Opening Speech for the Negative.

In opening for the negative, E. H. Hart emphasized at the outset the fact that the question under discussion was essentially a local one, and that it must be settled in the light of the actual situation in New York City. The speaker called attention to the fact that the proposition of the affirmative was without precedent in the whole history of the world, in view of the fact that no city ever thought of buying up an entire transportation system, to the owners of which it had granted perpetual franchises. Glasgow took over her lines when the franchises expired. In Chicago most of the franchises have expired and the rest will expire very soon.

Mr. Hart then demanded of the affirmative that some urgent and overwhelming necessity for the change be shown in view of the enormity of the problem. He then outlined the purpose of the negative as being three-fold--to show that municipal ownership is unnecessary, must inevitably be unprofitable, and will be positively injurious to the city. Municipal ownership is unnecessary since what it claims to do can be better accomplished in another way. We admit that there are some evils in the street railway system in New York, but we maintain that those which can be removed at all can be quickly and permanently abolished by strict regulation.

The speaker then took up the matter of poor service. He pointed out that the principal cry was against the overcrowding. He showed that much of this evil is due to the peculiar physical formation of the island which makes overcrowding inevitable. Furthermore reports of the New York State Railroad Commission show that cars are run as frequently as is practicable--a typical instance being the corner of Broadway and 23rd street, where cars pass at the rate of one every six seconds, while vehicles cross the tracks at the rate of 32 a minute. The speaker asked the affirmative to show how municipal ownership could improve a situation like this. He said that there is only one possible remedy, namely, relieving surface congestion by building new subways. Here again the expensive method of municipal ownership is unnecessary.

The speaker then took up the subject of over-capitalization. He showed that the fact of over-capitalization was very easily exaggerated and that much of the cry against watered stock is really against capital represented by the losses which the companies have incurred in experiments and improvements. From there the speaker went on to show that even though some over-capitalization did exist, municipal ownership was not the remedy. He showed that in Massachusetts over-capitalization was prevented by statute and he argued that the same thing could be done in New York.

In conclusion the speaker established the fact that the effective remedy for the evils existing in New York was not municipal ownership but regulation. He showed that statutes already exist which give the necessary powers for regulation, and he called attention to the fact that there have been concrete examples of successful regulation even in New York City.

Second Speech for the Affirmative.

G. W. Hinckley, continuing the debate for the affirmative, said: We have already seen that street railways are public utilities, and as such should be regulated for the public good. This would be brought about by municipal ownership, which would result not only in better and more efficient service, as shown by our first speaker, but would also be a distinct economic advantage to New York City.

The present system of street railways is grossly overcapitalized. The stock quotations and selling ability of the shares of these companies indicate enormous profits to the roads and dividends from 5 to 10 per cent. The roads themselves in endeavoring to conceal the tremendous profits have deliberately falsified their accounts. By this means they have increased the apparent charges and made the dividends seem normal.

New York can purchase these roads at a reasonable price on well settled constitutional and legal principles which have received their exposition in a long line of cases, that of the Long Island Water Supply Co. vs. Brooklyn, being a typical one. Here it was held in clear and explicit terms, that the basis of value of a public service company, when taken for a public use, was not the stocks and bonds, nor the great profits, nor the cost of construction and equipment as reckoned by the company, but was the value of the property as a going concern. This means, according to Judge Gaynor, that these roads could be bought for one-third or one-fourth of their present capitalization, a sum not exceeding $200,000,000, for all the roads in New York City. Acquired on such a basis as this and with present annual profits of nearly $25,000,000, it is clear that whether New York should choose to lease or operate the street railway lines ownership would be a distinct economic advantage.

But finally, we believe in municipal ownership because it offers the only wise solution of the rapid transit problem of the future. In a word the interests of the public are directly opposed to the ownership of a public utility by a private corporation and can never be satisfied short of municipal ownership.

Second Speech for the Negative.

J. N. Pierce, the second speaker on the negative, maintained that municipal ownership would be unprofitable, first because the city would have to buy the present system, with its perpetual franchises, at market value, which is $509,000,000; and secondly because the city would have to allow for depreciation out of the earnings of the system. He pointed out the fact that the present owners do not do this, but pay for depreciation by selling stocks and bonds, a policy which the city could not pursue without continually increasing its debts.

The speaker used a chart to show that the city would have to pay out annually for interest, sinking fund, and depreciation over $42,000,000. But as the net earnings of the roads are only $22,000,000 the city would have to face a net loss of $20,000,000 each year.

The speaker went on to say that this loss would really be much larger because of New York's poor financial management and would be an effective barrier against lowering fares, developing new lines, or giving more adequate service.