. Order and Disposition 2-3-14. Opinion and Order discontinuing proceeding on ground that through operation was not warranted. Case No.; Date Commenced; Company and Subject 1812. (3-9-14.) Street Railroad Corporations. Return of fares or issuance of emergency block tickets. Order and Disposition 7-30-14. Opinion and order directing issuance of block ticket good till end of second day where cars were delayed fifteen succes- sive minutes or more and passengers were not carried to destina- tion by transfer or rerouting of cars. 8-21-14. Order extending time for acceptance. Order accepted by companies and being complied with. Case No.; Date Commenced; Company and Subject 1813, (3-31-14.) Pelham Park and City Island Railway Company, Inc. Question of further operation of monorail system. 2608 Investigation of Public Service Commissions Order and Disposition 4^14^14. Order discontinuing proceeding as operation of monorail had been discontinued. Case No.; Date Commenced j Company and Subject 1814. (4r-14-14.) Ifassau Electric Eailroad Company and BrooMjQ, Queens County and Suburban Eailroad Company. Failure to stop cars at Broadway and Rodney street, Brooklyn. Order and Disposition 4r-21— 14. Order directing, stopping of eastbound and west- bound cars of Balph— Eockaway line at Broadway and Eodney street, and eastbound and westbound cars on Broadway, Eeid ave- nue. Summer and Wyckoff avenue lines at same point. 5-5—14. Acceptance of order. Order complied with. Case Xo.j Date Commenced; Company and Subject 1868. (9-11-14.) Brooklyn Heights Eailroad Company. Failure to stop cars at Cortelyou road on 16th avenue line. Order and Disposition 11-17-14. Order directing that from September 10th to May 30th in each year westbound cars on 16th avenue line be stopped at Cortelyou road and Gravesend avenue, Brooklyn. 11—25-14. Acceptance of Order. Order complied with. Mattees Eelating Maik'ly to Service Case No.; Date Commenced; Company and Subject 1510. (5-21^12.) New York and Queens County Eailway Company. Service and equipment. Order and Disposition 7_30-12. Order discontinuing proceeding in view of other proceeding (Case 1848) covering all lines of company. Case No.; Date Commenced; Company and Subject 1544. (7-23-12.) Long Island Eailroad Company. Service and equipment and stations on Atlantic avenue and Eockaway Beach divisions. Final Eepoet of Joint Legislative Committee 2609 Order and Disposition 12-29-14. Order discontinuing proceeding in view of Case 1891 covering service on all lines. Case No. J Date Commenced; Company and Subject 1608. (1-3-13.) Brooklyn Heights Eailroad Company. Service on Bay Eidge avenue line. Order and Disposition 7—30—14. Order discontinuing proceeding. Case No.; Date Commenced; Company and Subject 1713. (8-19-13.) Brooklyn Heights Eailroad Company. Service on Putnam avenue line. Order and Disposition 7-30-13. Order discontinuing proceeding in view of improve- ments in service. Case No.; Date Commenced; Company and Subject 1744. (10-7-13.) Nassau Electric Eailroad Company and Brooklyn Heights Eailroad Company. Service on Vanderbilt avenue and 16th avenue lines. Order and Disposition 4—24—14. Order directing operation of number of cars to pro- vide seats equal to number of passengers except on week days in lihe direction of traffic, when cars should be operated in accordance with specified schedules. 5-7—14. Order extending to 5-11- 14 time for acceptance. 5—15—14. Order extending to 9—21—14 time for compliance with Order. 9—28—14. Eeport from Transit bureau in regard to failure to operate from 7 a. m. to 9 a. m. and from 5 p. M. to 7 p. m. on 9-22—14 service required by Order. 10—2—14. Communication to company calling attention to com- pany of non-compliance with Order. 10-13-14. Eeply from company asking for abrogation of Order or for rehearing. 10-20- 14. Order denying abrogation or rehearing. Matter of compliance 2610 Investigation of Public Seeviob Commissions with Order taken up in Case No. 1880 now pending before Oom- mission covering service on all surface lines, company contending that there should be a readjustment of requirements of Order. Case No.; Date Commenced j Company and Subject 1Y53. (10-24^13.) Long Island Railroad Company. Service on lines of railroad from and to Long Island City and 34th street, Long Island City ferry line. Order and Disposition 2—6—14. Opinion and Order discontinuing proceeding in view of improvement. Case No.; Date Commenced; Company and Subject 1759. (11-14-13.) Union Railway Company of New York City, New York City Interborough Railway Company, Southern Boulevard Railroad Company and Bronx Traction Company. Service and equipment. Order and Disposition Opinion and Order discontinuing proceeding in view of improve- ments in service. Case No.; Date Commenced; Company and Subject 1760. ( 11-14-13. ) iStaten Island Midland Railway Company. Service on Port Richmond-Midland Beach line. Order and Disposition 3-27-14. Order directing operation from 4-1-14 between Richmond road and Midland Beach of cars on 30 minute headway and to continue the service in winter as well as in summer. Ac- ceptance 3-27-14. Order complied with. Case No.; Date Commenced; Company and Subject 1774. (12-19-13.) New York and Queens County Railway Company. Service on Flushing-Jamaica line. Order and Disposition 2—20—14. Order discontinuing proceeding. Final Report of Joint Legislative Committee 2611 Case No.; Date Commenced; Company and Subject 1785. (1-6-14.) Nassau Electric Eailroad Company, Brook- lyn Heights Railroad Company and Brooklyn and Queens County and Suburban Railroad Company. Service on street surface rail- road lines. Order and Disposition 11—10^14. Order discontinuing proceeding in view of pend- ency of Case 'No. 1880 covering service on all lines. Case No.; Date Commenced; Company and Subject 1Y88. (1-16-14.) New York Railways Company. Service on Eighth avenue, Sixth avenue and Christopher street lines. Order and Disposition 5-26-14. 'Order discontinuing proceeding in view of improve- ment. Case No.; Date Commenced; Company and Subject 1794. (2-3-14.) Brooklyn Heights Railroad Company. Service on Elatbush avenue line. Order and Disposition 11-10-14. Order discontinuing proceeding in view of proceed- ing in Case ISTo. 1880 covering service on all lines. Case No.; Date Commenced; Company and Subject 1808. (3-20-14.) New York Consolidated Railroad Com- pany, Nassau Electric Railroad Company and South Brooklyn Railway Company. Turning back of trains on elevated. Order and Disposition 7-9-14. Final Order "A" directing stopping of trains of Broadway-Canarsie line at New Lots, Livonia and Sutter avenue stations. 7-23-14. Acceptance of Order. 9-1-14. Complaint as to noncompliance with Order calling attention to company. Order complied with except as noted. 2612 Investigation of Public Seevioe Commissions Case No. J Date Commenced; Company and Subject 1815. (4-1Y-14.) Long Island Railroad Company. Train service on IsTorth Side Division. Order and Disposition 5—7—14. Order directing increase in passenger service and additional train leaving Pennsylvania station at about 12 :30 a. m. stopping at all stations on North. Side Division. 11-14-14. Ac- ceptance of Order. Order complied with. Case No. J Date Commenced; Company and Subject 1821. (5-12-14.) Forty-second Street, Manhattanville and St. Nicholas Avenue Railway Company. Service on Broadway branch, One Hundred and Tenth Street, Crosstown, and Tenth Avenue branch lines. Order and Disposition 5—27-14. Order discontinuing proceeding after improvement to service. Case No.; Date Commenced; Company and Subject 1846. (7-1-14.) ISTew York Railways Company. Service on Eighth Street Crosstown line. Order and Disposition 10-27-14. Order discontinuing proceeding in view of im- provement to service. Case No ; Date Commenced; Company and Subject 1847. (7-9-14.) New York Consolidated Railroad Com- pany. Service of Brighton Beach line. Order and Disposition S-21-14. Order directing operation on Brighton Beach line, except on Sundays and holidays, three of trains operated on Brighton Beach line through to Fulton Ferry station and passing Franklin Aveniie station between 7 :45 a. m. and 8 :30 a. m. Final Repokt of Joint Legislative Committee 2613 Case No.; Date Commenced; Company and Subject 184:8. (7-1-14.) New York and Queens County Railway Company. Service and equipment. Order and Disposition 10—20—14. Order directing company to operate on all lines a number of cars sufficient to furnish seats for all passengers ex- cept during certain periods, when cars are to be operated on a specified schedule. 12—4—12. Order extending time of accept- ance. 12-8-14. Communication received from company stating it could not accept and asking for modification. 1—29—15. Ap- plication denied. 2-2—15. Application for rehearing; rehearing now going on. Case No.; Date Commenced; Company and Subject 1850. (T-1-14.) ISTew York Consolidated Railroad Company, Nassau Electric Railroad Company and South Brooklyn Railroad Company. Saturday, Sunday and holiday service on elevated lines. Order and Disposition 12—29—14. Order discontinuing proceeding in view of Case 1882 covering service on all elevated lines. Case No.; Date Commenced; Company and Subject 1879. (10-20-14.) New York, New Haven and Hartford Railroad Company. Service on Harlem River branch to and from City Island (Bartow). Order and Disposition 12-11-14. Order discontinuing proceeding in view of improve- ments to service. Matters Relating Mainly to Equipment Case No.; Date Commenced; Company and Subject 1505. (5-14-12.) Brooklyn Union Elevated Railroad Com- pany, Nassau Electric Railroad Company, Sea Beach Railway 2614 Investigation oi Public Seevice Commissions Company and South Brooklyn Eailway Company. Destination signs in ears in sei-vice on elevated lines. Order and Disposition 7-30-14. Order directing equipment of cars with destination sig-ns. 8-21-14. Order extending time for compliance. 9-15- 14. Order modifying Order of 7-30-14 and directing that all cars equipped with line and destination signs and every motor car should display proper line and destination signs and all trains operated should display proper dash destination signs, except on certain short lines. 9-24-14. Letter received from JSTew York Consolidated Kailroad Company stating that the required number of signs had not been delivered for causes for which company had no control, but that work was being pushed. On 10-26-14 wrote to New York Consolidated Eailroad Company stating that investigation shows noncompliance with Order and inclosing blue- print tabulation. On 11-7-14 received a letter from company in answer to ours of 10—26—14 stating that the necessary signs were delayed but expected same for use on 1-20-15. On 12-15-14 wrote the New York Consolidated Eailroad Company in reply to theirs of 12-4-14 to be informed of the progress of the work of equipnient, and if unable to comply with Order to file applica- tion for modification of Order and reasons therefor. On 1—6-15 received letter from company stating that destination signs have been secured and that it can now comply with Order. Case No. J Date Commenced; Company and Subject 1536. (7-12-12.) Long Island Eailroad Company. Opera- tion of wooden trailer cars in trains. Order and Disposition 11-11—13. Order restricting operation of wooden trailer cars in electrically driven trains. 2-6-14. Order after rehearing pro- hibiting after certain periods the operation of wooden cars in mul- tiple unit trains made up in part of steel cars. 2-6-14. Ac- ceptance of Order. 10—28-14. Communication to company calling attention to noncompliance with Order. 12—11—14. Final Eepoet of Joint Legislative Committee 2615 Order denying application for modification of Order after re- hearing. Order subsequently complied with. Case No.; Date Commenced; Company and Subject 1783. (1-6-14.) Manhattan and Queens Traction Corpora- tion. Additions and repairs to rolling equipment. Order and Disposition 1-9-14. Order directing cessation of operation of existing equipment and overhauling and repairing of same before recom- mencement of operation, and directing maintenance of equipment in good condition until supplanted by new cars. 1-14-14. Ac- ceptance of Order. 3-13-14. Order denying application for rescission of Order. Order complied with. Case No.; Date Commenced; Company and Subject 1789. (1-23-14.) Electrical corporations, railroad corpora- tions and street railroad corporations. Marking structures for carrying overhead wires and pillars for support of overhead tracks. Order and Disposition 3—6—14. Orders directing companies to mark structures for support of overhead tracks with identification of ownership and to number the same. Order accepted by companies and being complied with. Case No.; Date Comm,enced; Company and Subject 1824. (5-19-14.) IsTew York Railways Company. Com- plaint of Central Mercantile Association. Condition of cars of Sixth Avenue, Seventh Avenue and Fourteenth Street surface lines. Order and Disposition 6-16-14. Opinion and Order discontinuing proceeding in view of complaint not being well founded. Case No.; Date Commenced; Company and Subject 1849. (7-1-14.) New York and Long Island Traction Com- pany. Sprinkling of streets with water. 2616 Investigation of Public Service Commissions Order and Disposition 7—30—14. Order directing company to comply with franchise provisions regarding sprinkling of streets on which company operated cars. 8-21-14. Order modifying Order permitting sprinkling of streets with oil. 9-1-14. Acceptance from com- pany, protesting against hearing in Case, and stating that if the company had had any idea that the Commission contemplated action, it would have oiled the road at once. Order complied with. Case No.; Date Commenced; Company and Subject 1874. (9-29-14.) Long Island Railroad Company. Instal- lation of emergency lighting system in Atlantic avenue tunnels. Order and Disposition 10-27-14. Order directing installation of emergency lighting system. 10-29-14. Acceptance of Order. Order complied with. Case No.; Date Commenced; Company and Subject 1876. (10-6-14.) Long Island Railroad Company. Reloca- tion of third-rail equipment on Atlantic division. Order and Disposition 10-30—14. Order directing relocation of third rail on elevated portions of division. 11—17-14. Order modifying Order of 10-30-14 in certain detail of recital. 11-24-14. Acceptance of Order provided company could obtain necessary funds for work. Order complied with. Station and Station Platforms Case No.; Date Commenced; Company and Subject 1411. (10-31-11.) Interborough Rapid Transit Company,, Escalator at 155th Street and Eighth Avenue elevated station, Order and Disposition 12-29-14. Order discontinuing proceeding in view of im- provements provided by certificate granted 5—22—14 to Manhattan Railway Company, owner of railroad, for structural changes. Final Keport of Joint Legislative Committee 2617 Case No.; Date Commenced j Company and Subject 1727. (9-2-13.) Long Island Railroad Company. Construc- tion of new local station on Old Southern division at South street, Jamaica. Order and Disposition 7-30—14. Order directing construction of station by Novem- ber 1, 1914. 12—11—14. Order after rehearing conforming Order, and extending time for construction to March 31, 1915. IvTo acceptance received. It is understood that the company in- tends to obtain a writ of certiorari. Case No.; Date Commenced; Company and Subject 1757. (11-7-13.) Long Island Railroad Company. Com- plaint of Jamaica Station Association as to service and station facilities at Union Hall street station. Ordetr and Disposition 1—16-14. Opinion and Order directing rearrangement of local train schedule so as to provide for additional stops at Union Hall Street station, to construct a westbound platform at Union Hall Street station, suitable toilet facilities and to make changes in station and station platforms so as to provide for stopping of ad- ditional trains at station. 1-3-14 and 3-3-14. Orders extend- ing time for compliance as to stopping of trains. 3-10—14. Order modifying Order of 1-16-14 in certain details. 3-12-14. Ac- ceptance of Order, with reservation of right to discontinue trains when Commission and company see fit. Order complied with. Case No.; Date Commenced; Company and Subject 1790. (1^23-14.) Interborough Rapid Transit Company. Service and facilities at 149th Street station of Third avenue elevated line and Lennox avenue subway line. Order and Disposition 2-6-14. Opinion and Order discontinuing proceedings in view of improvements. 6-2-14. Resolution approving plan of altera- tions at elevated station. 2618 IisrvBSTiGATiON OF Public Service Commissions Case No.; Date Commenced; Company and Subject 1791. (1-23-14.) Long Island Eailroad Company. Com- plaint of West End Citizens' League as to shelter facilities a1 Brooklyn Manor station on Rockaway Beach division. Order and Disposition 12-29—14. Order discontinuing proceeding upon satisfaction of complaint. Case No.; Date Commenced; Company and Subject 1825. (5-29-14.) Interborough Eapid Transit Company and Manhattan Railway Company. Complaint of Central Mercantile Association as to condition of elevated stations on Sixth Avenue elevated line. Order arid Disposition 6-16-14. Opinion and Order discontinuing proceeding as complaint was not well founded. Case No.; Date Commenced; Company and Subject 1832. (6-12-14.) Interborough Rapid Transit Company. Proposed new station at 120th street and Eighth avenue. Order and Disposition 12-18-14. Order discontinuing proceeding in view of disap- proval of location of new station. Case No.; Date Comvienced; Company and Subject 1861. (Y-30-14.) Interborough Rapid Transit Company. Widening of platforms at 23d Street station on Third Avenue elevated line. Order and Disposition 10-9-14. Order directing widening of platforms and station so as to be not less than ten feet wide in clear, except near northerly end of southbound platform. 10-19-14. Acceptance of Order. Application of company for extension of time to comply. 10-19-14. ISTot yet acted on by Commission. Final Eepoet of Joint Legislative Committee 2619 Case No. J Date Commenced; Company and Subject 18Y7. (10-13-14.) New York Consolidated Railroad Com- pany. Stairway facilities at Broadway Feriy Station on Broad- way Elevated line. Order and Disposition 10-27-14. Order directing opening of stairway from north- easterly end of mezzanine gallery to northerly side of Broadway. 12-8-14. Order extending time for completion of work. 12-22-14. Order denying application for rehearing. Report not received as to completion of work. Other Matters Relating to Electrical Corporations Case No.; Date Commenced; Company and Subject 1100. (4-21-09.) Electrical Corporations. Certification of meters. Order and Disposition 1-16-14, 6-2-14, 8-21-14 and 10-2-14. Amendatory Resolu- tions certifying additional types of meters as conforming to speci- fications adopted by Commission. Acceptance not required. Re- solutions being complied with. Case No.; Date Commenced; Company and Subject 1451. (1—12-12.) Electrical Corporations. Certification of attachment to electric current energy meters and standard form of report on test. Order and Disposition 1-23-14. Resolution denying application for extension of Re- solutions of 1-21 and 8-9-13. 2-17-14. Amendatory Resolu- tion approving combination of devices for use on certain types of energy meters. 6—16—14. Resolutions extending Resolution of 7-15—13. Acceptance not required. Orders being complied with. Case No.; Date Commenced; Company and- Subject 1524. (6-21-12.) Electric Light CorpOTations. Regulations as to testing electric meters. 2620 Investigation of Public Sbkvicb Commissions Order and Disposition Y-9-14. Order amending Order of Y-12-12 so as to extend period between tests of certain sizes of meters. No acceptance required. Order complied with. Case No. J Date Gotmnenced; Company and Subject 1Y29. (8-9-13.) New York Edison Company. Complaint of C. Perceval, Incorporated, as to refusal to furnish electric connection. Order and Disposition 2-27-14. Dismissal Order. 3-3-13. Opinion. 3-20-14. Order denying rehearing. 4-17—14. Service of writ of certiorari. 11-6—14. Order pursuant to decision of Appellate Division di- recting cancellation of Eider restricting consumer to exclusive service of Edison Company. 11—13—14. Opinion. 12-1-14. Order denying rehearing. IsTo report as to compliance. Case No.; Date CoTwmencedj Company and Subject 1755. (10-24-13.) Eichmond Light and Eailroad Company. Improvements in and additions to electric plant. Order a'nd Disposition 1-23-14. Opinion and Order discontinuing proceeding in view of contemplated improvements. 11-30-14. Order directing com- pany to make various additions to power station at Livingston, Staten Island. 11-24-14 and 12-16-14 and 1-5-15. Orders ex- tending time for acceptance of Order of 11—30—14. 1-9-15. Modifying Order. 1-29-15. Order extending time to accept Order of 1—19-15. Time for acceptance not yet expired. Case No.; Date Commenced; Company and Subject 1775. (12-23-13.) New York Edison Company. Complaint of Sharpe and Company as to installation of prepayment meters. Order and Disposition 1—23-14. Order dismissing complaint. Final Eepoet oe Joint Legislative Committee 2621 Other Matters Relating to Gas Coepoeations Case No.; Date Oommenced; Company and Subject 1Y3Y. (9-26-13.) Woodhaven Gas Light Company. Exten- sion of gas mains in Aqueduct, Howard Estates and Ramblers- ville, borough of Queens. Order and Disposition 2—3—14. Opinion and Order discontinuing proceeding in view of determination adverse to proposed extension. Case No.; Date Commenced; Com,pany and Subject 18(>4. (2-4-14.) Central Union Gas Company. Complaint of Ostro Construction Company as to supply of gas ranges. Order and Disposition 4—3-14. Order discontinuing proceeding, complaint having been withdrawn. Case No.; Date Com,menced; Company and Subject 181&. (5-7-14.) Northern Union Gas Company, Central Union Gas Company and Westchester Lighting Company. Supply of gas for buildings within 100 feet of mains. Order and Disposition 6-23-14. Opinion and Order discontinuing proceeding in view of satisfaction of complaint. Case No.; Date Commenced; Company and Subject 18Y5. (9-29-14.) Northern Union Gas Company and Cen- tral Union Gas Company. Eeplacement prepayment gas meters with gas meters of standard type. Order and Disposition 10-30-14. Opinion and correspondence with company. Com- mission holding that companies were obliged to replace prepay- ment meters with standard type meters without charge. 12-31-14. Companies having refused to meet requirements set forth in 2622 Investigation of Public Service Commissions Opinion, Resolution adopted directing Counsel to commence court proceedings to compel replacement of meters. Othee Matters Relating to Steam Coepoeations Case No.; Date Commenced j Com-pany and Subject 1Y63. (11-21-13.) New York Steam Company. Improve- ments in methods and property. Order and Disposition 7-23-14. Opinion and Order directing replacement of 58,986 feet of steam main of brick trench type with mains of modem tile construction. Y-30-14. Order extending time for acceptance of Order. 12-31-14. Opinion and Order after rehearing requiring replacement of mains at rate of 10,000 feet per year. 1-19-15 and 2-2—15. Orders extending time to February 10, 1915, for acceptance. Tracks and Switches Case No. j Date Comm-encedj Company and Subject 16Y5. (4^22-13.) Richmond Light and Railroad Company. Proposed construction of extension from Bulls Head to Linoleum- ville and from Bulls Head to Springville, borough of Richmond. Order and Disposition 12-16-14. Resolution directing Counsel to commence man- damus proceeding to compel construction of extension of railroad tracks. Case No.; Date Commenced; Company and Subject 1Y26. (9-2-13.) New York and Queens County Railway Company. Extension of street surface railroad on Flushing ave- nue from Ehret avenue to Jackson avenue, borough of Queens. Order and Disposition 1-6 and 1-9-14. Opinions. 4-24-14. Order discontinuing proceeding. 12-8—14. After rehearing resolution directing Coun- sel to commence mandamus proceeding to compel construction of street railroad extension. Final Eepoet uf Joint Legislative Committee 2623 Case No.; Date Commenced; Company and Subject 1Y45. (10-10-13.) Long Island Electric Eailway Company. Koadbed and tracks on Far Rockaway division. Order and Disposition 5-5-14. Order directing improvement to tracks and mainte- nance of tracks in improved condition. 5-22-14. Acceptance of Order. Order being complied with. Case No.; Date Commenced; Com,pany and Subject 1768. (12-5-13.) Long Island Electric Eailway Company. Double tracking on JSTew York avenue between South street and Oak street, borough of Queens. Order and Disposition 2-17-14. Order discontinuing proceeding. Case No.; Date Commenced; Company and Subject 1799. (2-17-14.) Long Island Electric Eailway Company. Double tracking road on New York avenue and Eockaway Turn- pike between South street and Hook Creek, borough of Queens. Order and Disposition 6-17-14. Order directing construction of additional tracks to complete double track on New York avenue between South street and Farmers avenue, borough of Queens immediately or coinci- dentally with paving to be begun by City, and on New York avenue between Oak street and Farmers avenue within 18 months from July 1, 1914. 6-23—14. Order extending time for acceptance. 6-27—14. Acceptance of Order. Time for compliance not yet expired. Case No.; Date Commenced; Company and Svhject 1809. (3-20-14.) New York Eailways Company and 34th Street Crosstown Eailway Company. Extension of tracks and service on West 34th street crosstown line between Tenth avenue and North Eiver. 2624 Investigation of Public Service Commissions Order and Disposition 5—28-14. Opinion and communication to company requiring extension of double track underground electric road on West 34th street. 10-6-14. Order discontinuing proceeding in view of construction of extension. Matters Relating to Accounts Case No.; Date Commenced; Company and Bvhject 1818. (5-7-14). New York Railways Company. Account for injury and damage claims. Order and Disposition 5—26—14. Order directing restoration of casualties and insur- ance reserve of some transfer and insurance account and amend- ment of quarterly report accordingly. ."3-16—14. Orders ex- tending time for acceptance. 6-23-14. Order amending Order of 5-26—14 and directing restoration of casualities and insurance re- serve, part of whicli was credited to surplus account and part of whicli was credited to operating expenses, and amendment of quarterly report accordingly. Y— 1— 14. Acceptance of Order. EXHIBIT 1^0. 29 Matters acted upon at the following meetings of the Public Service Commission for the First District, together with a com- ment as to the questions involved: February 21, 1913. February 25, 1913. April 25, 1913. April 29, 1913. June 3, 1913. September 9, 1913. September 23, 1913. September 30, 1913. February 3, 1914. October 9, 1914. Stated meeting of the Public Service Commission held on Friday, February 21, 1913, at 12:15 p. m. Present: Oommis- Final Repoet of Joint Legislative Committee 2625 sioner Maltbie, Acting Chairman; Commissioners Eustis, Cram and Williams. The following matters were acted upon: Matter Acted Upon (1) Item ISTo. 287: Copy of franchise granted by Board of Estimate and Apportionment to Union Railway Company of l^ew York city for street surface railway extension on Morris avenue from 161st street to 167th street, the Bronx. Ordered filed. Com,ment The power to grant franchises of the nature mentioned resides exclusively with the Board of Estimate and Apportionment. A copy of each of such franchise, when granted, is transmitted by the Board of Estimate and Apportionment to the Commission. There is no action whatever which the Commission can take upon such a franchise except to record it in its files. It is only when an application is made iy the grcmtee for the approval of the exercise of the franchise as convenient and necessary to the public service that the Commission can take any affirmative action. Hence, the only disposition of the copy of the franchise presented was to order it filed. It is formally presented at a meeting of the Commission in order that there may be a record thereof in the minutes, and to furnish the ready reference thereto which the printed volume of the minutes of the Commission affords. (2) Item No. 288: Copies of Report of Commissioners of Ap- praisal as to parcels in condemnation proceedings affecting prop- erty on Westchester avenue. Southern Boulevard and Boston road. The Bronx, required in connection with the Bronx branch of the Manhattan-Bronx Rapid Transit Railroad, and confirmatory Order of the Supreme Court. Order filed. Comment These papers are merely informative of the procedural progress of a condemnation proceeding which the Commission had pre- viously authorized the Corporation Counsel of the city to institute, and prior to the authorization of which the Commision had care- fully examined into the advisability and necessity for such con- 83 2626 IxvESTiGATiox or Pfblic Service Commissions denmation. These condemnation proceedings usually follow the unsuccessful efforts of the Commission and its staff to acquire by purchase at reasonable figures the property desired for the rapid transit construction. All this took place prior to the meeting on this date. This notification from the Corporation Counsel concern- ing the report and order are simply filed, i-equire no attention by tbe Commission, and are presented to the Commission and men- tioned in the minutes for the purpose of record and the ready reference thereto which the printed volume of the minutes of the Commission affords. (3) Item Xo. 2S9: Xotification from Chief Engineer of his approval of a sub-contractor for the construction of Section 14 of Koute Xo. 5 of the Seventh avenue-Lexington avenue Rapid Transit Railroad. Ordered filed. Comment This notification requires no action by the Commission. Under the rapid transit railroad construction contracts tie contractors have the right to sub-let portions of the work, but the Commission reser^-es the authority to disapprove the sulM;ontraetors. The subletting to the sub-contractors does not require the approval of the Commission. As a matter of practice, the contractor notifies the Chief Engineer of the Commission of his or its purpose to sub-let the work to a sub-contractor, and the Chief Engineer after inquiry notifies the contractor whether the sub-letting meets with his ap- proval. In this instance the inquiry with reference to the sub- letting was made previous to the meeting. The notice to the Com- mission from the Chief Engineer, witb regard to sub-letting is given for the purpose of record and is entered in the minutes in order to afford a ready reference for ascertaining tlie scope of the sub-contractor's work and responsibility should occasion for such reference arise. (4) Item 290: List submitted by Chief Engineer of vaults vacated and delivered to the contractor on Section 1, lA, 2, 2 A and 3 of Route Xo. o. Copy ordered sent to President Borough of Manhattan. Coviment Under the law, occupants of vaults under street in which rapid transit construction is necessars', who hold only temporary licenses Final Repoet of Joint Legislative Committee 2627 from the city for the occupancy of such vaults may be required by the city to vacate in order that the work may progress. These vaults are restored to the occupants after the work is finished. The Chief Engineer serves the notices upon the owners as necessity for vacating vaults arises from time to time. ISTo action whatever is required to be taken with reference to the report as to vaults vacated, but a copy of such report is sent to the Borough authori- ties for their files and information. (5) Item No. 291 : Letter from Commissioner Eustis to Presi- dent of the Borough of The Bronx requesting authority for by- passing of sewer at Brook avenue and 188th street in connection with construction of Section 1, Eoutes Nos. 19 and 22 of the Southern Boulevard and Westchester avenue rapid transit railroad. Communication approved. Comment This communication was sent by Commissioner Eustis after the matter had been submitted to him and to other Commissioners, informally by the Chief Engineer of the Commission. It was a matter of detail which required immediate attention and was taken up by an individual Commission prior to the meeting. The request for the by-passing of the sewer having been made at the in- stance of the Chief Engineer, would as a matter of course have the approval of the Commission, because it is a detail of engineer- ing construction as to which the Commission is naturally governed by the advice of the Chief Engineer and no examination by the Commission was necessary beyond the report of the Chief Engineer. (6) Item No. 292: Resolution in Case No. 1451 certifying a device for use as an attachment to certain types of electric meters. Resolution adopted. Comment A long time previously the Commission had made an order pro- hibiting the use of meters and attachments unless certified by the Commission as conforming to its specifications. Where a com- pany desires to use a certain device it submits it to the Commis- sion and a report thereon is then made by the electrical engineer. Upon the report of the electrical engineer, if favorable, the Com- mission certifies the device for use. The question involved is one 2628 Investigation of Public Seevice Commissions of technical electrical engineering, and the Commission is governed in its decision by the facts presented by the company and the re- port of the electrical engineer of his investigation. Invariably upon such application and report the company has acted in accord- ance with the recommendation of the electrical engineer. In this case also the Commission has so acted, and the resolution adopted was prepared by the counsel to the Commission. After the application from the company, the report by the electrical engineer and the advice of Counsel, all submitted previous to the meeting, the Commission adopted the resolution certifying the device. (7) Item No. 293: Case 1643. Hearing resolution upon complaint of Thomas Dimond as to the refusal of the I^ew York Edison Company to extend conjunctional service rate. Resolution adopted. Comment The question presented did not require any consideration or the passing of judgment by the Commission at this meeting because, a complaint having been presented which the respondent public service corporation declined to satisfy, the Commission simply directed a hearing to ascertain the facts upon which to base a future determination. (8) Item 294: Summary of reports made to the Commission of accidents occuring during January, 1912. Noted in the minutes. Comm,ent All accidents are reported to the Commission in writing, and most of them coming within defined classifications are reported by telephone. These accidents are investigated by the Commission's staff and are also investigated by the Commission formally where reports by the staff indicate the necessity for securing further in- formation or directing that remedial measures be taken. The summary of the number of accidents is made monthly and noted in the minutes for ready reference. No action is required with reference to these summaries, all action necessary having previ- ously been taken after the reports had come in. (9) Item No. 295: Eesolutions approving vouchers for work done and materials furnished in the construction of rapid transit railroads. Resolutions adopted. Final Report of Joint Legislative Committee 2629 Comment Th.© minutes state simply that vouchers approved by Committee of Audit for the payment of certain sums on accoimt of con- struction or of other purposes were approved and directed to be traoismitted to the Comptroller of the City of New York for payment. The standard provisions of construction contracts with reference to payments to contractors are that the Chief Engineer " shall from time to time as the work progresses," make in writing an estimate, such as in his opinion shall be just and fair of the amount and value of the work done and materials incorporated in the work by the contractor according to the terms of his contract. * * * Upon each such estimate being made and certified in writing to the Commission, the Commission shall prepare and certify a voucher for * * * per centum of the amount stated in such estimate or certified to be the value of the work done and the materials furnished as provided in Article * * * ^ and the City shall within thirty days after the date of the certi- fication of such voucher by the Commission pay the same; * * * The primary function with reference to the certification of the work done and the right of the contractor to payment resides with the Chief Engineer of the Commission, and he is made the arbiter according to whose judgment the Commission and the City are bound in paying for the work done and the materials furnished. The Chief Engineer of the Commission has under these contracts other powers vested in him which are not subject to the regulation either of the Commission, the City or the contractor. As a matter of invariable practice, the following has been the course pursued with reference to paying the contractors for construction work; The Division Engineer in charge of a particular section certifies to the Chief Engineer of the Commission in detail the quantities and the value of the work done and the materials furnished ; the Chief Engineer of the Commission then certifies that " according to the terms of the above-mentioned contract " the approximate estimate of the work done and the material furnished is just, and then transmits his estimate to the Commission with a recom- mendation for payment. These papers are checked up by the bookkeepers of the Commission, and the Auditor of the Commis- sion carefully examines the papers and thereupon certifies to the 2630 Investigation of Public Seevice Commissions Commission tlie accounts set forth in those papers. Thereafter the papers are examined by a standing committee of the Commis- sion on audit, and upon the approval of the account by the Com- mittee on Audit the papers are submitted for examination and certification by not less than three Commissioners. If no objec- tions then appear to the approval, the account is submitted at the regular meeting of the Commission for formal approval and trans- mittal to the City for payment. The Comptroller of the City of l^ew York or the person charged with the payment of the ac- count then checks up and examines in every detail the items of the voucher so that there can not possible be an overpayment or overdrawal by a contractor. In addition to all this, it should be borne in mind that the percentages retained from the amount due to the contractor and the security provided by the contractor by the large bond required under his contract are more than ample to cover any possible claim that the City can have against a de- linquent or defaulting contractor. Thus, every safeguard is taken to determine the correctness and justness of a contractor's account. Substantially similar certifications and precautions against de- ception are followed in the audit of supply bills of the Commission. The certification, examination and audit of these contract vouchers and supply bills must necessarily transpire before the formal meeting because the details are so numerous and the work so extensive that if they were attempted at the regular meeting they would require the presence of a large staff and a great deal of time would also be required in progressing the various steps out- lined. The action of the Commission at the meeting is simply the formal action consummating a regularly established and closely adhered to procedure. (10) Item No. 296: Resolution as to employees. Resolution adopted. Comment Upon the report of the Chief Engineer that he required addi- tional room for employees, a lease was proposed for such rooms at rates not in excess of those previously fixed for similar space occupied by the Commission. The negotiation of the lease was attended to before the meeting, and, in the approval of the lease. 2642 Investigation of Public Seevice Commissions the ObmTm'ssion was guided by the previous report of the Chief Engineer as to the necessity for additional room and the report of the Purchasing Agent of the Commission concerning the nego- tiation for the lease. The lease was signed by the Chairman. Stated Meeting of the Public Service Commission for the First District held on Tuesday , April 29, 1913, at 12 :15 p. m. Present: Commissioner Maltbie, Acting Chairman; Commissioners Eustis and Williams. The following matters were acted upon: Matter Acted Upon (1) Item No. 735 : Copy of Eesolution of Board of Estimate and Apportionment fixing roadway width. Ordered filed. Comment These papers required no action by the Commission, but are for Loformation and to be noted by the engineers in connection with plans for rapid transit railroad construction. (2) Item No. 736 : Eesolution approving plan for and au- thorizing regrading of Pearl and Park streets adjacent to Hallen- beck building, in connection with construction of section 9—0—1, Brooklyn loop lines. Resolution adopted. Comment At a meeting on April 11, 1913, the Commission authorized a communioation to the President of the Borough of Brooklyn with regard to the regrading of the street and submitted to the Borough President a plan for that purpose. The reply of the Borough President's office was presented at this meeting, stating that the plan was satisfactory. Accordingly, the Chief Engineer was authorized to have the work done. This action followed as a matter of course the previous action of the Commission on April 11th and the concurrence therein of the borough authorities. (3) Item No. 737: Communication from Chief Engineer as to restoration of pavement in Park avenue between 58th and 60th streets, in connection with tbe construction of section 8 of route No. 5. Recommendation approved. Final Kepoet of Joint Legislative Committee 2643 Comment Pursuant to the terms of the contract with the Bradley Con- tracting Company for the construction of this section, the Chief Engineer directed the contractor to restore the pavement at a price fixed by him, with a percentage for profit to the contractor. The Chief Engineer informed the Commission of his action which was approved by the Commission at this meeting. The action of the Commission was simply confirmatory of the pre- vious action of the Chief Engineer, pursuant to the terms of the construction contracts. (4) Item ISTo. Y38: Acceptance by ISTew York Municipal Railway Corporation of terms of governing contract for con- struction of trackwork in Centre street loop and original con- tract. Ordered filed. Comment These papers were simply for filing and required no action by the Commission. A record was made in the minutes for notation and ready reference. (5) Item No. 739: Eesolution authorizing contractor to take possession of property in connection with the construction of Section 14 of Eoute No. 5. Eesolution adopted. Com,m,ent The contract with the contractor, dated July 23, 1912, pro- vided for the placing of the contractor in possession of the prop- erty, and, title to the property having vested in the city as a result of condemnation proceedings, and turning over of the prop- erty followed as a matter of course. (6) Item No. 740. Permit for temporary tramway along Queens Boulevard in connection with construction of Section 3 of Eoute Nos. 36 and 37. Permit approved. Comment The E. E. Smith Contracting Company, the contractor for this section of the rapid transmit railroad having requested a permit for a temporary tramway for the purpose of transporting ma- terials in connection with construction work, the Chief Engineer 2644 Investigation of Public Seetice Commissions and Counsel to the Commission were previously requested to advise the Commission; one with reference to the engineering questions and the other with reference to the legal questions which were presented, and upon their reports made to the Commission, previous to the meeting, a permit for the tramway was authorized. (7) Item !N^o. 741. Communications from civic organizations as to proceedings pending before the Commission. Communica- tions referred to the Committee of the Whole. Comment These communications referred to cases pending before the Commission in which was acting quasi-judicially upon the record presented. The communications could not he considered as a part of the record in the proceedings because they^ were not pre- sented at the hearings at which the parties affected by them had an opportunity to be heard and to cross-examine as to the contents of these communications. The Commission, however, receives these communications and considers them in so far as they are based upon the records, but in so far as they are not based upon the record they are considered with a view to action independent of the Cases. They are therefore referred to the Committee of the Whole for further consideration. (8) Item No. 742: Resolution: approving recording of gas pressure gauge locations and type of recording gauges submitted by Queens Borough Gas and Electric Company. Resolution adopted. Comment The Commission on January 24, 1913, prescribed certain gas pressure regulations to be observed by gas companies in the borough of Queens and requiring, among other things, that the companies install recording pressure gauges of a type and at places to be approved by the Commission. Previous to this meeting, an application was made by the Queens Borough Gas and Electric Company for such approval, and upon the examination and report of the Gas Engineer of the Com- mission, came up for formal action by the Commission at this meeting; and the action of the Commission was in accordance with the recommendation of the Gas Engineer. Final Repokt of Joiwt Legislative Committee 2645 (9) Item No. 743: Opinion and Order authorizing Bronx Gas and Electric Company to issue $200,000 bonds. Adopted. Comment The Opinion and Order expressed the Commission's decision upon the record presented in a case before Commissioner Maltbie, in which investigations were made by the engineers of the Com- mission, the Bureau of Statistics and the Counsel as to the capital- izability of the expenditures proposed. A copy of Commissioner Maltbie's opinion was submitted to the various Commissioners, including the Chairman, prior to the meeting, and there appearing no reason for dissent the Opinion and Order were formally adopted at this meeting. (10) Item No. 744: Hearing resolution upon application of city of New York for determination of grade of opening Third avenue across tracks of New York and Harlem Railroad Com- pany. Eesolution adopted. C(Mnm,ent There was no action required by the Commission beyond fixing a date for a hearing to ascertain the facts upon which the applica- tion was based and upon which future action by the Commission might follow. (11) Item No. 745: Hearing upon application of New York Railways Company for the approval of change of motive power on the Metropolitan Crosstown line. Eesolution adopted. Comment There was no action required by the Commission beyond fixing a date for a hearing to ascertain the facts upon which the applica- tion was based and upon which future action by the Commission might follow. (12) Item No. 746: Letter to Board of Estimate and Appor- tionment in regard to repaving streets in connection with subway work. Letter authorized. Comment This matter had been the subject of discussion among the Commissioners, including the Chairman, the Chief Engineer and the Counsel to the Commission, and concerned a question of 2646 Investigation of Public Sbevice Commissions policy in connection witth future subway construction contracts which had been practically agreed upon prior to the meeting. (13) Item No. 74-7 : Eesolution approving vouchers. Eesolu- tion adopted. Comment Explanation concerning the audit and certification of vouchers prior to the meeting has been made in connection with (9) ; Item No. 295 of the meeting of February 21, 1913. (14) Item ISTo. 748: Resolution approving form of contract for wrecking of building at Park avenue and east 138th street the Bronx, in connection with construction of Section 15 of Koute No. 5. Resolution adopted. Comment The Chief Engineer and the Counsel to the CGmmission having reported to the Commission the necessity for wrecking this build- ing which had been previously acquired in connection with the construction of the rapid transit railroad at that point, a contract for that purpose was authorized. (15) Item No. 749: Special permission to Long Island Rail- road Company to put into effect 20-trip ticket fare between sun- dry points. Special permission granted. Commeyit Under the Public Service Commissions Law, a change in a tariff schedule can be made only upon 30 days' notice, unless shorter notice be permitted by the Commission. In this case, the Traffic Inspector having charge of tariff schedules previously reported in favor of granting the Special Permission as ad- vantageous to the public, and such permission was issued at the regular meeting. Stated meeting of the Public Service Commission for the First District held Tuesday, June 3, 1913, at 12:15 p. m. Present: Commissioner Maltbie, Acting Chairman; Commissioners Eustis, Cram and Williams. The following matters were acted upon : Matter Acted Upon (1) Item 932 : Copies of resolutions of the Board of Estimate and Apportionment rescinding previous resolutions which author- Final Repoet of Joint Legislative Committee 2647 ized the laying of pipe lines and conduits, etc., by various com- panies. Ordered filed. Comment These papers required no action by the Oammission, and are presented to the Commission and mentioned in the minutes for the purpose of record and ready reference thereto which the printed volume of the minutes of the Commission affords. (2) Item 933 : Copies of resolution of Board of Estimate and Apportionment changing street grades at Brook avenue and East 138th street. Ordered filed. Comment This required no action by the Commission, but are for the information of the engineers of the Commission in connection with plans for rapid transit railroad construction. (3) Item 934: Inquiry from the Sinking Fund Commission as to the need of certain lands in Brooklyn for public use. Reply authorized. Com,m,ent This required only an examination of the rapid transit railroad construction plans to ascertain if they affected the lands in ques- tion. The records of the Commission not disclosing a need for the lands in question, the Sinking Fund Commission of the city was informed by the reply that the lands were not needed for pub- lic use. (4) Item 935 : Resolution approving leases made by the New York Municipal Railway Corporation in connection with its work under rapid transit railroad contract No. 4. Resolution adopted. Comment Inquiry had previously been made. The counsel to the Com- mission reported that this was a proper instance for the approval by the Commission in accordance with the terms in contract No. 4, and action was taken accordingly. (5) Item 936: Original modifying agreement for under- piiming St. Paul's School and Vestry Building in connection with the construction of Section lA of Route No. 5. Ordered filed. 2648 Investigation of Public Service Commissions Comment The execution of tke agreement had been previously authorized by the Commission, and all the questions in connection therewith were then passed upon. The Secretary simply presented to the Commission and had noted in the record one of the originals of the agreement in the executed state. No action whatever was necessary on the part of the Commission at this time. (6) Item 937: Resolution approving work of new station con- structed by the Interborough Company at 38th street and Sixth avenue on Sixth avenue elevated line. Resolution adopted. ComTnent On February 3, 1913, the Commission directed the Interborough Company to provide a new station at that point, and to submit plans thereof to the Commission. When the plans were sub- mitted, they were referred to the Chief Engineer of the Com- mission who made an examination of them, and upon his recom- mendation the plans were approved at this meeting. The question was one purely of engineering, upon which the Commission is governed by the advice of the Chief Engineer. The action of the meeting was confirmatory of the investigation and report by the engineers of the Commission under the standing directions c £ the Commission. (7) Item 938, Case 1599 : Service of vTit of certiorari in the matter of the complaint of E. W. Bliss against Jay Street Con- necting R. R. Co. as to the latter's failure to furnish railroad service. Referred to counsel. Ccmiment The Commission on May 30, 1913, after investigation, directed the railroad to furnish the service, and the railroad obtained a writ of certiorari to review the determination of the Commission. The entry in the minutes simply noted the service of the writ. As a matter of course, it was referred to the counsel to the Com- mission for his attention. (8) Item 939: Resolution rescinding former resolution adopting new Route l^o. 52. Resolution adopted. Final Report of Joint Legislative Committee 2649 Comment As a result of further consideration of the route, to which Chairman MoCall personally gave particular attention, the Com- mission decided to rescind the Flushing Eoute No. 52, and to adopt a new one. Of all the facts concerning the change of plan the chairman was fully advised and the change was made with his express concurrence. The chairman himself transmitted a communication to the Board of Estimate and Apportionment ad- vising it of the action of the Commission in changing the route and requesting its approval. (9) Item 940: Hearing resolution in regard to service of the JTassau Electric Railroad Company upon the Ralph-Rockaway Avenue line. Resolution adopted. Comment This required no action by the Commission, beyond fixing a date for a hearing in order to investigate the facts upon which a determination of the Commission could subsequently be based. An order was entered by the Commission as the result of the in- quiry at a meeting held on iN'ovember 18, 1913, at which the chairman was present. (10) Item 941: Resolution approving vouchers. Resolution adopted. Comment Explanation concerning the audit and certification of vouchers prior to the meeting has been made in connection with (9) — Item 295 — of the meeting of February 21, 1913. (11) Item 942: Resolution as to employees. Resolution adopted. Com,ment The action of the Commission was strictly in accordance with the rules of the Civil Service Commission and the appointments were made in the regular order of nominees certified by that Com- mission, where lists had been established by it. See comment as to employees' resolution of February 21, 1913 (10) — Item 296. (12) Item 943: Resolutions authorizing contractor to take possession and resolution discontinuing condemnation proceedings 2650 Investigation of Public Service Commissions to acquire property at southeast comer of East 138th street and Canal street west in connection with the construction of section 15 of Route No. 5. Eesolutions adopted. Comment Previous to this meeting, the Commission had authorized con- demnation proceedings to acquire the property in question. The property was subsequently acquired by deed from the owner. There was therefore no longer any necessity for the condemnation proceedings, and as a matter of course the original resolution authorizing the condemnation proceeding was rescinded. Pur- suant to the provisions of the contract with Rodgers & Hagerty, Inc., the contractor for the construction of section 15 of Route JTo. 5, the contractor was authorized to take possession of the property. These steps were all progressive, and required no de^ termination by the Commission. Stated meeting of the Public Service Commission for the First District held on Tvssday, S&ptemher 9, 1913, at 12:45 p. m. Present: Commissioner Maltbie, Acting Chairman; Commis- sioners Eustis and Williams. The following matters were acted upon : Matters Acted Upon (1) Item No. 1394: Resolution approving agreement modify- ing contract for wrecking of portion of Astor House on section 1-A of Route No. 5. Resolution adopted. Comment The contractor, the Hudson Wrecking & Lumber Co., had asked for permission to substitute a bond for $5,000 in place of the cash security of $2,500' under the contract for the wrecking of the building, and, counsel to the Commission and the Chief Engineer having reported that there was no objection, the Com- mission authorized this to be done. There was no question or diflference involved in this proceeding, and the security was made more ample. The Chairman was fully informed of the matter and he himself executed the contract. Final Report of Joint Legislative Committee 2651 (2) Item No. 1395 : Original agreement witK Astor for lease of Astor House property and agreement and affidavits with licenses, in connection with section 1-A of Route Wo. 5. Ordered filed. Comment This required no action at this meeting, having heen previously acted upon, but the papers were simply noted so as to record their execution and delivery. (3) Item No. 1396: Resolution granting extension of time to Bradley Contracting Co. for completing section 9-0-1 of Brook- lyn Loop lines. Resolution adopted. Comment The application was submitted by the company, and previous to the meeting was referred to the Chief Engineer and Counsel to the Commission. Upon their report, and there appearing no reason for objection, the extension of time was granted. (4) Item ISTo. 1397 : Duplicate original agreement, modify- ing contract providing for withdrawal of money due to Degon Contracting Company, contractor for section 9-0-2 of Brooklyn Loop lines. Ordered filed. Com,ment This required no action at this meeting, having been previously acted upon, and the papers were simply noted so as to record the execution and delivery. (5) Item No. 1398: Correspondence with attorney for Brad- ley et al., against the Degon Contracting Co. in reference to the injunction suit to restrain the operation of the temporary tram- way in connection with section 11-B-l and ll-B-2 of the Fourth avenue subway. Communication authorized. Com,ment The correspondence related to details of an action pending in court as to which the Commission was necessarily guarded by the advice of its Counsel conducting its part of the litigation. The reply sent to the attorney was substantially in accordance with the suggestion of counsel. 2(552 Investigatiox of Public Service Commissions (6) Item No. 1399: Agreement between the Degon Contract- ing Co. and the Department of Water Supply, Gas & Electricity for removal and replacement of water mains on section 11— B— 2 of the Fourth avenue subway. Communication authorized to Department of Water Supply, Gas 6: Electricity. Comment The Department had previously inquired whether the proposed agreement was satisfactory to the Commission. Coimsel to the Commission, prior to the meeting, reported thereon, and the Secretary was authorized to transmit a copy of the report from Counsel and a copy of the construction contract to the Depart- ment of Water Supply, Gas & Electricity. (7) Item ~No. 1400: Report of Chief Engineer as to shutting down of work on section 1 of Eoute Nos. 19 and 22. Ordered hied. Comment This was a report by the Chief Engineer as to the progress of work, and required no action by the Commission at the meeting. (8) Item iSTo. 1401: Notice from Corporation Counsel of vesting in city of title to property at northeast corner of Broadwny and Canal street, in connection with section 2-A of Eoute Xo. .5. Ordered filed. Comment This was a report by the Corporation Counsel as to the closing up of a condemnation proceeding previously authorized by the Commission, and required no action by the Commission at the meeting. (9) Item No. 1402 : Eeceipt from Department of Finance of money received from N. Y. Municipal Eaihvay Corporation as part of its contribution for construction of the Canal street con- nection (Section 3, Eoute No. 5). Ordered filed. Comment This was a notation that the New York iluuieipal Eailway Corporation had complied with the requisition by the Commission authorized at a previous meeting, and required no action by the Commission. Final Eepoet of Joint Legislative Committee 2653 (10) Item No. 1403: Original bond substituted by Thos. J. Buckley Engineering Co., Inc., in place of check deposited witK bid for construction of section 1 of Eoute Nos. 36 and 37. Gommient This was simply the notation in the minutes of the substitution of the bond which had been authorized by the Commission at a meeting of the Commission on September 2, 1913. (11) Item No. 1404: Communication to Board of Education as to the encroachment of Public School No. 19 on Eoosevelt avenue, in connection with section 3 of Route Nos. 36 and 37. Communication approved. Co'mment At the instance of the Chief Engineer, the Secretary had trans- mitted a communication to the Board of Education calling atten- tion to the matter. The action of the Commission approved the recommendation of the Chief Engineer and the action of the Secretary in accordance therewith. (12) and (13) Items Nos. 1405 and 1406: Notice of com- mencement of work on Broadway elevated line and on Luthern Cemetery-Myrtle avenue elevated line. Ordered filed. Comment Reports were made by the Chief Engineer of the commence- ment of the work and were noted in the minutes solely for record and for the ready reference afforded by the printed minutes of the Commission. The report required no action at the meeting. ( 14) Item No. 1407 : Resolution approving plans and form of contract and directing advertisement of invitation to contrac- tors for proposals for construction of section 2 of Route Nos. 4 and 38 of the Se^^enth Avenue-Lexington Avenue Rapid Transit Railroad. Resolution adopted. Comment The Commission had previously considered the form of con- tract to be used for this purpose, having held a public hearing thereon as required by law, and had submitted it to the Inter- borough Rapid Transit Co. for criticism in accordance with the 2654 Investigation of Public Service Commissions provisions of Dual Contract No. 3. The matter now came before the Commission to direct the advertisement of the invitation for bids for this contract. The main action of the Commission was to be taken, when at a subsequent date, the bids were received. (15) Item ]^o. 1406: Resolution approving proposed lease from New York Bay Railroad Co. to the city of a portion of the Greenville line of the Pennsylvania Railroad Co. at Jersey City for storing materials for rapid transit railroad construction. Resolution adopted. Comment The leave provided for a nominal rental of $1, and was made to enable the delivery of the materials upon property occupied by the city, in accordance with the recommendation of the Chief Engineer and Counsel to the Commission. (16) Item No. 1409: Notification from Chief Engineer of his approval of sub-contractor for section 4 of Route No. 5. Or- dered filed. Gonmrnemi This notification required no action by the Commission. Un- der the rapid transit railroad construction contracts, the con- tractors have the right to sublet portions of the work, but the Commission reserves the authority to disapprove the sub-con- tractor. The subletting to the sub-contractor does not require the approval of the Commission. As a matter of practice, the contractor notifies the Chief Engineer of the Commission of his or its purpose to sublet the work to a sub-contractor and the Chief Engineer, after inquiry, notifies the contractor whether the con- tractor subletting meets with his approval. In this instance, the inquiry with reference to the subletting was made previous to the meeting. The notice to the Commission from the Chief En- gineer in regard to subletting is given for the purpose of record and is entered into the minutes in order to afford a ready refer- ence for ascertaining the scope of the sub-contractor's work and his responsibility should occasion for such reference arise. (17) Item No. 1410: Resolution making requisition on Board of Estimate and Apportionment for $100,000 to pay awards in Joralemon street condemnation proceedings. Resolu- tion adopted. Final Repoet of Joint Legislative Committee 2655 Comment The determination of the Condemnation Commissioners was binding as to the money to be paid, and the requisition by the Commission was in pursuance of that determination, llie action did not require any examination by the Commission, the Counsel to the Commission having reported to the Commission the deter- mination made by the Condemnation Commissioners. (18) and (19) Items Wos. 1411 and 1412: Eesolutions in Cases 1272 and 1405 approving plans in connection with cross- ings of streets with railroad tracks. Resolution adopted. Comm,ent The submission of these plans was in pursuance of orders pre- viously made by the Commission, and was reported upon by the Chief Engineer of the Commission. The question was one of the engineering feasability and the Commission was necessarily guided in its approval of the plans by the recommendation of the Chief Engineer. (20) Item ]^o. 1413 : Order extending time of the Long Island Railroad Co. for complying with order as to safeguarding employees from injury by high tension electrical apparatus. Order adopted. Comment The order made by the Commission on June 2Y, 1913, pre- scribed certain requirements with reference to the use of high tension electrical apparatus. These requirements were numerous and compliance with them necessitated various readjustments in co-operation with the Electrical Engineer of the Commission. This readjustment required more time than was originally given to the companies in the Order and several of the companies made application for an extension of time within which to comply, which extension was granted upon the recommendation of the Electrical Engineer. (21) Item ISTo. 1414: First resolution authorizing Bronx Gas Electric Co. to withdraw a part of the proceeds from the $200,000 bond issue. Resolution adopted. 2656 Investigation of Public Seevioe Commissions Commesnt The Order of the Commission authorizing the bond issue re- quired the Company to submit a statement of proposed expendi- tures before using the proceeds of the bond issue for the purposes of such expenditures. The company having submitted such a statement and the Electrical Engineer of the Oonmiission and the Counsel having reported thereon as to the capitalizability of these expenditures, the Commission formally authorized the withdrawal of the proceeds for the use indicated. (22) Item No. 1415: Communication to Long Island Rail- road Co. as to the plans for the new Winfield station. Communi- cation authorized. Comment The Long Island Eailroad Co. having submitted a plan for the new station which did not meet with the approval of the Chief Engineer of the Commission in respect to the engineering details, the Commission, following the recommendation of the Chief En- gineer, notified the Company that the plans were not acceptable. (23) Item ISTo. 1416: Duplicate original mortgage of the Hudson & Manhattan Kailroad Co. previously authorized by the Commission. Ordered filed. Comjment On July 1, 1913, the Commission in authorizing the issuance of a mortgage by the Hudson & Manhattan Railroad Co. and of bonds thereunder, required that, for the purposes of its record, a copy of the mortgage be filed in the office of the Commission. The filing of this copy required no action whatever by the Com- mission, as all the matter involved in the authorization had been previously disposed of by the decision of the Commission. (24) and (25) Items ISTos. 1417 and 1418: Resolutions directing hearings as to New York Edison Co's failure to furnish electric service connection to C. Perceval, Inc., and as to charges of the New York Central & Hudson River Railroad Co. for checking baggage at the Grand Central Terminal. Resolutions adopted. Final Report of Joint Legislative Committee 265Y Comment These matters required no action by the Commission, beyond the fixing of a date for a hearing for the purpose of ascertaining the facts upon which the Commission might subsequently reach a determination. (26) Item No. 1419 : Order approving revised plan of switch connection between Long Island Railroad Company's tracks and the side track of Benj. R. Clayton. Order adopted. Comment The Order of the Commission made on July 24, 1913, direct- ing the establishment of the side track required the submission of a plan thereof to the Commission, and, such plan having been submitted and having been reported upon by the Chief Engineer, previous to the meeting, the Commission, in accordance with the recommendation of the Chief Engineer as to the engineering prac- ticability of the construction, approved the plan. (27) Item 'No. 1420: Special Permission 253 granted to New York, Westchester & Boston Railway Co. to reduce fare be- tween Casanova and Columbus avenue, Mount Vernon. Commient Changes in tariffs, under the Commission's Law, may be made only upon thirty days' notice, unless the Commission grants special permission for a shorter period of notice. As this matter involved a reduction of fare in favor of the public, the Commis- sion, upon the recommendation of the Traffic Inspector having charge of tariffs, granted this Special Permission. (28) and (29) Items Nos. 1421 and 1422: Application of Staten Island Rapid Transit Railroad Co. for permission to re- fund overcharge on shipments. Permission granted. Comment The Traffic Inspector in charge of tariffs having reported that upon investigation the facts warranted the refunding of over- charge, the Commission granted such permission. (30) Item No. 1423: Reports of Gas and Electric Meter Tests for August, 1913. Noted in minutes. 84 2658 Investigation of Public Service Commissions Comment This was simply a summary of the reports and required no action by the Commission, as such action as was necessary had already been taken. (31) Item E"o. 1424: Eeports oi accidents for July, 1913. Noted in minutes. OoTmnent This required no action by the Commission, as such action as was necessary in connection with any of these reports had already been taken at the time or soon after the reports were received by the Commission. (32) Item JSTo. 1425: Eesolution approving vouchers. Resolution adopted. Gimiment Explanation concerning the audit and certification of vouchers prior to the meeting has been made in connection with (9) — Item JSTo. 295 — of the meeting of February 21, 1913. (33) Item ISTo. 1426: Resolution as to employees. Resolu- tion adopted. Com,ment The action of the Commission was strictly in accordance with the rules of the Civil Service Commission and the appointments were made in the regular order of nominees certified by that Commission, where lists had been established by it. See comment as to employees' resolution at the meeting of February 21, 1913, (10)— Item No. 296. (34) Item No. 1427: Resolution approving draft form of contract for construction of section 1 of Route No. 33, and fix- ing a hearing upon such form of contract. Resolution adopted. Comment The action of the Commission was to direct a hearing upon the draft form of contract prepared by the Counsel and Chief Engineer of the Commission, in order to ascertain whether there were any objections to or criticisms of the form, and what changes should be made therein before final adoption at future date. Final Report of Joint Legislative Committee 2659 Stated meeting of the Public Service Commission for the First District held on Tuesday^ September 23, 1913. Present: Com- missioner Maltbie, Acting Chairman; Commissioners Eustis and Williams. The following matters were acted upon: Matter Acted Upon (1) Item No. 14:75: Resolution approving revised drawing submitted by New York Connecting Railroad Company for pro- posed bridge to carry the Laurel Hill Boulevard over railroad tracks. Resolution adopted. Comment Prior to the meeting, an application was received from the company for the approval of the plan and a report thereon was made by the Chief Engineer of the Commission. The matter was an engineering question as to which the Commission was necessarily guided by the report of the Chief Engineer as to the technical sufficiency of the plans. Upon such report, the Com- mission took action at this meeting. (2) Item No. 14:76: Notice of Chief Engineer as to com- mencement of work by E. E. Smith Contracting Company on section 1 of Route Nos. 4 and 36. Ordered iiled. Comment No action was required by the Commission, the notification being mentioned in the minutes for the purpose of record and the ready reference thereto afforded by the printed volume of the minutes of the Commission. (3) Item No. 1477: Resolution approving stipulation be- tween Counsel to the Commission and Interborough Rapid Transit Company extending time of Chief Engineer of the Com- mission to render determination of cost of construction and equip- ment under Dual Subway Contract No. 3. Resolution adopted. Comment The Chief Engineer of the Commission is under the terms of the contract obliged to make the determination within a specified 2660 Investigation of Public Seevice Commissions time. It has not been unusual for the Chief Engineer to require more time to complete his determination, and the extension of time has in such instances been given by the Commission's counsel and the counsel for the Interborough Eapid Transit Com- pany. This was an instance of that kind, and required no in- quiry by the Commission. The Counsel to the Commission re- quested the approval of the stipulation. (4) Item No. 1478: Resolution approving contract covering removal of structure at northeast comer of Broadway and Canal street in connection with section 2-A of route Wo. 5. Resolution adopted. Comment The New York Municipal Railway Corporation requested the approval of the contract with the O'Rourke Engineering Con- struction Company covering the work in question and the Coun- sel to the Commission recommended the approval of the contract. No objection appearing, the Commission granted the request. (5) Item No. 14T9: Approval by Corporation Counsel of form of contract for construction of section 2 of Route Nos. 4 and 38. Ordered filed. Comm^ent Before a contract is entered into between the city, acting by the Com mission, and a contractor for the construction of a sec- tion of rapid transit railroad, the contract is submitted to the corporation counsel for his approval as to form. The communi- oation of the corporation counsel advising the Commission of his approval, of course requires no action by the Commission and is noted for purposes of record and ready references. (6) Item No. 1480: Opinion of Counsel to the Commission with reference to suggestion of Eidelity and Deposit Company of Maryland as to increasing percentages of bonds required of subway contractors. Ordered filed. Com,msnt This required no immediate action by the Commission but was presented for information with a view to consideration in con- n»ction with matters which arose subsequently. Final Repoet of Joint Legislative Committee 2661 (7) Itean No. 1481 : Comnnuiication from Interboroughi Eapid Transit Company as to work of Rodgers and Hagerty, Inc., contractors for section 15 of Route No. 5, affecting the existing subway structure at 149th street and Mott avenue. Re- ferred to Chief Engineer. Comment This communication from the Interborough Rapid Transit Company was merely precautionary to reserve the rights which the company might have by reason of any damages done by the contractor to its subway structure. The communication was re- ferred to the Chief Engineer for his attention, so that in the supervision of the work by his subordinates the matter might be carefully observed. It required, at this time, no action by the Commission. (8) Item No. 1402: Resolution approving plans for track connection from Canal street to Broadway in connection with section 2-A of Route No. 5. Comment The plan was submitted by the Chief Engineer with his recom- mendation for approval, and, involving mainly an engineering question of construction, the Commission was necessarily guided by the Chief Engineer's recommendation. (9) Item No. 1483: Submission of drawing to Art Conxmis- sion and change of name of station at Birchall avenue on White Plains road (section 1, Route No. 18). Submission to Art Com- mission authorized; change of name approved. Comment The Chief Engineer having had prepared a drawing of the ornamental structure on Birchall avenue on the White Plains road line, the Commission authorized its submission to the Art Commission. No action could be taken- with reference to the matter at this time, in advance of the ascertainment of the views of the Art Commission as to the change of name. The recom- mendation of the Chief Engineer with reference to the change of the name of the station, being based upon facts reported by him, was adopted by the Commission. 2662 Investigation of Public Sekvice Commissions (10) Item No. 1484: Submission to Art Commission of drawings for ornamental elevated structure at Bronx and Pelham Parkway and at Mosholu Parkway, on section 2 of Eoute 16 and section 1 of Eoute 18. Submission authorized. Comment The submission of these plans to the Art Com mission is a formal matter and required no action upon the plans by the Com- mission in advance of the ascertainment of the views of the Art Commission. (11) Item No. 1485: Original contract between New York Municipal Railway Corporation and Cooper and Evans Company for construction of section 1 of connection between Lutheran Cemetery line and Myrtle Avenue Elevated line. Ordered filed. Goinment A copy of the contract was transmitted to the Commission for its files, and was mentioned in the minutes for the purpose of record and the ready reference thereto which the printed volume of minutes affords. There was no action whatever which the Commission was required to take upon this contract at the meeting. (12) Item No. 1486: Resolution approving vouchers. Reso- lution adopted. Comment Explanation concerning the audit and certification of vouchers prior to the meeting, has been made in connection with (9) Item No. 295, of the meeting of February 21, 1913. (13) Item No. 148Y: Petition of Harlem Board of Com- merce requesting location of station at 175th street and St. Nicholas avenue. Referred to Commissioner Eustis. Comment No action upon this petition was taken by the Coinmission at this meeting beyond referring it to a Commissioner to investigate and report back to the Commission the facts upon which the Commission might base a determination at a future time. Final Repoet of Joint Legislative Committee 2663 (14) Item 'No. 148S: Eesolution as to employees. Eesolu- tion adopted. Comment The action of tlie Commission was strictly in accordance with the rule of the Civil Service Commission, and the appointments were made in the regular order of nominees certified hy that Commission, where a list had been established by it. See com- ment as to employees' resolution of the meeting of February 31, 1913, (10) Item No. 296. (15) Item No. 1489: Order extending time for compliance with Order amending Final Order "A" in Case No. 1438, direct- ing Brooklyn Heights Railroad Company et al. to acquire new cars. Order adopted. Comment The application of the companies for an extension of time was based upon reasons which, in the opinion of the Transit Depart- ment of the Commission, justified an extension of time. Where a company has been unable to comply with an Order of the Com- mission within the time prescribed by it and shows good reason for an extension of time to comply, it has been usual to grant such extensions of time as the circumstances warranted. (16) Item No. 1490: Second Order amending Approval Order authorizing the Bronx Gas and Electric Company to issue $200,000 additional bonds. Order adopted. Comment Prior to the meeting, the Company submitted an application for a modification of the Original Order entered on April 29, 1913, with respect to the condition limiting the price at which the bonds were to be sold; the presiding Conamissioner, having made investigation in regard thereto, reported in favor of the modification of the Order. The action of the Commission fol- lowed the recommendation of the presiding Commissioner. (17), (18), (19), (20) Items Nos. 1491, 1492, 1493 and 1494 Resolutions directing hearings in Cases Nos. 1732, 1733, 1735 and 1736, upon application for the condemnation of property in Ozone Park, L. I., and for the discontinuance of a freight station 2664 Investigation of Public Seetice Commissions in Whitestone, L. I., and upon the rates of the New York Central and Hudson Eiver Eailroad Company, and an accident on the Whitestone branch of the Long Island railroad. Comment There was no determination on these matters required by the Commission at this meeting, beyond the fixing of dates for hear- ings in the respective cases for the purpose of ascertaining the facts upon which the Commission was to base- its determination at a later date. Stated Meeting of the Public Service Commission for the First pistrict held on Tuesday, September 30, 1913, at 12:35 p. m. Present: Commissioner Maltbie, Acting Chairman; ComLiis- sioners Eustis and Williams. The following matters were acted upon: Matter Acted Upon (1) Item No. 1527: Authorization of Chief Engineer to di- rect Healy Contracting Company to close cavities over timbering of sewer tunnel on 30th street between Second and Third avenues. Authority granted. Comment The Chief Engineer having reported to the Commission the ne- cessity for additional work necessitiated in the course of construc- tion and having asked for the authority to have the necessary work done, the authority was granted. The Commission was nec- essarily guided by the recommendation of the Chief Engineer with reference to the detail of construction. (2) Item No. 1528: Order directing Long Island Railroad Company to make alterations at the Eailroad avenue grade cross- ing on the Atlantic Division. Order adopted. Comment The presiding Commissioner in the case recommended the order, having previously apprised the Commissioners of the situa- Final Repoet of Joint Legislative Committee 2665 tion at this point. The Order was the result of an agreement for doing this work among the Commission's engineers. The city's engineers and the railroad's engineers. (3) Item No. 1529 : Notice of a hearing upon complaint of Flushing Association against Long Island Railroad Company in regard to baggage transfer facilities at Murray Hill Station. Hearing notice approved. Oomment No determination was required by the Commission at this time other than the fixing of a date for a hearing to ascertain the facts upon which the Commission might subsequently base a determina- tion. (4) Item No. 1530 : Order extending time of Interborough Rapid Transit Company and other companies within which to notify the Commission whether it would accept the Order restrict- ing smoking upon passenger cars and stations. Order adopted. Oomment The original order of the Commission made on September 16, 1913, required the companies to notify the Commission within a prescribed time whether the terms of the Order, were accepted and would be obeyed. The acceptance of the Order did not affect the obligation of the companies to comply with its directions. Such an extension of time was not prejudicial to any interest which might be involved, as the Order was not stayed. (5) Item No. 1531. (6) Item No. 1532. (7) Item No. 1533. Orders directing filing of data by steam corporations, transfer companies and baggage companies for use in the preparation of a Uniform System of Accounts. Comment The requirements of the Orders were simply the filing of data to be used by the Chief of the Bureau of Statistics in framing a Uniform system of Accounts for those classes of corporations. 2666 Investigation of Public Seevice Commissions (8) Item E"o. 1534: Notice of purchase of car equipment by certain companies of Brooklyn Kapid Transit System. Noted. Comment This notice was filed by the companies in compliance with au Order of the Commission requiring the filing with the Equipment Bureau for information of data concerning equipment proposed to be acquired. No approval of these data was contemplated by the Order and the submission of these data was noted in the min- utes simply because it showed the progress the companies were making in complying with an Order of the Commission which required the equipment of surface cars with brakes. (9) Item No. 1535: Eesolution approving lease of room for engineering department. Resolution adopted. Comment Upon the report of the Chief Engineer that he required addi- tional room for employees, a lease was proposed for such room with the Tribune Building at rates not in excess of those previously fixed for similar space occupied in the buildings by the Com- mission, The negotiation for the lease took place prior to the meeting, and, in approving the lease the Commission was guided by the previous report of the Chief Engineer as to the necessity for the additional room and the report of the Purchasing Agent of the Commission concerning the negotiation for the lease. The lease was signed by the Chairman of the Commission. (10) Item No. 1536: Special Electrical Permission No. 54 granted to the United Electric Light and Power Company for filing a change in its rates affecting conjunctional service and in- tercommunicating buildings. Special Permission granted. Comment The change in the rate schedule could be effected by the com- pany only upon thirty days' notice, unless the Commission per- Final Repoet of Joint Legislative Committee 2667 mitted a shorter period of notice. As the request for filing the permission was based upon a previous requirement of the Com- mission, such permission was granted in the public interest upon the recommendation of the Bureau of Gas and Electric; ity of che Commission. (11) Item jSTo. 1537: Eesolution approving vouchers. Eeso- lution adopted. Comment Explanation concerning the audit and certification of vouchers prior to the meeting has been made in connection with (9) Item No. 295 of the meeting of February 21, 1913. (12) Item Xo. 1538: Communications from Civic Associa- tions, one as to method of construction on Atlantic avenue in elim- inating grade crossings, and the other as to a plan for a crosstown subway in Brooklyn. The first ordered filed, and the second ordered to be heard. Comtnent ISTo action was necessary upon the communication as to the structure for eliminating grade crossings in Atlantic avenue, be- cause that matter was then under inquiry by the Conmiission in Case 'No. 1672, for a determination in which the Commission was awaiting an appropriation by the Legislature of the State's one- quarter share of the cost of elimination. N"o determination upon the matter of the crosstown subway in Brooklyn was made at this meeting beyond fixing a date for a hearing to ascertain the views which would guide the Commission in a determination at a future date. (13) Item No. 1539: Eesolution as to employees. Eesolu- tion adopted. Comm,ent The action of the Commission was strictly in accordance with the rules of the Civil Service Commission, and the appointments were made in the regular order of nominees certified by that Commission, where lists had been established by it. See comment 2668 Investigation of Public Sehvice Commissions as to employees' Eesolution at meeting of Tebniary 21, 1913, (10) Item JSTo. 296. (14) Item No. 1540: Eesolution approving offer of Borough Bill Posting Company for use of plots on Fulton street and on Hudson avenue on Fourth avenue subway. The resolution adopted. Comment The Secretary of the Commission and the Keal Estate Expert of the Commission were previously authorized by the Commission to secure bids for the temporary lease of vacant lots which were not temporarily used in connection with rapid transit railroad con- struction but which had been acquired for that use. Upon the report of the Real Estate Expert and the Secretary of the Com- mission as to the most favorable offer received, the Commission awarded the permit. (15) Item No. 1541: Resolution approving award of con- tract by New York Municipal Railway Corporation to George W. McNulty for reconstruction of Sea Beach Line under contract No. 4. Resolution adopted. Gomment This matter was first submitted to the Chairman, who had the matter investigated by the Chief Engineer and Counsel. They reported, and, upon the Chairman's view that the contract should be awarded, the matter was submitted to the full commission for action, which was taken at this meeting. (16) Item No. 1542: Opinion and Order with regard \c specifications for electric current energy meters to be put in usee by electrical corporations and regulations governing the accept- ance tests of watt-hour meters. Opinion and Order adopted. Gomment The Opinion and Order were submitted to each of the Com- missioners in advance of the meeting by Commissioner Maltbie, Final Eepoet of Joint Lidgislative Committee 2669 and, no dissent having been made, the matter was put upon the calendar for formal approval. (17) Item No. 1543: Eesolution certifying attachment to electric current energy meters. Comment The Commission had previously prohibited the use of devices in connection with electric current energy meters except those certified by the Commission as conforming to its specifications. The Commission has been guided in its action by the report of the Electrical Engineer of the Commission as to the efficiency of the device submitted and in this instance a similar report was made by the Electrical Engineer previous to the meeting for the guidance of the Commission, and the action of the Commission was based upon his recommendation. (18) Item JSTo. 1544: Eesolution approving further modify- ing contract for wrecking of portions of Astor House. Eesolution adopted. Gommerd This contract provided for the occupancy of the Astor House by former tenants during the wrecking and was recommended by the Counsel to the Commission as appropriate. The contract itself was signed by the Chairman. (19) Item nSTo. 1545: Submission to Art Commission of drawings for ornamental elevated structure for stations at Fort Hamilton avenue and at 86th street and Bay Parkway on E"ew Utrecht avenue line. Submission authorized. Comm^ent No action by the Commission was required with reference to these drawings beyond submitting them to the Art Commission for the purpose of ascertaining its views for the future guidance of the Commission in determining the details of the work to be done. J 2670 Investigation of Public Seevice Commissions Stated meeting of the Public Service Commission for the First District held on Tuesday, February 3, 1914, at 12:30' p. sr. Present: Co mm issioner Maltbie, Aating Chairman; Commis- sioners Eustis, Cram and Williams. The f olloM'ing matters were acted upon : Matter Acted Upon (1) Item No. 211 : Copy of Eesolution of Board of Estimate and Apportionment approving contract for construction of section 6 of Routes ISTos. 4 and 38, and authorizing issue of corporate stock therefor. Ordered filed. Goinment The Commission had previously invited bids for the construc- tion of this section, awarded the contract to the lowest bidder, and submitted the matter to the Board of Estimate for its consent as provided by law. The Resolution of the Commission awarding the contract to the lowest bidder also authorized the Chairman and Secretary to execute the contract in behalf of the Commission upon the Board of Estimate consenting thereto. The Resolution of the Board of Estimate was simply advisory of its consent and required no further action by the Commission except the ministerial one of execution of the contract in accordance with the previous authoriza- tion of the Commission. (2) Item No. 212 : Copy of resolution of the Board of Esti- mate and Apportionment approving general plan for the Park Avenue— Lexington Avenue Connection (Route ISTo. 53). Ordered filed. Comment This resolution of the Board of Estimate expressed its consent to the construction of this route which had previously been adopted by the Commission and submitted to the Board of Esti- mate. The resolution of the Board was simply advisory of its action and required no action by the Commission. (3) Item No. 213: Communication from Board of Estimate and Apportionment returning requisition for removal of subway kiosks at 42d street and Madison avenue. Ordered filed. Final Repoet of Joint Legislative Committee 2671 Comment ISTo action was required by the Commission as it had previously withdrawn this requisition. The matter was noted in the minutes for the purpose of record. (4) Item ~No. 214: Correspondence with Interborough Rapid Transit Company as to additional express stations on elevated lines. Communication to company approved. C'oniTnent The matter of the location of these express stations had been the subject of conference among the Chairman, the other Com- missioners and the Interborough officials and Engineers of the Commission and the communication sent to the Interborough Company was the result of inquiry made by the Commission and consideration given to the matter prior to this meeting. (5) Item ISTo. 215: Acceptance by Interborough Rapid Tran- sit Company of permit granted by the Commission for temporary spur track from its Manhattan Division power house to bulkhead at 74th street and East river. Ordered filed. Com/ment No action was required upon this communication as the Com- mission had previously granted the permit which required the acceptance by the company of the conditions in order to make it effective. The acceptance was noted in the minutes for the pur- poses of record. (6) Item ISTo. 216: Letter to Interborough Rapid Transit Company in reply to its criticisms on the form of contract for the construction of section two of Route ISTo. 16. Reply authorized. Com,ment The Commission had at a previous meeting tentatively ap- proved the form of contract for the construction of this section and submitted it to the Interborough Company in accordance with the requirements of Dual Contract No. 3 for its criticisms or 2672 Investigation of Public Seevioe Commissions suggestions. The criticism was made by the Company as to certain details of the plan. The Chief Engineer having pre- viously reported thereon a reply was authorized to the Inter- borough Company in accordance with the recommendation. (Y) Item ISTo. 217: Amendatory resolution authorizing accept- ance of bid of Parsons & Lantry for construction of Eighth Avenue bridge across the tracks of the 'New York Consolidated Eailroad Company and the Long Island Eailroad Company in Brooklyn. Resolution adopted. Comment The Commission had previously authorized the acceptance of the bid and the company asked for a modification with regard to certain reservation. This modification was recommended by the Counsel to the Commission prior to the meeting and the meet- ing and the Commission adopted the Amendatory Resolution embodying the modification. (8) Item No. 218: Permit to Richard Carvel Company, Incorporated, contractor for section one of Route JSTos. 19 and 22 for extension of temporary tramway on Southern Boulevard. Permit granted. Comment Upon the receipt of the application from the contractor for the permit, the matter was investigated by the Commission through its Chief Engineer and Counsel, who reported that there were no objections from an engineering standpoint nor from a legal standpoint to the granting of the application. Accordingly the permit was authorized, and the Chairman executed it. (9) Item No. 219: Original agreement for the construction of subway stairways in front of the premises at 125th street and Lexington avenue. Ordered filed. Com,ment No action was required upon this by the Commission, the agreement having been previously passed upon and executed. Final Report of Joint Legislative Committee 26Y3 The executed agreement was noted in tlie minutes for the pur- poses of record and ready reference. (10) and (11) Items Nos. 220 and 221: Orders extending time of certain companies for complying with Order as to safe- guarding employees from injury by high tension electrical appa- ratus. Order adopted. Comment An Order made by the Commission on June 27, 1913, pre- scribed certain requirements with reference to the use of high tension electrical apparatus. These requirements were numerous and compliance with them necessitated various readjustments in co-operation with the Elec- trical Engineer of the Commission. The readjustment required more time than was originally given to the companies in the Order and several of the companies made application for an extension of time within which to comply, which extension was granted upon the recommendation of the Electrical Engineer. (12) Item E'o. 222: Order discontinuing proceeding upon application of New York Railways Company and Central Cross- town Railroad Company of ISTew York for approval of operating agreement for 1913. Order adopted. Com/ment This Order had been recommended by the presiding Commis- sioner in the case and was entered with the consent of the appli- cants. It therefore required no examination by the Commission at the meeting. (13) Item No. 223: Opinion and Order discontinuing pro- ceeding as to extending the gas mains of the Woodhaven Gas Light Company in Aqueduct, Howard Estates and Ramblersville, Borough of Queens. Opinion and Order adopted. Comment The Opinion had been submitted to the Commissioners prior to the meeting by the presiding Commissioner. The Chairman, 2674 ImrESTIGATION OF PuBLIC SeKVICE COMMISSIONS of course, was informed as to the i-ecommendation. The Order adopted was in accordance with the recommendation of the pre- siding Commissioner. (14) Item "No. 224: Opinion and Order discontinuing pro- ceeding in regard to the question of operation of through trains on Third Avenue elevated line of Interborough Eapid Transit Company to and from Harlem Eiver station. Opinion and Order adopted. Comnvent The Opinion had been submitted to the Commissioners prior to the meeting by the presiding Commissioner. The Chairman, of course, was informed as to the recommendation. The Order adopted was in accordance with the recommendation of the pre- siding Commissioner. (15) Item ~Mo. 225: Resolution directing hearing in Case 1794 as to service on Flatbush Avenue line, Brooklyn Heights Railroad Company. Resolution adopted. Commeni This required no determination by the Commission beyond fixing a date for a hearing to ascertain the facts upon which a determination might be based at a future date. (16) Item N"o. 226: Resolution approving lease of rooms for Engineering Department. Resolution adopted. Comment Upon the report of the Chief Engineer that he required addi- tional room for employees, a lease was proposed for such rooms at rates not in excess of those previously fixed for similar space occupied by the Commission. The negotiation for the lease was attended to before the meeting, and in approving the lease the Commission was guided by the previous report from the Chief Engineer as to the necessity for additional room and the report of the Purchasing Agent of the Commission concerning the nego- tiation of the lease. The lease was signed by the Chairman. Final Repoet of Joint Legislative Committee 2675 (17) Item No. 22Y: Resolution as to employees. Resolution adopted. CoTument Tlie action of the Commission was strictly in accordance with the rules of the Civil Service Commission and the appointments were made in the regular order on nominees certified by that Commission, where lists had been established by it. See note as to employees' resolution at the meeting of February 21, 1913, (10) Item No. 296. Stated meeting of the Public Service Commission for the First District held on FridoAj, October 9, 1914, at 12 :15 p. m. Present : Commissioner Maltbie, Acting Chairman; Commissioners Cram, Williams and Wood. The following matters were acted upon : Matter Acted Upon (1) Item 'No. 2206 : Opening of bids for contract for construc- tion of section 1, Route 48. Bids opened and referred to Chief Engineer. Oomment No action could be taken by the Commission until the bids had been tabulated and a report of such tabulation submitted to the Commission. (2) Item No. 2207 : Resolution authorizing Secretary to return checks deposited as security with all bids for construction except lowest on Section 1 of Route No. 48 upon receipt of report by Chief Engineer. Resolution adopted. Comment In order not to retain security deposited by unsuccessful bidders, a resolution of this kind is customarily adopted by the Commis- sion soon after the opening of bids. (3) Item No. 2208: Approval of minutes for July, 1914. Approved. 2676 Investigation of Public Service Commissions Commemi Copies of the minutes had previously been submitted to all the Commissioners and the action followed the inspection of the minutes by the Commissioners. (4) Item No. 2209 : Copy of Eesolution of Board of Estimate and Apportionment modifying franchise granted Manhattan Bridge Three-Cent Line. Filed. Com/ment The power to grant franchises of the nature mentioned resides exclusively with the Board of Estimate and Apportionment. A copy of each such franchise when granted is transmitted by the Board to the Commission. There is no action, however, which the Commission can take on such franchises except to record them in its files. It is only when an application is made by the grantee for the approval of the exercise of the franchise as convenient and necessary to public service that the Commission can take any affirmative action. The copy of the franchise is presented formally at the meeting in order that there may be a record in the minutes and to furnish the ready reference thereto which the printed volume of the minutes of the Commission affords. (5) Item E"o. 2210: ISTotice from Corporation Counsel of vesting in city of title to properties at 84th, 85th and 86th streets on ISTew Utrecht and Eighteenth avenues, Brooklyn. Ordered filed. Comnverd The com m imication required no action by the Commission, and was simply informative of the precedural progress of the con- demnation proceeding. (6) Item No. 2211: Resolution awarding contract for con- struction of Section 1, Eoutes Nos. 26 and 43 to Rapid Transit Subway Construction Company and authorizing requisition on Board of Estimate and Apportionment for that purpose. Reso- lution adopted. C omine'nJb The award of the contract was the result of competitive bidding in which the Rapid Transit Subway Construction Company was the lowest bidder, and the Chief Engineer and the Counsel for Final Eepoet op Joint Legislative Committee 2677 the Commission had recommended the award of the contract to it. All this took place prior to the meeting. The contract could not however be executed until consented to by the Board of Estimate and Apportionment. (7) Item ISTo. 2212: Eesolution authorizing invitation for bids for wrecking buildings on premises between New Utrecht avenue and Nineteenth avenue and between 81st and 86th streets, Brooklyn. Resolution adopted. Comment The action of the Commission was simply to authorize adver- tisements for bids, upon the receipt of which the Commission was to make an award at a subsequent date. The matter required no determination at this time. (8) Item No. 2213: Eesolution approving lease from New Y"ork Bay Eailroad Co. to city of Greenville Yard in Jersey City for storage purposes. Eesolution adopted. Cowmient The rental for this lease was the nominal sum of $1 and the lease was made for the convenience of the city in receiving ma- terials to be u^ed in rapid transit railroad construction, and its execution was in accordance with the recommendation of the Chief Engineer and the Counsel to the Commission. (9) Item No. 2214: Noting of service of summons in action of New York Times against Commission et al., in connection with construction of section 6-A, Eoute Nos. 4 and 38. Eeferred to Counsel. Comment No action was required on the part of the Commission at this meeting, as it was one in which the Counsel to the Commission was required to advise and take the necessary steps in the litiga- tion. (10) Item No. 2215 : Consent of Hudson & Manhattan Eail- road Co. to extension of time to begin construction of extension from 33d street and Sixth avenue to Terminal station under 42d street. Ordered filed. 26T8 Investigation of Public Seeviob Commissions Comment This consent required no action by the Commission, having been filed in accordance with a previous resolution of the Com- mission authorizing an extension of time, upon certain conditions. (11) Item No. 2216 : Notice from Chief Engineer of opening of new entrance to Times square station through Fitzgerald building. Ordered filed. Com,ment This required no action by the Commission and was entered in the minutes for record and the ready reference which the printed volume of minutes affords. (12) Item No. 2217: Notice of commencement of construc- tion of entrance through Adams Express building to Wall street subway station. Ordered filed. Com,ment Ditto. (13) Item No. 2218: Notice by Chief Engineer of approval of subcontractor for section 1, Eoute Nos. 4 and 38. Ordered filed. Comment This required no action by the Commission. Under the rapid transit railroad construction contracts the contractors have the right to sublet portions of the work, but the Commission reserves authority to disapprove the subcontractor. The subletting does not require the approval of the Commission. As a matter of practice, the contractor informs the Chief Engineer of the Com- mission of his or its purpose to sublet the work to a subcontractor, and the Chief Engineer after inquiry, notifies the contractor whether the subletting meets with his approval. The inquiry with reference to the matter ia made by the Chief Engineer previous to reporting to the Commission. The notice from the Chief Engineer is made solely for the purpose of record and is entered in the minutes in order to afford a ready reference for ascertain- ing the scope of the subcontractor's work and his responsibility, should occasion for such reference arise. Final Report of Joint Legislative Committee 2679 (14) Item JSTo. 2219: Notice by Chief Engineer of approval of subcontractor for section 2, Route 5, sections 2 and 3, Routes Nos. 4 and 38. Ordered filed. Oomment Ditto. (15) Item No. 2220: Notice by Chief Engineer of approval C'f subcontractor for section 7, Route 5. Ordered filed. Comment Ditto. (16) Item jSTo. 2221: Notice by Chief Engineer of approval of subcontractor for section 2, Route No. 16. Ordered filed. Comment Ditto. (17) Item No. 2222: Notice by Chief Engineer of approval of subcontractor for section 1-A, Routes Nos. 19-22. Ordered filed. Com,ment Ditto. (18) Item No. 2223 : Notice by Chief Engineer of approval of subcontractor for section 1, Routes Nos. 36 and 37. Ordered filed. Comment Ditto. (19) Item No. 2224: Notice by Chief Engineer for approval of subcontractor for Route 11-B. Ordered filed. Comment Ditta (20) Item No. 2225: Notice by Chief Engineer for approval of subcontractor for section 3, Route 48, and section 2, Route 33. Ordered filed. Comment Ditto. (21) Item No. 2226 : Notice by Chief Engineer for approval of subcontractor for section 1-A and 1, Route Nos. 4 and 38, and section 7, Route 5. Ordered filed. 2680 Investigation of Public Service Commissions Comment Ditto. (22) Item ISTo. 2227: ISTotice by Chief Engineer for approval of a subcontractor for section 1-A, Route 4 and 38. Ordered filed. Comment Ditto. (23) Item jSTo. 2228: Original bond substituted by Degnon Contracting Co. in place of securities deposited for performance of contract for construction of Eoute 50. Ordered filed. Com/ment No action was required by the Commission, the bond being filed in accordance with a resolution of the Commission of Sep- tember 10, 1914, and having been examined and approved by the Counsel to the Commission. (24) Item No. 2229 : Original bond substituted by Degnon Contracting Co. in place of securities deposited for performance of contract for construction of section 2, Koute 5. Ordered filed. Comment Ditto. (25) Item No. 2230: Original bond substituted by Degnon Contracting Co. in place of securities deposited for performance of contract for construction of section 3, Route Nos. 4 and 38. Ordered filed. Comment Ditto. (26) Item No. 2231: Copy of consent of property owners to construction of subway stairway at northeast corner Lexington avenue and 51st street in connection with construction of section 7, Route 5. Ordered filed. Comment No action was required on the part of the Commission, beyond the noting for record and for ready reference in the printed minutes of the Commission. (27) Item No. 2332 : Resolution approving estimate of cost of superstructural steel submitted by New York and Harlem Final Repokt of Joint Legislative Committee 2681 Railroad Co. in cormection with canstruction of footbridge on East 166tli street, the Bronx. Resolution adopted. Comment In accordance with an Order of the Ooimnission adopted De- cember 1, 1911, determining the method of constructing the exten- sion of the street across the tracks, the company submitted an esti- mate of the cost of the superstructural work, which was referred to the Chief Engineer and reported upon by him with his favorable recommendation prior to the meeting. The question involving one purely of engineering computation, the recommendation of the Chief Engineer was controlling upon the Commission and the action of the Commission was in accordance with such recom- mendation. (28) Item ISTo. 2233: Order extending time of New York Municipal Railway Corporation, within which to issue stock previously authorized by the Commission in Case 1692. Order adopted. Com,ment On August 1, 1913, the Commission authorized an issue by the company of stock, and limited the time within which the stock might be issued. Certain questions as to the application of the proceeds of the stock issue to expenditures in connection with rapid transit railroad construction having arisen, and having been left open for future determination, extensions of such time were as a matter of course and upon the recommendation of the Chief Statistician and Counsel to the Commission granted to the company. (29) Item JSTo. 2234: Order directing Interborough Rapid Transit Co. to widen platforms at 23d street station on Third Avenue Elevated Line. Order adopted. C(ymment This was an order reconnnended by the Commissioner who sat at the hearings. (30) Item No. 2235: Extension of Special Permission granted to the Official Classification Committee to put into effect a tariff affecting " nested " packages. Application granted. 2682 Investigation of Public Service Commissions CoTiiinent Under the Public Service Oommission Law changes in tariffs may be made only upon 30 days' notice, unless the Commission grants special permission for a shorter period of notice. Upon the application of the company and the recommendation of the Traffic Inspector in charge of tariffs of the Commission, and it appearing that the filing of the tariff upon short notice would be advantageous, such permission was granted. (31) Item No. 2236: Reports of Gas & Electric meter tests during September, 1914. l^Toted. Comment ~No action was required by the Commission with reference to this report, such action as was necessary in connection with the meter tests having been previously taken as occasion arose. (32) Item No. 2237: Resolution approving vouchers. Comment Explanation concerning the audit and certification of vouchers prior to the meeting has been made in connection with (9) — Item No. 295 — of the meeting of February 21, 1913. (33) Item No. 2238 : Resolution as to employees. Resolution adopted. Comment The action of the Commission was strictly in accordance with the rules of the Civil Service Commission, and the appointments were made in the regular order of nominees certified by the Civil Service Commission, where a list had been established by it. See note as to Employees' Resolution of February 21, 1913 — (10) — Item No. 296. (34:) Item No. 2339 : Resolution approving bond submitted by contractor as security for performance of contract on section 3, Route 33. Resolution adopted. Comment In accordance with the terms of the contract, the contractor submitted the sureties for approval. The resolution of the Com- Final Report of Joint Legislative Committee 2683 mission awarding the contract directed that the Counsel to the Commission should pass upon the bond and the sureties as to form and suflBciency. Upon the recommendation of Counsel, the bond submitted by the contractor was approved at this meeting. (35) Item No. 2240: Seventh resolution authorizing BronS Gas & Electric Co. to vsdthdraw proceeds from issue of $200,000 bonds. Resolution adopted. Comment The order of the Commission authorizing the issue of bonds made it a condition that the company should, before using the proceeds of the bonds, submit to the Commission a statement of the proposed expenditures so that investigation might be made as to their capitalizability. Such a statement having been submitted and the Electrical Engineer of the Commission and Counsel hav- ing examined into the matter and reported the results of such investigation prior to the meeting, the Commission as was usual in such cases, approved the withdrawal of proceeds. (36) Item No. 2241: Rehearing directed upon complaint of Gill et al. v. Dock Contractor Co. for violation of Labor Law. Rehearing directed. Comm,ent No determination was required to be made by the Commission at the meeting, the hearing having been directed for the purpose of ascertaining any further facts upon which such a determination could be heard in the future. EXHIBIT No. 30 Traffic and Population Some Comparisons Which Confute Current Charges and Should Confound Certain Chronic Critics There has been much said in public lately to the effect that the Brooklyn Rapid Transit system has failed to keep up with the growth of population in its supply of transportation facilities. This charge first emanated from that conspicuous opponent of every transit improvement, Cornelius M. Sheehan of East New 2684 Investigation of Public Seevioe Commissions York; was echoed by that constant candidate for office and con- sistent enemy of the dual system, County Judge Hylan of Eidge^ wood; was advertised by the yellow journals; was seized with avidity by that noted traffic prosecutor, Joe Johnson of the Pub- lic Service Commission; and, finally, with these worthies as un- questionable authorities, has been assumed to be true by the Legislative Investigating Committee which is grilling the Public Service Commission. We thought the Joe Johnson bird would come home to roost, and inasmuch as the Public Service Commissions let it loose we suppose they are themselves to blame for the mess it has made on its return to the coop. JSTevertheless, we extend to them our genuine sympathy. As for the yellow journals, we gave them the facts, but they never correct, or retract. As for Hylan and Sheehan — God made them and therefore let them pass without comment (the worst punishment we could inflict). As for the Legislative Committee, we should like to help in any sincere effort to present the truth, as it affects either Public Service Com- missioners or railroad companies. Of course the real facts could at any time have been readily ascertained by any of these critics from the elaborate records of the Public Service Commission which the taxpayers' money pays for. We have enough to do with every hour's problems, and especially with expediting the dual system contract work, with- out delving into past history, but some good citizens have urged that we were not doing ourselves justice in allowing these slanders to be repeated, so we are presenting the actual figures in refuta- tion, dating the comparison from that concededly epochal year in the world's history — the year of the creation of the Public Serv- ice Commission, 1907. In other words, the statistics cover each fiscal year ending June 30th, beginning, for comparison's sake, with the year before the Commission was established and ending with 1914. During these eight years the population of Brooklyn and half of Queens (the territory served by our lines) has increased 26.6 per cent. Our passengers carried have increased 31. Y per cent. Our car trips have increased 47.6 per cent. Our car mileage has increased 29.3 per cent. The average passengers per car per trip decreased 10.7 per cent. Final Report of Joint Legislative Committee 2685 In other words, the rate of increase in car service (measured by trips) has been nearly 1.8 times the rate of increase population. It ha^ been about one and one-half times the increase in passengers carried, and the average loading per car per trip, each trip averag- ing over five miles, has actually decreased from 43.8 to 39.1 persons. These figures, significant as they are, do not tell the full story; for, during the period covered, the Interborough tunnel to Brook- lyn was placed in operation and took away a large part of the traffic tributary to our lines. Moreover, the tremendous extension of transfer facilities has crippled our ability to carry passengers comfortably and has in- creased the average haul. It must be remembered, too, that during this period we have had but little co-operation from the city in the establishment of new facilities and lines — an absolute essential to adequate ex- pansion and growth. Being human, as well as corporate, and truthful, we should like to take to ourselves most of the credit for these gratifying com- parisons, but being also generous and sympathetic with the ac- cused, we cannot help pointing out to the Public Service Com- missioners what a splendid addition these comparisons would have made to the list of achievements which they have spread in their defense upon the records of Senator Thompson's com- mittee. Of course the figures would have been quite inconsistent with the conclusions of that iU-conoeived and unfair Johnson re- port, but in time of storm and heavy seas all kinds of ballast have to be sacrificed. Just think how much might have been claimed for 180 per cent, greater increase in car service than in population since the Public Service Commission was established, and, in spite of numerous transfer orders, nearly 11 per cent, decrease in car loading ! But here is the whole table appended. Eead it and remember it. We offer it in our own defense, but if incidentally it is of service to the P. S. C. we shall not begrudge them equal satis- faction — even if it seems to come a little late for their salvation. BROOKLYN RAPID TRANSIT COMPANY. February 25, 1915. 2686 Investigation of Public Service Commissions Traffic Statistics B. E. T. System — Fiscal Years 1907- 1914 Inclusive* Passengers • . Year Population (b) carried Car Trips 1907 1,580,000 511,000,000 11,660,000 .190'8 1,620,000 518,000,000 12,450,000 1909 1,660,000 535,000,000 13,430,000 1 910 1,770,000 573,000,1000 15,200,000 1911 1,840,000 581,000,000 15,720,000 1912 1,910,000 608,000,000 16,190,000 1913 1,980,000 638,000,000 16,390,000 1914 2,000,000 673,000,000 17,210,000 Increase 1914 over 1907 420,000 162,000,000 5,550,000 Per cent, increase 26.6 31.7 47.6 Traffic Statistics B. E. T. System — Fiscal Years 1907- 1914 Inclusive" Revenue Passengers ^ Car per car Year Mileage per trip Receipts 1907 : 68,200,000 43 . 8 $18,400,000 1908 73,800,000 41 . 6 19,000,000 1909 74,500,000 39. 8 19,100,000 1910 78,300,000 37.7 20,6Q0,00O 1911 80,200,000 37 . 21,600,000 1912 82,200,000 37 . 6 22,700,000 1913 82,900,000 38 . 9 23,600,000 1914 88,200,000 39. 1 25,000,000 Increase 1914 over 1907 20,000,000 4.7" $6,600,000 Per cent, increase 29.3 10.7° 35.9 Note. — (a) Covers elevated and surface lines and includes Bridge Operating Company. (b) Figures taken as of January 1st each year from Brooklyn Eagle Almanac. They comprise all of Brooklyn but only one-half of Queens. (c) Decrease. Final Kepoet of Joint Legislative Committee 2687 EXHIBIT Kg. 31 Befoee the Legislative Committee Investigating the Public Sekvice Commission Brief in Suppoet of Charges Filed Januaey 27, 1915 General Charge That the Public Service Commissioners for the First District have failed to restrain railways under their control from practices which lead to ruin, and have jeopardized investments of hundreds of millions of dollars. Charge 1 That they have permitted railway companies to issue official reports containing statements of earnings ivhich are false. In many instances large annual net profits are reported, when true statements toould show losses amounting to hundreds of thousands of dollars. And that the Commissioners with full knowledge have published and distributed such false statements. Street railways are required to furnish the Conunission with quarterly and annual reports of operation containing statements of earnings and balance sheets. These reports are tabulated and published by the Commission in an official summary with explana- tory notes, and the summary is widely distributed. l^ot one of these summaries correctly shows even approximately net earnings and financial conditions. The Commission is over two years behind in publishing its volumes of annual reports. The latest report issued is for 1912. Yet the Commission had a salary list last year of over $2,484,000. But to establish my charges, it is only necessary to consider the Commission's summary for the year ending June 30, 1914. In that summary the net corporate income, or profits from operation, for the fiscal year 1914 of the Third Avenue railway system is reported as $623,998, while actually the system operated, as will be shown, at a net loss of $362,416 — a difference of nearly a million dollars. The Third Avenue Company, like other companies, has been permitted by the Commission to issue reports which do not make adequate deductions from operating income for depreciation. 2688 Investigation of Public Seevioe Commissions Were these companies required to make proper charges for de- preciation, alleged profits, in almost every instance, would stand disclosed as actual losses. That depreciation must be seriously reckoned with and that it is an unavoidable charge against operating income is established by fundamental principles of accounting, by numerous court de- cisions, and by the Commission's official opinion in the Third Avenue Reorganization Case, to which attention will be directed. The Commission can not plead ignorance as an excuse for wrong- doing and neglect of duty. In the Brooklyn Rapid Transit Railroad Tax Case, Judge Le Boeuf, in 1910, said: "As surely as humanity travels from the cradle to the grave, the machinery and equipment of a public service cor- poration travels towards the scrap pile. The plant and struc- tures depreciate in less degree, but as certainly. This is ordi- nary depreciation." Referring to public service corporations which have neglected to provide for depreciation out of earnings, he adds: " The wrecks of many such corporations scattered through- out the State would not to-day be seen if early this principle had been applied to their accounting." The questions that have to be determined are : How much does annual depreciation on the various street railways of New York under the control of the Public Service Commission amount to; how much was charged against operating revenues in 1914, and what were the amounts permitted to be left uncharged by the Pub- lic Service Commission? With respect to the Third avenue, the answers to these questions are not difficult to find. At the hearings before the Commission in 1909 and 1910, in the matter of the Third avenue reorganization plan, the Commis- sion established by its own traffic expert Connette that the cost to reproduce the Third avenue system was $43,000,000, while the railways' expert Floy certified the reproduction cost to be $46,- Final Repoet of Joint Legislative Committee 2689 000,000, and both agreed that the property had depreciated to the extent of from $10,00'0,000 to $12,000,000. Floy specifically stated that the leproductioii cost of tangible property subject to depreciation was approximately $40,000,000, and in this estiiuato Oonnette substantially agreed. (See Exhibits o5 and 3(i and opinion in the case). These figures were for the Third avenue system as it then existed with 271 miles of single track road. But several roads have been added tu the system since, making the total present length 357 miles of such single track road. The reproduction cost of the Third avenue system to-day is in the neighborhood of $50,000,000, but to arrive at the amount of annual depreciation the conservative figure of $45,000,000 is adopted as a basis for calculation. In the case of the bankrupt North and East Railway Company of Chicago several yeai's ago engineers appointed by the United States Cireuit Court reported that depreciation on the road amounted to 5 6/10 per cent, per annum on the estimated repro- duction cost, and this was confirmed by the court. This is as much as to say that a street railway with respect to its tangible property subject to depreciation, obsolescence and inadequacy has an esti- mated physical life of about eighteen years. These facts were submitted to the Public Service Commission in 1910, and the Commission ignored them. Experience shows that this estimate, when applied to roads in Xew York, is extremely conservative. As a matter of fact, these railways in twenty-five years have been practically reconstructed and transformed twice, from horse car lines to cable and then to electric roads. Indeed, for several years depreciati(!U and obso- lescence on the Third avenue exceeded 12 per cent, of reproduction cost or about 50 per cent, per annum of operating income. And these facts were laid before the Commission and were ignored. But instead of taking five and six-tenths per cent, of the cost to reproduce, or over $2,500,000, let us take only three and one-third per cent, on $45,000,000, as representing annual depreciation on the Third Avenue system, that is to say $1,500,000. On this basis of reckoning, the estimated physical life of the road is thirtv years. That this estimate is moderate is confirmed by 85 2690 IXVESTIGATIOX OF PuBLIC SeeYICE COMMISSIONS the well-known accountants, Price, Waterhouse & Company. In 1908, the Metropolitan Eeceivers employed that firm to report on the Third Avenue system. Their report is on iile with the Public Sei-vice Commission, but has be€n totally ignored by the Com- mission. The accountants demonstrated that annual depreciation on the S3'stem with two roads omitted (and, of course, not including the four roads since added) was not less than $1,099,000, and pos- sibly $1,326,000. They showed that these estimates had been confirmed by the Metropolitan's Chief Engineer, ^I. C. Starritt, as well as by a number of independent witnesses. A member of the firm of accountants was called as a witness before the Commission in the Third Avenue Reoi-ganization Case, and testified to the facts, yet those facts have been persistently ignored by the Commission. Mr. Starritt also testified at the hearings before the Public Service Commission in the same case that depreciation on the Third Avenue road alone (not on the whole system, but on but one-tenth of the system's mileage, on a little over thirteen miles of double track road) was $443,000 annually, not even including depreciation on the five million dollar Kingsbridge power house. And the sworn testimony of the Company's own engineer has been ignored by the Commission. Price, Waterhouse & Company's figures were based on single track mileage of about 271 miles of road. The system is now 357 miles of single track road, or one-third greater. If we add one-third to their previous figures we find their estimate for annual depreciation on the system is not less than $1,465,000 and possibly $1,768,000. This estimate of Price, Waterhouse and Company was sub- stantially approved by the Appellate Division when the court decided that a proper charge for depreciation was the equivalent of about 80 per cent, of maintenance expenses. (People ex rel. Third Avenue R. R. Co. v. Tax Commissioners, 136 Appellate Division. ) Of course the Commission should have known of this decision^ and no doubt they did, but they have paid no attention to it. Final Eepoet of Joint Legislative Committek 2691 The Court of Appeals has indicated the proper method of com- puting annual depreciation. The court says : " The annual allowance for depreciation should be com- puted by dividing the values of the various kinds of tangible property by the number of years of their respective estimated physical lives, and that will be the opinion of the Court." {People ex rel Manhattan Railway Co. v. Board of Tax Com- missioners, 203 X. Y. 201.) But the Commissioners have not obeyed the court. They have established ridiculous accounting rules in which they display con- fusion as to the difference between maintenance, depreciation and amortization. Instead of obliging railways to charge income with proper allowances for depreciation, they have permitted them to credit themselves with hundreds of thousands of dollars." In order to be extremely conservative, however, $1,500,000, as already shown, has been adopted as accurately representing annual depreciation on the Third Avenue system. This charge is equal to about 14 per cent of passenger receipts. On the streng-th of the accountant's report, which disclosed that, because of the inevitable outlay for depreciation, the Third Ave- nue could not be profitably operated, and the Commission was fully infoi-med of the facts. The Third Avenue lease was broken and that company, with its controlled companies, in 1908, was separated from the Metropolitan system, now known as the New York Railways Co. That report of the accountants, remember, was on file with the Commission, and it was many times referred to at the Third Avenue hearings. Neither the Public Service Commission, nor the managers of the Third Avenue and Metropolitan railway systems can plead ignorance of the fact that depreciation must be reckoned with in operating street railways. And they well know that the penalty for neglecting depreciation is bankruptcy. In the Third Avenue Reorganization case, the Commission said: " That property depreciates is an indisputable fact, and the failure to recognize and provide for it has brought low many corporations. The street railway situation in Man- "2ii92 Invkstkj.vtion of Public Skkvick (.\)m missions hattaii for tke past three yours is an omiuons warniui;', aud any one who unduly minimizes the subject of depreciation harms not only the investor but the public. If only normal wear and tear be provided for directly out of operating ex- penses, obsolescence, inadequacy and age must be mot by a depreciation fund. Counsel for the applicants seems to be of the opiuiitii that all a company needs to prox'ide for out of earnings is its daily needs and mandatory demands, and that the stock- holder is entitled to dividends regardless of provision for depreciation. This policy has brought many roads to liiuincial disaster. Companies that are soundly financed make am[)k^ provision for depreciation before dividends are paid. Ecgloct to keep investments unimpaired in order that dividends may be paid will lead to ruin." (Opinion Disapproving Plan of Reor- ganization, July 29th, 1910.) These railway companies, as the Public Sei'vicc (^.onunission is well aware, have applied to tlie courts for reduc-tion of their franchise taxes and in such applications havc^ presented the evi- dence of officers of the company and expert witnesses to establish the extent of annual depreciation charges against earnings. Vet the Commission has made no use whatever of this information. But when the railways issue reports of earnings through the Com- mission, they deliberately avoid making projx'r charges for depre- ciation and thereby, with th<^ connivance oi' the Commission, de- •ceive investors as to earnings and financial conditions. As one result, at the recent annual meetiug of th(^ Tliird Ave- nue, stockholders \vbo( wer(> misled by tlie show of ciaruin^s in the company's annual report strenuously demanded payments of dividends, being left in ignorance by this ('Onimission of tlio fact that that company has been losing money, that capital has been impaired, and that instead of a substantial surplus, it has a huge deficit and has been regularly })a,ying bond interest with the pro- ceeds of capital. The Third Avenue is by no means the worst oU'euder; it is indeed one of the least. With only on(Miintli of all tlio traffic FixAL Report of Joint Legislative Committee 2693 it accounted for half of all the depreciation charged against earn- ings in 1914. Last year Third Avenue appropriated $513,586 from operating revenue to provide for depreciation. But, as it has been shown, depreciation amounted to $1,500,000 and accord- ingly, when taken into account, proves that instead of alleged profits of $623,!};>8 there was a net loss for the year of $363,416. The Xew York Eailways Company, with probably a larger re- construction cost and certainly a larger income from operation, was permitted by the Commission to appropriate last year but $324,773 for depreciation, and was enabled thereby to show a fictitious net profit of $3,933, which received the Commission's endorsement. This company's passenger receipts last year were over $13,400,000. If depreciation be estimated at the same rate as has been proved reasonable in the Third Avenue case, 14 per cent of receipts, we find depreciation last year amounted to $1,876,000 and that there was a deficiency charge against earn- ing-s of $1,551,227. It is accordingly disclosed that this company, instead of operating last year at a small profit, actually operated at a loss of over $1,500,000, and the Commission, by publishing the false figures, and thereby endorsing them, was a party to the fraud on stockholders. It is a suggestive fact that there was a very narrow line be- tween profit and loss, as shown in the company's report. Had operating expenses been increased by only so much as one- twentieth on one per cent of gToss receipts a loss would have been shown instead of a small profit. The Commission's report shows that the Brooklyn Rapid Tran- sit Companies last year had passenger receipts of over $25,- 790,000. At 14 per cent, depreciation is estimated to have amoimted to $3,610,600. But instead of charging operating rev- enue anything for depreciation, the B. E. T., as shown by the Commission's Summary, actually was permitted ta credit itself with $102,431. It was able to get away with this extraordinary piece of business because the Commission has adopted faulty ac- counting rules, of which this railway company has been too ready to take advantage, showing that this Commission will stand for pretty much anything from the traction lines. The Summary shows " Net Corporate Income " or " Surplus " 2694 Investig.vtiox of Public Service Cojimissions earnings of the B. E. T. for the year of $3,395,843, when, if de- preciation had been charged, there would have been disclosed a loss of not less than $817,188. The Interborough Rapid Transit Company was permitted to charge operating income with but $330,495 for depreciation last year, a totally inadequate sum, as was well known to the Commis- sion. The company's passenger receipts were over $32,500,000. Because of different conditions, depreciation on the Interborough does not bear so large a proportion to income as other companies. It is estimated to be from $2,500,000 to $3,000,000 annually. The Interborough reported net corporate income last }'ear as $8,0'24,580. But had this Commission seen that income was jiroperly charged with depreciation there would have been not much more than enough net earnings for the year to pay its 10 per cent, dividends. The Interborough Eapid Transit Co. is in a class by itself. It is in a sound financial condition, unlike the other street railways under the control of the Public Service Commission for the First District. Its earnings have been so great that it could safely neg- lect depreciation for a while. But not for all time. One of these c'ays, it may appear capital has been hopelessly impaired. Had this company been obliged by the Commission, since its incorpo- ration, to properly provide for depreciation, it would now have a fund accumulated from operating income much more than sufficient to replace the wooden cars in the subway which in ten years have totally depreciated through obsolescence. This com- pany's $15,000,000 surplus is wholly fictitious, and this fiction is published by the Co^mmission as a true statement. The Accounting Orders of the Commission prescribe that the hasis for charging depreciation shall be optional with each com- pany. This is not only in conflict with the Interstate Commerce Commission's rules, and with the Court of Appeals, but results in the absurdity of most companies basing depreciation charges on cents per car mile, which is like measuring a man's height by Troy weight. The Commission has confused Maintenance with Depreciation, though they are entirely distinct. In its system of accounts it permits capital to be consumed in operation — is violation of law Final R.Erojrr ok Joint Legislative Co,-\nLrrTEK 2695 and common sense — and Las invited railway companies to reduce maintenance expenses by crediting Depreciation whenever a com- pany sees fit. This permission the Brooklyn Rapid Transit has been quick to avail itself of, with ridiculons results to which at- tention has already been called. The Street Railways under the control of this Commission with traffic receipts of nearly $91,000,000 last year charged operating revenue with $1,100,000 for annual depreciation, which was only about one-tenth of what should have been charged. Charge 2 That they have permitted companies to publish balance sheets which display millions of assets which are not real; atid conceal millions of liabilities which are real; and that such balance sheets set forth enormous surplus earnings totaling millions of dollars which are purely fictitious. The Public Service Commission pub- lishes a summary of reports of thirty-six street railways operating in the City of New York for the year 1914. With the possible exception of one or two railways of least importance, none of the balance sheets in the summary is a true statonent. It is obvious that when a company neglects to charge income with proper charges for depreciation, or for any other operating expense, false balances occur on both sides of ledger and balance sheets. When the practice has continued for years the amounts of false balances reach an appalling total. Take the New York Railways Co. for example. That company claimed in balance sheets a corporate surplus of $83,486.40 on June 30, 1914. As a matter of fact, no surplus existed but a iarge deficit, as the result of years of accumulated depreciation remaining uncharged against income. Of course, had the proper annual charges been made, the deficit would now appear in balance sheets instead of a fictitious surplus. This applies to Third avenue as well. Moreover, it has been proved by the Commission's own experts that the Third avenue system started business under its reorganization in 1910 with liabilities of from $10,000,000 to $12,000,000 for accumulated depreciation. Such liabilities ought to be accounted for in balance sheets, but they never have been. -i696 Investigation of Public Service Comjiissions I have recently had occasion to call the Commissio'ri's attention to the fact that the Third avenue has been guilty of a piece of startling bookkeeping sleight of hand by fabricating a " Keserve Fund" of $9,000,000' out of bankrupt wreckage. The Commission has been publishing, and thereby endorsing, this false asset for three years past. I will pay particular attention to this item presently. There are three small railway companies in Brooklyn whose reports of earnings and balance sheets seem to warrant credence. The chief of these is the Bush Terminal. ^A'ith their exception, all the reports of railways published by the Commission are unreliable and misleading, all the great traction systems have been permitted by the Commission to impair their capital, and all of them are on the brink of bankruptcy. Charge 3 That they have allowed raihuays to pay dividends and hand interest with the proceeds of capital, a practice which, in the past admittedly has brought many roads to financial disaster. It has been shown that the Third A^-enue and New York City Kailways while accumulating huge deficits from operation have nevertheless been paying bond interest, and the Brooklyn Eapid Transit under like circumstances has been paying divi- dends and bond interest. These payments as they could not have been paid out of non-existing earnings must necessarily have been made with the proceeds of capital, that is to say, with money received from the sale of stocks and bonds. And in consequence capital has been impaired. The Commission has permitted these things to take place while declaring, " This policy has brought many roads to financial disaster." Charge 4 These Commissions htove heen a party to the issuance of Reports roniaining statements of earnings and balance sheets ivhich are false and misleading ; and have put their official approval on them hy publishing and distributing them; and tlud ihey hare thereby deceived and wronged innocent investors. This charge has been amply approved. As the direct result, doubtless, of the publication of false statements of earnings and Final Repoet of Joint Legislative Committee 2697 misleading balance sheets, Third Avenue stock has recently been selling close to $50 a share on the Stock Exchange. If the truth were known, prices might well recede to the level asserted by President Whitridge some years ago to be the value of Third x\vc- nue Railway stock, viz. : " Two cents a hushel." The total capital outstanding of street railways under the control of the Commission, including both stock and bonds, is nearly $700,000,000. It is respectfully submitted that the Commission has no more important duty than to see that the securities of investors are kept intact and that truthful and illuminating reports of financial operations of public service corporations under their control are issued. The Commission through its wilful neglect of duty has done irreparable injury to thousands of confiding investors. Charge 5 That they have permitted railway com,panies under their conr irol to publish two or more statements of earnings and balance sheets as of the same date whose figures widely differ. The 'New York City Railways Company and the Interborough Rapid Transit Company have issued annual reports for the year ending June 30, 1914, which properly agree with their reports as published by the Commission in its summary. But the Third Avenue system has been permitted by the Com- mission to issue three reports as of the same date, including that in the summary, which disagree in every particular, ^o two sets of figures are the same. Only one instance need be mentioned here. The Third Avenue in its annual report for year ending June 30, 1914, has a con- solidated balance sheet of the Third Avenue and controlled companies showing a surplus on that date of $1,906,025.72. The balance sheets of the Third Avenue and controlled companies as published in the Commission's summary for the same date show a surplus balance of only $88,710.92, the difference being over $1,800,000. I fail to see how these differing figui-es can be reconciled. Certainly it was the duty of the Commission to see that they did not go unchallenged. 2698 IxvESTiGATiON OF Public Service Commissions The difference between the figures of the two amiiial reports of the Brooklyn Rapid Transit for the year ending June 30, 1914, are even more startling. Not one of the figures agrees with the other. Even the figures for net earnings in 1914 differ to the extent of nearly two millions — to be exact $1,919,863. And Brooklyn Rapid Transit's alleged surplus is a joke. Charge 6 That they have failed to enforce reasrniahle accounting 7-uhs and honest methods of financial o-peraiionsj and that, as a resvl-t of their neglect and co-operation in wrong-doing, capital has been impaired and many raiJvays are insolvent or approaching in- solvency; and that they have invited general bankruptcy of trac- tion lines such as was experienced in 1907. That the Commission has failed to enforce proper accounting I'ules and honest methods of railway management has been proved. And that, because of official neglect and wrong-doing, many street railways have reached a stage of insolvency is a fact which becomes manifest to any one who examines into the question. The Public Service Commissioners are no improvement on the Railroad Commissioners whom they superseded, in fact they are infinitely worse. Raihvays can with impunity falsify their ac- counts to-day in a way they were not permitted to do even in the past. One reason for this seems to be that the railroad managers have got the Commissioners half scared to death. Since 1907 the street railways of New York have been freely permitted by the Public Service Commission to violate cardinal principles of economies essential to continuing solvency to such an extent as to bring them face to face with ruin. The principles so violated and the violation of which spells bankruptcy are these : 1. Maintenance up to the highest standard of efficiency must take place; 2. Due regard must be had to the life of the earning material, the factor of depreciation ; 3. Payments on account of maintenance, depreciation, re- newals, and other operating expenses, as well as dividends or interest, must not be made otherwise' than out of earnings ; Final Eepoet of Joint Legislative Committee 2G99 4. Indebtedness must be paid off or gradually reduced, not con- tinually increased. The ruinous methods of the street railways are in all respects similar to those of the bankrupt Metropolitan street railway. The Metropolitan went into the hands of receivers not because it had been looted of a few millions, which was wholly insufficient to cause its downfall, but because of the violation of essential princi- ples of economies to which attention has been directed. In 1902" I asserted that that railway system was insolvent — not, however, on account of the looting of some few millions, which is even now erroneously supposed by many persons to be the sole factor. I charge that the cost of replacements for depreciation, and a large part of operating expenses, dividends on stock, and interest on bonds, had been paid out of capital, and that the cijst of operation, instead of being under 50 per cent, as reported to the Railroad Commission, was over 80 per cent, of gross receipts ; that the capital of the companies was being depleted of millions an- nually; that as soon as it was found impossible to go on raising new capital with watered securities, bankruptcy would be declared. The officers and directors characterized my statements as ''an avalanche of Ties" and threatened criminal prosecution. Their accountants branded my statements as ridiculous, and certified to the perfectly sound condition of the system. They asserted there was " not the slightest ground for any charge of corporate mis- management," and declared dividends had not been paid out of capital. (See reports of Stephen Little, Farquhar J. IMcRae, Arthur W. Teele and Haskins & Sells), certified accountants. The truth of my charges has since been confirmed by the re- ceiverships and by the reports of operations made by the receivers, as well as by the Metropolitan Committee attempting to reorganize the traction system, quoted in the New York Times of ]\Iay 14, 1910, as follows: " The result was that a system which was actually being operated at a cost of nearly 80 per cent, of the gross earnings, which had fixed charges equal to about 50 per cent, of the gross, was in addition paying some 10 per cent, of the gross in taxes, making about 140 per cent, of its gross earnings, all told, before it got to any of the junior issues of securities, the 2700 Investigation of Public Seevice Commissions proceeds of which had been used from time to time to keep piling up the inverted pyramid." These same railroads in the borO'tighs of Manhattan and the Bronx are to-day permitted by the Public Service Commission to report annual operating expenses of 64% per cent., and the Broak- lyn Rapid Transit, under 59 per cent., figures which are mani- festly not true, and are known by the 'Commission to be untrue and by means of which they still " keep piling up the inverted pyramid." Charge 1 That their attention has been repeatedly called to the matters herein referred to, and that they have disregoxded the same. The Commissioners were repeatedly requested to consider these matters and to correct wrongdoing at numerous hearings in the Third avenue reorganization case in 1909 and 1910, when the undersigned, as chairman of a committee of nearly 200 stock- holders, appeared many times before the Commission with counsel. More recently I have sent several written complaints to the Commission. My last letter, dated January 13, 1915, was ad- dressed to Commissioner Maltbie but has not been answered. Per- haps he has not answered it because he could not without frankly confessing official neglect of duty. I have not attempted to include herein the charge mentioned in my letter of January 27, 1915, that the Commissioners have per- mitted conditions to prevail in the subway that invite disaster. I am prepared to furnish a separate brief to cover this charge if desired. (Signed) W. N. AMORY, 41 Park Row, ISTew York city Dated, New York, February 1, 1915. Depeeciation Officially and Judicially Recognized On July 29, 1910, the Public Service Commission of New York published an opinion disapproving of a bondholders' plan for re- organizing the bankrupt Third Avenue railroad, in the course of which the following declarations were made regarding railroad depreciation : Final Repokt of Joist Legislative Committee 2YG1 " Much, evidence was submitted upon the subject of de- preciation. That property depreciated is an indisputable fact, and the failure to recognize and provide for it has brought low many corporations. Unless the investment of security holders is kept intact by a depreciation fund or some other similar means, the day will come when there will be no fimds or pro- perty to represent their securities. The street railway situ- ation in Manhattan for the past three years is an ominous warning, and any one who unduly minimizes the subject of depreciation harms not only the investor but the public. " If only normal wear and tear be provided for directly out of operating expenses, obsolescence, inadequacy and age must be met by a depreciation fund or some similar fund. " It is the first duty of every company to see that its capital investment is kept intact. All charges for repairs, renewals and replacements should be met out of earnings, and divi- dends should not be paid until these expenses have been pro- vided for in some way. It is evident that the Third Avenue railroad did not do so, but issued new stocks and bonds in- stead. The result was that its capital was depleted, that it could not pay the interest on its bonds and that the property has been sold under foreclosure. Counsel for the applicants seems to be of the opinion that nil a company needs to provide for out of earnings is its daily needs and mandatory demands, and that the stockholder is entitled to dividends regardless of provision for depreciation. " This policy has brought manj- roads to financial disaster. Companies that are soundly financed make ample provision for depreciation before dividends are paid. Ifegiect to keep investment unimpaired in order that dividends may be paid will lead to ruin." But most important of all, provision must be made out of earn- ings for renewals, replacements and reconstruction. For example, take a street car which we will say, with ordinary usage and good management, will last twenty years. In those years the manager must accumulate a sufficient fund out of earnings to replace that car. 2702 Iavestigatiox of Public Seevice Commissions In the pamphlet entitled " Classification of Operating Ex- penses " (3rd revised issue, 1907, p. 10), the Interstate Com- merce Commission has declared that, " The question of depreciation is fundamentally a question of values and not a question of maintaining the original capacity, or a standard of operating efficiency, or of keeping full the numbers in equipment series. " The basis of accumulation — that is to say, the amount to which the percentage rate is applied — ought in strict theory to be the original cost." The necessity of providing for railroad depreciation out of earnings has recently been judicially determined. On November 25, 1910, Judge Randall J. LeBoeuf, of the Su- preme Court of New York, in a decision rendered in the Brooklyn Kapid Transit tax case, declared that, " As surely as humanity travels from the cradle to the grave, the machinery and equipment of a public service cor- poration travels towards the scrap pile. The plant and struc- tures depreciate in less degree, but as certainly. This is ordinary depreciation. " But another form of depreciation in the case of properties here being valued takes place. The machinery or equipment, while still capable of years of service, becomes inadequate to do the work demanded, not only by the corporation, but by the law itself. In the case particularly of electrical ma- chinery, the type becomes obsolete by reason of invention, and increasing public demands frequently require, in aid of safe and adequate service, that the obsolete appliance or equipment give way to renewal. " Some of these changes are capable of definite ascertain- ment. Many of them may be provided against for the future by setting aside from gross earnings a reasonable sum to create a reserve against the day when they shall come. This reserve, with the amounts set apart for ordinary depreciation, goes to amortize the capital of the company. " Amortization of capital is something of a novelty in the case of public service corporations. Amortization of securi- ■Fii(AL Eepoet of Joikt Legislative Committee 2703 ties of trustees and money corporations has been known for many years, and the principle has been applied by manu- facturing corporations. Public service corporations alone were slow to recognize this necessity. " The wrecks of many such corporations scattered through- out the State would not to-day be seen if early this principle had been applied to their accounting." More recently, on March 8, 1911, the appellate division of the Supreme Court of New York, four judges sitting in the case of People ex rel. Binghamton Light, Heat and Power Co. vs. Stevens, et al.j enunciated the following sound principles: " Of course, there are certain betterments to property that are properly chargeable to capital. The general upkeep of a plant or of a railroad, however, ought not to be charged to capital, but the company ought to be compelled to make such repair and replacement as a part of current expenses. Of course, if this were not so, they could capitalize all running expenses periodically and call the gross income net income, and continually impoverish the company by ^ajixig im- properly large dividends. " One of the primary purposes of this general law is to prevent over-capitalization and to protect the public from the flotation of securities that do not represent actual values. The mischief is just as great whether it is the result of a process by which property has been replaced, and the original capital- ization is still carried on the books in addition to the cost of replacement. " This company has been paying dividends every year without laying aside anything for depreciation and replace- ment." On October 17, 1911, the Court of Appeals, the highest court in the State of I^ew York, and second only in importance to the Supreme Court of the United States, decided in the case of the People of the State of Neiv York ex rel. Manhatian Railway Company vs. Board of Tax Commissioners (203 W. Y., 231, at p. 236), as follows: '2704: I.WESTIGATIO.X OF PuBLIC SekVIOE COMMISSIONS " The annual allowance for depreciation should be com- puted by dividing the values of the various kinds of tangible property by the number of years of their respective estimated physical lives." WM. ROWLAND AilOE:!'. 1^0. 103 Park Avenue, New York, August 11, 1909 Public Service Commission, First District, 154 Nassau street. Dear Sirs. — My attention has been called by a Third avenue stockholder to the abstracts from quarterly reports of the Third Avenue companies, for the three months ending March 31, 1909, issued by your Commission. The stockholder referred to had received a totally erroneous impression from the statement of the earnings of the Third avenue system, I vras able to corTect some of his mistaken ideas as soon as I had glanced at the statement. Will you permit me to point out in what particulars the pub- lished statement is incomplete, inaccurate and misleading ? First. The financial statement is headed: Income statement — Third Avenue railroad system. The railways in the system are : Third Avenue R. E. Co. Kingsbridge Railway Co. Dry Dock E. B. & B. E. E. Co. 42nd St., :\ran. & St. Nich. Av. Eailway Co. I'nion Eailway Co. Broux Traction Co. Southern Boulevard R. E. Co. Tarryto^vn. W. P. & M. E. E. Co. Westchester Electric E. E. Co. Yonkers E. E. Co. It v.'oiild appear from the head lines, and the stockholder naturally believed, that the statement contained the Income Ac- couvt o-f «'/ the railroads in the system. Such is not the case, and the statement is accordingly found to be incomplete and mislead- ing. Final Report of Joint Legislative Committee 2105 The companies whose statistics are omitted are three in number, viz. : the Tarrytown R. E., Westchester Electric R. E. and Yonkers E. E. It is presumed that the Third Avenue figures as published in- clude those of the Kingsbridge Eailway, and the Union those of the Bronx Traction. It may be correct for the Bronx Traction to be included in the Union Eailway report, for it is a leased com- pany, but the fact ought to be stated. In my opinion, the Kings- bridge Eailway report should be separately made, for it is not a leased company, but controlled through ownership of stock exactly as the Union Eailway and other companies are, but if it be included in the Third Avenue report, that fact should be stated. Second. The three companies whose statistics were not reported in your statement I find operated for the quarter with the follow- ing deficits : Tarrytown Eailroad . $16,148 70 Westchester Electric Eailroad 18,495 37 Yonkers Eailroad 38,595 38 Total $73,239 45 The report therefore, of total surplus for the quarter of $177,- 457.91 is shown to be by this item alone an over statement of $73,239.45. The statement for t^nipliis for !) months, fp'.'i^b'.- 230.88, is accordingly also shown to be a misstatement. It is true that two of these companies reports to the Commission of the Second District, but the complete figures could ha^-e been and ought to have been published for the sake of accuracy in your report, or a clear explanation of the omission made. The Third Avenue Company owns all the capital stock of the Tarrytown Eailroad, all of the Westchester Electric and 99% per cent, of the Yonkers Eailroad. Third. The item of $144,348.23. income from (.thei- soairpe?,, in the Third Avenue column, is beyond reasonable doubt a mis- statement. In the previous quarter (December 31, 1908) there were earnings claimed of $132,649.29 for Sale of Power, which 27UU Ix\-ESTIGATIO]N' OF PuBLIC SeEVICE COMMISSIONS had not heen paid, and which did not appear in the reports of the companies using the power as an expense or liability (See page 2, Reorganization plan, Committee of Bondholders, filed with your Commission). It would appear that possibly the whole $144,348.23 is an over- statement, but allowing that $30,592.50 of the sum was for rentals, etc., and was actually paid or properly debited, there is left $114,348.23, representing fictitious earnings under this head. I have been obliged to estimate this item. But the Commis- sion has power to ascertain the exact facts and to see that they are duly published. Fourth. Proportionate amount of Special Franchise Taxes are wholly omitted. Franchise Taxes for the year on all the roads in the Third Avenue system, fixed on the basis of Judge Hall's report, amount to not less than $320,000. One quarter of the amount or sa.y $50,000 is chargeable against this particular quarter. Not all of special Franchise Taxes is assessed in jSTew York county ; some is assessed in Westchester county. In the Commission's statement there is no reference whatever regarding Franchise Taxes. Those who did not know, like my friend the stockholder, would be led to believe that the published item of taxes included Franchise Taxes. The proportionate amount of Franchise Taxes ought to have been included in the financial statement, but if omitted there should be a plain statement of the omission, and an indication of the amount. The Commission has power to force street railway companies to include Franchise Taxes in their statements of in- come account and the Commission ought to exercise the power. It is found that the cost of operation for the whole system was 86.42 per cent, not including any taxes. With franchise and all other taxes included the cost of operation exceeds 96 per cent, of gross earnings. It is fair to state, however, that the quarter ending March 31st is the worst quarter in the year for street railwavs. Final Report of Joint Lecsislative Committee 2707 Be capitulation, shaming misleading statement of earnings in the published abstract. Losses, not reported, of other companies in the system (ISTo. 2) $73,239 45 Fictitious profit claimed for sale of power (No. 3) 114,348 23 Special Franchise Taxes chargeable against quar- ter (I^To. 4) 80,000 00 Total $267,587 68 It is seen that had these items been contained in the statement of earnings, as they properly should, instead of a surplus for the quarter of $177,129.77, as claimed, there would have been shown losses from operation of $90,129.77, truly, an important difference. The same applies to purported net earnings for the 9 months. Instead of surplus earnings of $928,230.88 it would be shown that the railways in the system operated at a loss. The Commission could and should, determine and report the exact amount of loss from operation for the 9 months. Fifth. The statement is not clear as to the deduction on account of funded and floating debt. Full information on these points ought to be given. I find on analysis that the Third Avenue Company has deducted interest on $5,000,000, First Mortgage Bonds, and $29,510.21, besides presumably interest of Eeceiver's Certificates, but has made no deduction for interest on $37,560,000 of consolidated mortgage bonds. ' It would appear that all the other companies have properly deducted interest on bonded indebtedness, excepting that the 42d Street, Manhattan and St. Nicholas Avenue Railway has made no deduction for interest on $1,600,000 of second mortgage bonds, nor the Dry Dock road any deduction for interest on $1,100,000 of certificates of indebtedness. The companies in the system owe the Third Avenue Company, $18,310,827.63 of borrowed money, and they owe the New York 2708 Investigation of Public Service Commissions City Eailvpay Company $1,701,809.15, and the Union Railway Company $921,453.80. The Tarrytown Kailroad owes the West- chester Electric Eailroad $93,933.86. The Third Avenue Com- pany owes the Metropolitan Street Railway Company $5,474,- 769.18. No interest on any of these high floating debts is being paid. I am aware that to include an explanation of all of these items would extend the statement, but for a clear understanding of the earning capacity and the exact financial footing of the railways in the Third Avenue system their inclusion is necessary. I have felt impelled, to send you this communication not only in the general interest of proper reporting but for the particular reason that a certain Third Avenue stoctholder ol my acquaint- ance has been misled to such an extent by your published state- ments that he actually believes the Third Avenue system is a going, profitable concern, and with the very best intentions, has misled other stockholders. It will not do to dismiss this subject by declaring that stock- holders and other interested parties ought to know many of these things without being told. As a matter of fact they don't. It is necessary to be most explicit. If complete and accurate statistics of the street railways of this city had been published from time to time by your predecessors, millions of dollars would have been saved by innocent investors, in the last few years. The opportunity for reform is yours to be availed of in the interest of honest investors. To show you how easy it is for street railway managers to color statements, distort figures, and delude the public, I call your attention to the fact that at the recent hearings before your Com- mission of the Bondholders' Committee proposing to reorganize the Third Avenue, not a s.ingle stockholder or other interested party (which included the Commission and its employees"), except the undersigned, discovered that figures of earnings submitted were not simply disingenuous but were false and deliberately deceptive. Very respectfully, FiKAL Eepoet of Joint Legislative Committee 2709 State of i\"ew York — Public Service Commission for the First District, Tribune Building, 154 Nassau St., Telephone 4150 Beekman. New Yoek, August 17, 1909. W. N. xiiioEY, Esq., 103 Park Avenue, New York City: Deae Sie. — Your letter of the 11th containing criticisms of the reports of the Eeceiver of the Third Avenue Kailroad Co. has been received. Much more might be said in criticism of those re- ports than you have stated, but the Commission has not placed de-, pendence on them alone and it did not suppose that the public did. It presumed that investors, and more especially stockholders, would read the abstracts in the light of the evidence brought into the pro- ceedings of the transfer case (59th Street Crosstown line and Third avenue, etc.), wherein the accounts of the Third Avenue and Forty-second Street companies were spread out in detail and subjected to analysis through cross-examination. All of which was printed in full. Similar details for a later period have been put in evidence in the reorganization case, although they have not, unfortunately been printed as yet. The Commission did not deem the reports valuable enough to justify the explanations and corrections you suggest, but devoted its attention rather to the improvement in the keeping of the books of accounts, from which the reports are a mere transcription. Very shortly after it came into existence the Commission took up the matter of accounts and endeavored to have a new system of bookkeeping ready for use before the beginning of the fiscal year, 1908 (July 1). But the necessity of co-operating with othet bodies, especially the Interstate Commerce Commission, which is required by law, delayed the work and prevented action before July 1, 1908. The prescribed system of accounts went into full force at the beginning of the following fiscal year (July 1, 1909), and the Commission will soon he receiving monthly reports hosed thereon which will have some real value. The Commission agrees entirely with your opinion as to the need of complete and accur- ate statistics of the street railways and other corporations and it expects to have them from now on. In deference to your opinion, the abstract of the reports for ihe 2710 INVESTIGATION OF PuBLIC SeEVICB CoMMISSIOiXS quarter ending June 30, 1909 {(he last under the old system), will contain proper qualification of the significance of the figures reported. Yours very truly, (Signed) Teavis H. Whitney, Secretari/. December 28, lei-t. •Public Service Commission, 154 Nassau Street, New York City: Dear Sie. — In your published summary of annual reports of street railways in New York for the years ending respecti\-ely June 30, 1913 and 1914, in the balance sheet of the Third Avnme Eailway Co., I find the item of rese^rves, i$9,329,0'99.08 in 1913, and $9,625,546.43 in 1914 — showing an increase of $290,447.35. Will you have the kindness to inform me in detail how these enormous reserves were accumulated. Were they accumulated through capital in whole, or, if in part, in what proportion '( Or do they represent actual cash accumulations from operating in- come in whole, or, if in part, in what proportion? Or are they the product of bookkeeping devices in whole, or, if in part, in v liat proportion ? I observe that in 1913 the total includes $473,038.07 stated in footnote to be deposits by controlled companies for taxes and iiiter- est, and under the like head in 1914, $341,139.55, a decrease under this head of $131,898.52. It is accordingly found that, omitting such deposits by eon- trolled companies from consideration, the actual increase of other reserves in 1914 was $428,345.87 instead of $296,447.35. Will you please inform me in detail how such increase was made? Yours very tiTily, (Signed) W. N". AMORY P. S. — I should like further to be informed whether the amounts reported as deposited by controlled companies for taxes and interest were cash deposits, and if so, from what source the cash was obtained; and what controlled companies made such Ftxal Eepokt (IK ToiAT Legislative Comiiittee 2711 deposits; and where the records of such deposits appear in your printed annual reports of such controlled companies. State of ^ew York — Public Service Commission for the First District, Tribune Building, 154: Nassau St. jSTew York, December 30, 1914. W. N. AitOEY, Esq., 41 Park Row, iVetc York City: Dear Sir. — Keceipt is acknowledged of your inquiry of the 28th, concerning certain reseires shown in the balance sheet of the Third Avenue Eailway Co. as published in the Commission's summaries of reports. The quarterly reports, from which the Commission's summa- ries are prepared, do not contain the complete detail that is given in the annual reports, and in the case of some companies do not contain the final adjustments made in the closing month of the year. For -that reason the summary is always entitled provisional. At the same time the differences between the provisional report and the final report are of minor importance. If you will refer to the abstract of the report of the Third Avenue Railway Co. printed in Vol. II of the Commission's An- nual Report for 1912, at page 851, under Reserves, you will note the following: " Reserve for adjustment of stocks and obligations of con- trolled coonpanies and other capital adjustments (on opening entry January 1, 1912), balance at beginning and end period, $9,000,000." A comparison of the assets of the reorganized company with those of the old company will indicate the source of this reserve. It appears that the new company used, with some small adjust- ments, the book values of the fixed capital and investments of the old company, and consequently the total book value of the assets exceeded the liabilities by $9,000,000. There are four other reserves described in the 1912 report. One of these, a small reserve for water rates, has been discontinued. The balance in the remaining reserves, and in the unfunded debt account entitled " Deposits from associated companies to pay inter- est and taxes ", are shown in the following table : $9, ,261, 639 79 235, 440 00 473, 269 32 $9, 970, 349 11 1914 $8, ,886, 432 23 323, 892 84 $9: ,210, 3125 07 392, 400 00 333, 738 86 $9, 936, 463 93 2712 IxVESTIGATIOX OF PuBLIC SeETICE COMMISSIONS 1912 1913 Reserve for + + + capital adjustments. ... $9, 000, 000 00 $8, 951, 016 94 Reserve for unpresented claims against Eec'r 100, 000 00 79, 403 56 Reserve for loss on operations of others.... 182,415 64 231,219 29 $9,282,415 64 Accrued amortization of capital 78, 480 00 Deposits of associated companies to pay interest and taxes Reserve for -\ — h + capital adjustments Reserve for unpresented claims against Rec'r. Reserve for loss on operations of others Accrued amortizat'n of capital Deposits of associated companies to pay interest and taxes. You will understand, of course, that the reserve for loss on operations of o.thers represents the Third Avenue Railway Com- pany's contingent liability for losses throu.gh the operations of controlled companies. This contingent liability might properly be shown as a deduction from the investment in the securities of such companies. Concerning the deposits by controlled companies for interest and taxes, it does not appear that these are specially ear-marked by the Third Avenue Railway Company. In the reports of the controlled companies, the amounts appear on the balance sheet under the caption " Other special deposits ", which in the con- densed quarterly summaries are combined with " Cash ". Very truly yours, (Signed) Teavis H. WsiTi^rEY, Secretary. January 11th, 1915. Public Service Commission, 154 Nassau, Street j New Yorh City: Deae Sies. — I beg to acknowledge receipt of your letter of December 30th, which, while a reply to my letter of the 28th, is not responsive to my several specific inquiries. Final Kkpokt ok Joint Li;cuslati\-e Coaimitthk 2713 Among other things, I asked for a definite explanation of the enormous sum of $9,000,000, displayed in balance sheets as a reserve, and described as : '' Eeserve for adjustment of stock and obligations of con- trolled companies and otlier capital adjustments (on opening entry January 1, 1912), balance at beginning and end of period, $9,000,000." You offer the following in explanation : " A comparison of the assets of the reorganized Company with those of the old company will indicate the source of this reserve. It appears that the new company used, with some small adjustments, the hook values of the fixed capital and in- vestments of the old cmnpany, and consequently, the total hook value of the assets exceeded fli.e liabilities hy $9,000,000." (The italics are mine.) Permit me to remind you that a railroad Reserve is a Store or Fund for future specific use, accumulated from income, or from definite profits, incident to railroad operation — and nothing else. When a reserve is created or increased, operating income is corre- spondingly decreased in exactly the same sum. In other Avords, a Reserve is a charge against operating revenue. As railway operating revenue is, essentially, a cash item, so is a Reserve that very same tangible thing, a cash item. A surplus, it seems appropriate here to remark, is created out of the net profits of railroad operation, and in no other way. It is the excess of operating revenues remaining after there shall have been first deducted from such operating revenue (a) Operating Expenses, including Depreciation; (b) R&serves, (if any); (c) taxes; (d) Interest; (e) fixed charges, etc., etc., and (f) dividends (if any). It is a concrete sum of money, just as a Reserve is. The chief difference is that a reserve is a fund accumulated for a specific purpose, while a surplus is an accumulation of tangible net profits which is not necessarily restricted in its future application. 271tl: Ikvestigation of Public Seevice Commissions And you cannot create a Reserve fund out of alleged book values of fixed capital and investments, any more than you can make a surplus by bookkeeping entries. But it appears the Third Avenue Eailway Company has done that very thing and created a reserve of $9,000,000 with the bookkeepers' help and a stroke of the pen. And it further appears that you have permitted this to be done without protest. When you consider that the reorganized Third Avenue is grossly over-capitalized, and, as I am fully prepared to prove, is not only issuing deceptive balance sheets, but is publishing false statements of earnings and is drifting towards insolvency, yet presumes to use (and has used with your sanction), the book values of the fixed capital and investments of the old defunct bankrupt company, to establish that the total book value of the assets exceed the liabilities by $9,000,000 and then displays that $9,000,000 in balance sheets as a reserve fund, the question naturally arises, if the company is permitted to do this ; why not allow this company also to set up a surplus of another fictitious nine millions, or accomplish any other desired end by means of adroit bookkeeping and juggled figures ? Why go to the trouble of operating a railroad for profit, anyway, when it is such a simple matter with pen and ink to make millions of assets out of something rather less than nothing ? I observe that there is a large difference between the figures of total reserve published in your summary of annual reports and those supplied in your letter. Your letter shows increases of $641,250.03 in 1913, and $310,917.50 in 1914. The differences in totals are far too large to be accoimted for by the convenient term of " adjustments," and call for explicit explanation. In addition to the $9,000,000 above considered you show that the totals are made up of the following items: 1913 1914 Reserve for unpresented claims against receiver $Y9,403 58 Reserve for loss on operation of others 231,219 29 $323,892 84 Accrued authorization of capital . 235,440 00 392,400 00 Deposits of associated companies to pay interest and taxes 473,269 32 333,738 86 Fl.N'AL IvKPORT Ol-' JoiKT LkGI!-LATIVK CojIMlTTElC 2715 A^ ith respect to each of these items of reserve, I desire to be informed in detail whether they have been accumulated through capital in whole, or, if in part, in what proportion ? Or do they represent actual cash accumulations from operating revenue in whole, or, if in part, in what proportion ? Or are they simply the product of bookkeeping legerdemain in whole (like the $9,000,000), or, if in part, in what proportion? If these various items of reserve actually represent deductions from operating revenue of the Third Avenue and its controlled companies, as they properly should, I should like to have the in- formation in detail in order that the facts may be confirmed by an examination of the various companies' reports. You volunteer the following information : " You will understand, of course, that the reserve for loss on operations of others represents the Third Avenue Eailway Company's contingent liability for losses through the opera- tions of controlled companies. This contingent liaJ>iJity might properly be shown as a deduction from the investments in the securities of such companies." I beg to take issue with you. I understand nothing of the sort. A contingent liability is one that is not certain or determinable, or is dependent upon either fortuitous or extraneous matters. The losses from operation of controlled companies are not a contingent liability. They are a very real liability and a legal obligation of the Third Avenue Company ; and they are required to be paid out of the operating revenues of the railways system. To assert that " This contingent liability might properly be shown as a deduction from the investment in the securities of such companies " is, with all due respect, simply preposterous. If this . method of paying losses were adopted in the final analysis the result would be that the Net Income of the Third Avenue system would appear in Balance Sheet unwarrantedly increased by the exact amount of such losses designated as " Contingent Liability." To make the situation clear, let us take a simple parallel case, An express company is regularly earning $1,000 net profit a year. It purchases for $500 and controls and operates another small express company. At the end of the year it is found that this controlled company has been operated at a loss of $100. 2716 Ikvestigation of Public Service Commissions Would you charge off the loss of $100' against the $500 in- vestment by showing it as a deduction from the investment in the securities of such company and seriously maintain that the annual profits of the express business were still $1,000 ; or would you deduct the $100 loss from the $1,000 profit and write down $900 as profit for the year. If this way, which you apparently endorse, of paying losses from operation, by the convenient method of writing do\vn book assets in the ledger, were permitted to continue to prevail, how many years would it be before the express company would have to confess insolvency ? The application of common sense to these questions supplies the answers. And this leads me to remind you that accounting is an exact science firmly based on common sense. You must be aware that the application of its principles is simple. JSFevertheless, cor- porate bookkeeping and reporting are frequently clouded and wil- fully made complex for dishonest purposes. Through indifference on the part of Commissions, created at popular demand to safe- guard the public, railroads, I regi-et to say, find it a perfectly easy matter to issue statements of earnings which are unreal and to promulgate balance sheets which conceal liabilities and lay claim to millions of assets which are fictitious. In the last paragraph of your letter you state that " Deposits by controlled companies for interest and taxes are not specifically earmarked by the Third Avenue Railway Company." But they certainly should be, like all other items herein dis- cussed, and they should be fully displayed in your published re- ports of operation. Otherwise, the doors are conveniently left open for the perpetration of frauds upon the public through shady accounting methods. I unhesitatingly assert that not a single one of the railways under your control is publishing true statements of earnings and financial condition. iioreover, with particular regard to Third Avenue annual re- ports, I respectfully call your attention to the fact that such reports are made as of June 30th of each year, purporting to dis- play correct statements of earnings and true financial conditions on such date. Final Eeport of Joint Legislative Committee 271Y Apparently, with your connivance and approval, three state- ments are issued for public consumption, though not one agrees with any other. Two of them your Commission publishes; the third the company supplies to its stockholders. N"ot only do the statements widely differ, but it is found impos- sible to reconcile the differences. Yet it must be apparent that if one differs with another in but the smallest particular, one at least must be an untrue statement, while if they greatly differ in many particulars, as they do, the reasonable presmnption is that all are false. Very truly yours. STATE OF NEW ^'ORK Public Service Commissiox foe the First District Tribune Building, 154 ^Nassau Street ISTew York, January 20, 1915. \\. ]Sr. Amory, Esq., 41 Park Row, New York City: Dear Sir. — With reference to the reserves reported by the Third Avenue Railway Co., concerning which you have made in- quiry, the following detail is shown in the reports for the two fiscal years 1913 and 1914 of the deposits made by associ