the Seventh avenue line, rights of way through private property would have to be acquired near the corner of Seventh avenue and Twelfth street, so as to enable the line to turn into Greenwich avenue; then under private property between Sixth avenue, near Clinton place and the northeast corner of Waverly place and MacDougal street, where the line turns into Washington square; and finally for a loop passing under private property and lying between West Broadway, Murray street, Greenwich street and Barclay street. The Interborough Company estimates the cost of these easements at $2,500,000. Whatever the cost might be, it would have to be paid by the city under the proposed contract; but the operating company would have to pay as rent, the interest which the city paid on the bonds issued for such property plus one per cent.

Assuming the cost to be $2,500,000, as estimated, and the interest payable by the city to be four per cent., this would add $125,000 a year to the rent payable, but would not otherwise affect the cost of the road to the contractor. The Rapid Transit Act does not compel the Rapid Transit Commission to charge rent upon the cost of easements acquired for rights of way, but it has been the declared policy of the Board ever since 1902 to make such a charge.

Third.

The purchase of private property for station entrances.

This is, of course, a matter which the law does not regulate, but the policy of the Board, as declared for the past three or four years, has been to provide for putting station entrances within private property wherever possible. In the case of the Sixth avenue line it is expressly provided that this shall be done, except where the Board might give distinct permission to the contractor to put entrances in the streets. In the report of the committee on plans, dated April 28, 1904, it was stated "That in the construction of additional subways, arrangements should be made so that the entrances to the stations may be upon private property and not upon the streets, thus avoiding the impeding of traffic on the already obstructed sidewalks."

Fourth.

Greatly increased responsibility for damages.

In the contracts for the Manhattan-Bronx and Manhattan-Brooklyn rapid transit railways, the provisions as to the responsibility of the contractor for damages to abutting property were believed to be ample. In practice, however, serious doubts have arisen as to the meaning of these clauses. Accordingly. counsel were instructed by the committee on plans and contracts to draft a contract under which there could be no question as to the responsibility of the contractor for injuries to persons or property along the line. The insertion of such provisions is what Mr. Shonts refers to. If the Board so desires, the contract can, of course, be redrawn so as to leave the contractor responsible only for the use of reasonable skill and diligence; in which case it is probable that owners and occupiers of abutting property would have no redress in many cases, or would be able to hold the city of New York responsible. The accidents occurring in Park avenue and in Joralemon street have naturally been such as to warn the Board against leaving contracts for construction in a shape to invite doubtful litigation.

Fifth.

An increase in the diameter of the tunnels.

This increase is due, as I am informed by the engineers, to a desire to give a more efficient and satisfactory service. The reasons are, of course, of a technical kind, which I cannot undertake to state.

Sixth.

"The fact that the express and local tracks on Lexington avenue are upon different levels also adds materially to the cost."

This is as much as saying that going up Lexington avenue adds materially to the cost. I understand from the engineers that it would be in the long run quite as expensive, if not more so, to make four tracks on the same level. Lexington avenue is a comparatively narrow street, where any other than a double deck construction would be almost impracticable.

Seventh.

"Another important consideration is the exceptionally broad power conferred by your form of contract upon the public authorities to require, from time to time, any changes in the construction of the subway and in the equipment and other appliances used therein as shall to them seem proper." In the report of the committee on contracts of April 28, 1904, to which reference has already been made, the following occurs:

"The committee believes that

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stringent and

satisfactory provisions in relation to the character and frequency of the service to be given may properly be inserted in the leasing part of the contracts."

In the contracts now under discussion, provisions were inserted in chapter three, the lease, reciting that the principal object of the city in making the contract was to secure for the public convenience an adequate, comfortable and rapid system of passenger traffic in the portions of New York that should be served by the railroad, and that the contractor had accordingly covenanted to do various things, such as to operate the railroad carefully and skillfully, according to the highest known standards of railway operation, to supply adequate rolling stock and to run trains so as to meet the reasonable requirements of the public, etc. The contracts then provided that if the Board should at any time be of the opinion that any additions to the rolling stock or other equipment, or any additions or changes in stations were necessary or that additional terminal facilities were required or any change was necessary, in order to carry out the purposes of the lease, or to promote the security, convenience and accommodation of the public, the Board might direct the making of such improvements, additions or changes as it deemed proper. If the contractor should neglect or refuse to comply with the directions contained in such notice, then it was agreed that in any legal proceeding instituted by the Board or other public authority to compel compliance with the obligations of the lease, the burden of proof at all stages of such proceeding should be uron the contractor to show that it was in fact discharging the duties and obligations of the lease, or that the additions, improvements or changes which the Board has directed to be made were unjust or unreasonable, or not in accordance with the terms of the lease.

The reasons for these clauses were fully discussed by the Board in 1903, in connection with the grant of a certificate to the Hudson and Manhattan Company. The question has several times been asked whether the Rapid Transit Board, under existing contracts, could compel the Interborough Company or other company to change methods of operation, or do other things in connection with the operation of the roads. The answer of counsel has always been that no such power was reserved by the leases or certificates, and that the Board therefore could do nothing more than advise, unless the act or omission complained of amounted to a breach of covenant. It has also been the opinion of counsel, concurred in by the Attorney General, that the State Railroad Commissioners had no general jurisdiction over the railways owned by the city and leased by it to operating companies.

Under these circumstances the clauses referred to were inserted following the lines of the suggestion made by Mayor Low in 1903 in respect to the Hudson and Manhattan certificate already referred to.

It will be seen that if carried into effect they would have been far less drastic than the powers which will be vested in the new Public Service Commission, if the bill now pending before the Legislature becomes a law. They would simply authorize the Commission to make orders and directions which would be prima facie regarded by the courts as reasonable and proper, but could not be enforced except through the medium of a court order.

Eighth.

Mr. Shonts further points out that in various respects the income would be reduced or the expenses which must be provided for out of income would be much greater, as compared with the original subway contracts.

These things are not due to changes in the form of contract.

A. Interest, on the supposition that the city can sell its bonds on a 4 per cent: basis will be from 2 to 4 of 1 per cent. higher than in the case of the original rapid transit bonds. This is beyond the control of the Board.

B. Unlike the original subway, the entire investment of the contractor in the new subway will be subject to taxation. This is due to changes in the rapid transit act adopted in 1905.

C. "Various advantages conferred by the original contract are now eliminated." This doubtless refers to the fact that under the existing law no advertising or merchandising of any kind can be permitted in the subway. This will make considerable difference in the profits of the operating company, but is imperative under the Elsberg Law.

D. The lease is limited to twenty years, subject to a renewal upon a revaluation, the terms of which cannot be fixed in advance. This is, of course, due to the rigid terms of the Elsberg Law, for which this Commission is in no degree responsible.

Trusting that the foregoing sufficiently answers the request of the Commission, I am

Respectfully yours,

GEORGE L. RIVES.

It was thereupon decided that the Committee on Plans and Contracts would take the matter under advisement and decide on what terms subsequent construction of any or all sections of these routes would be undertaken.

Coincidentally with the consideration of this question of construction of the Lexington avenue, Seventh and Eighth avenue and Jerome avenue routes, application was again renewed for the construction of an extra third track on the Second and Third avenue elevated railroads in Manhattan and the Bronx, the Interborough Company having applied for such authority for several years past. A hearing was given on this matter on May 2, 1907, and, as a counter-proposition, the board offered to grant to the Interborough Company authority to construct these additional third tracks on condition that that Company would agree to build those portions of the Seventh and Eighth avenue and Lexington avenue railways, in Lexington avenue north of Fortysecond street, and in Seventn avenue south of Forty-second street, using its own capital both for construction and equipment, and to agree to arrange for a system of universal transfers on all its lines in the boroughs of Manhattan and the Bronx. This, however, was not acceded to by the Interborough Company.

BROOKLYN-MANHATTAN SUBWAY LOOP LINES.

As was stated in the report of 1906, the necessary legal measures were about consummated at the close of the year to get under contract the system of subway loops known as Route 9, providing for connection between the Brooklyn, the Manhattan and the Williamsburg bridges. On January 12, 1907, the commissioners of the Appellate Division approved the Manhattan sections of this route, with the exception of a proposed two-track spur down William street from Beekman street to Old Slip, opposition to it being that it was considered, if built, it would result in serious injury to the buildings on either side of the street; although two experts appointed by the