Home > The Dual Contracts > New Subways for New York: The Dual System of Rapid Transit

Chapter 6: Growth of the Dual System

From nycsubway.org

New Subways For New York: The Dual System of Rapid Transit ยท Public Service Commission

In the Dual System of Rapid Transit, the Public Service Commission for the First District believes it has solved the present rapid transit problem of New York City. That problem, owing to the growth of the City and the past failure of city authorities and transportation companies to extend the street railroad system proportionately with the growth of traffic, had become acute. Marvelous as was the growth of the City after the Civil War, the growth of traffic within the City was even more wonderful. In 1860, with the population of 1,174,779, the street railway traffic of the City was 50,830,000 fares. In 1900 when the population grew to 3,437,202, the street railway traffic had jumped to 846,353,000. In the next decade, namely, from 1900 to 1910, it almost doubled. In that year with the population of 4,766,883, the traffic had grown to 1,531,263,000. Such an astonishing rate of growth could not have been anticipated, and it is no wonder that the building of City transportation lines fell behind such rapidly increasing demands. The problem before the Commission, therefore, presented two phases:

(1) How to bring about the immediate expansion of the various lines so as to relieve existing congestion.

(2) How to build new lines to provide for the new traffic of future years.

When the Public Service Commission, organized July 1, 1907, undertook the solution of this problem, it was confronted with seemingly insurmountable difficulties. The difficulties were two-fold: First, the City's borrowing capacity was so restricted that it could not raise sufficient money to engage in construction on the scale necessary to afford relief; second, the amendments of 1906 to the Rapid Transit Act had required terms so stringent as to preclude the co-operation of private capital.

The City of New York had been growing so rapidly that, after paying nearly $50,000,000 for the existing subway and spending other millions for permanent improvements demanded by the various boroughs, it had very little credit left to apply to new rapid transit work. The State Constitution limited its indebtedness, except for water works bonds, to an amount not exceeding ten per cent. of the assessed valuation of real estate within the City limits. This debt limit had been so closely approached at the beginning of the year 1908 that, when the Commission asked the Board of Estimate and Apportionment for $16,000,000 with which to construct the first part of the Fourth Avenue Subway in Brooklyn, it was met by the opposition of the then Comptroller to the authorization of the appropriation on the ground that the margin of the borrowing capacity of the City would not warrant such an expenditure.

It is true that the courts later decided against the Comptroller and the appropriation was subsequently authorized, but the ensuing litigation consumed more than a year and postponed the beginning of work on the Fourth Avenue Subway from May, 1908, until November, 1909.

The fact that the City's financial officer had to appeal to the courts to determine whether the debt limit restriction would permit an appropriation of $16,000,000 showed that the City had so closely approached the debt limit that, even with the normal increase in real estate values each year, it could not hope to expand the margin sufficiently within the time necessary to build such rapid transit lines as the necessities of the situation demanded. Two courses to relieve the situation were open to the Commission: First, to bring about an increase of the borrowing capacity of the City. Second, to amend the Rapid Transit Act as by the authorization of fair terms to induce transportation companies already enjoying rapid transit franchises to come to the aid of the City and furnish at least a portion of the money required for new lines.

City's Credit Expanded.

The Commission adopted both. The State Constitution previously had been amended so that bonds issued by the City for the construction or improvement of municipal water works were exempted from the operation of the ten per cent. restriction as to debt limit. The Commission sought to apply the same principle to the bonds which had been issued by the City for the construction of the existing subway and the existing dock system, for the reason that both properties, like the water-works, were self-supporting and, therefore, strictly speaking, the bonds issued for their construction could not be regarded as burdensome indebtedness. A constitutional amendment to this effect was presented to the Legislature by the Commission, duly passed by two successive sessions and submitted to the people and adopted by them at the general election in November, 1909. Following this referendum the Legislature of 1910 passed a law putting the amendment into operation, and by that act the credit of the City of New York was expanded by about $120,000,000.

The Legislature also amended the Rapid Transit Act, and by the amendments of 1909, as extended by those of 1912, untied the hands of the Commission and gave it power to make contracts upon terms that, while carefully safeguarding the City's interests, were attractive to private capital.

While it had taken several years of persistent effort to pave the way, it took an even longer time and even more sustained effort to induce the existing transportation companies to agree to contribute private capital in the required amount toward the building of the new rapid transit system. Within the first six months of its existence, to be exact in December, 1907, the Commission had adopted a route for a new subway and elevated system, known as the Broadway-Lexington Avenue Line running the entire length of Manhattan Island and having two branches into the principal parts of The Bronx.

The Tri-Borough Plan.

Early in 1908, the Commission adopted routes in Brooklyn which, with the Fourth Avenue, Brooklyn, Subway, it linked up with the Broadway-Lexington Avenue Subway by means of bridges and tunnels over and under the East River. The whole plan became known as the Triborough System. In Brooklyn it embraced the Broadway-Lafayette [Brooklyn] Avenue Subway running from the end of the Williamsburg Bridge out Broadway, Brooklyn, to Lafayette Avenue and back through Lafayette Avenue to a junction with the Fourth Avenue Subway at Fulton Street, as well as two extensions of the Fourth Avenue Subway running to Ft. Hamilton and Coney Island. The estimated cost of this system was about $147,000,000 and the plans provided for about 45 miles of new road including both underground and elevated portions.

To ascertain whether the existing transportation companies or other persons or firms commanding large capital would undertake the construction of this new system with their own money or whether the City itself would have to build it, the Commission prepared contracts in two different forms.

First, the Tri-Borough contract for construction, equipment and operation. Under this form of contract the corporation proposing to do the work was to furnish all money necessary for construction (outside of the lines then being built by the City) and to get a lease for the operation of the system when built for a period of years.

Second, contracts for construction alone. These contracts were framed for municipal construction and contemplated the furnishing of all money for that purpose by the City.

Advertising for proposals under both forms of contract was begun September 1, 1910. The time for opening the bids for construction by private capital was set for October 20, 1910, and that for bids under municipal construction contracts for October 27, 1910. When October 20th came not one proposal was received for construction and operation under the private capital contract. A week later the Commission received numerous bids for the construction with municipal funds of the principal sections of the Tri-Borough System. The formal invitation to private capital, therefore, had failed to evoke a favorable response. During practically all this time the Commission had been informally negotiating with the Interborough Rapid Transit Company, the lessee of the existing subway, towards the same end. Conferences and correspondence with this company, looking toward its supplying the funds needed for extensions of the subway began as early as May, 1909, when the company first proposed to build certain extensions. The company amplified this proposition a month later after the Legislature had passed certain amendments to the Rapid Transit Act.

First Interborough Proposal.

Under date of June 30th in that year the Interborough Rapid Transit Company made a proposal to the Commission to build third tracks on its Second, Third and Ninth Avenue Elevated roads, to lengthen the station platforms in the existing subway, so that ten-car trains might be operated, and to build certain extensions of the subway with its own money providing the City would build them as "extra work" under the terms of the original contract with John B. McDonald for the construction of the existing subway.

This proposal contemplated the extension of the subway from 42nd Street up Lexington Avenue and Third Avenue to and under the Harlem River to a junction with the existing subway at 149th Street; the extension of the subway south from Times Square through Seventh Avenue, Varick Street and West Broadway, Canal Street, and Manhattan Bridge to a junction with the existing subway in Brooklyn and two tracks south of Canal Street to Battery Park; also to extend the Sixth Avenue Elevated line from 149th Street across McComb's Dam Bridge and up Jerome Avenue to 194th Street; to sell to the City and to operate as a part of the subway system the Steinway Tunnel owned by the company, running from 42nd Street, Manhattan, under the East River to Long Island City; also to extend the Second Avenue Elevated Railroad across the Queensborough Bridge to Long Island City.

While the company proposed to furnish the money for these extensions, it demanded in return a lease for the operation of the new lines to be co-terminous with existing leases, that is, the subway extensions to be turned over to the City with the original subway at the end of the existing lease in 1954 and the privileges for the elevated road extensions to be co-terminated with existing franchises for those lines, which are practically perpetual. The proposal gave the City the option of building the subway extensions with its own money or of having them built at the company's expense and operated at a fixed rental like the existing subway or under a profit sharing arrangement, which would divide profits with the City after paying operating expenses and other costs.

The Commission for various reasons, expressed in a letter, dated August 27, 1909, rejected this proposal but clearly indicated its willingness to consider a proposal along the same lines which would adequately meet the rapid transit needs of the City.

This was the beginning of an exchange of correspondence between the Commission and the company which, with numerous conferences between the Commissioners and the company's officials, lasted through the balance of the year 1909, all of the year 1910, and the greater part of the year 1911. Indeed, it was in the Spring of 1912 before a final agreement was made between the parties. In the year 1911 the Commission and the company practically agreed upon a plan for joint construction of new lines. This plan, however, was not approved by the Board of Estimate and Apportionment, and a subsequent arrangement, the first Dual System plan, came to naught through the refusal of the Interborough Rapid Transit Company to accept the terms offered by the City.

The early negotiations were conducted through the closing year of the term of Mayor George B. McClellan. In the election of 1909 Mayor William J. Gaynor and a new Board of Estimate and Apportionment were elected. The new board consisted of the Mayor, the Comptroller, W. A. Prendergast; the President of the Board of Aldermen, John Purroy Mitchell; the Borough President of Manhattan, George McAneny; the Borough President of Brooklyn, A. E. Steers; the Borough President of The Bronx, Cyrus C. Miller; the Borough President of Queens, Lawrence Gresser; the Borough President of Richmond, George Cromwell. Mr. Gresser was subsequently succeeded by Maurice E. Connolly, as Borough President of Queens. The new officials took office January 1, 1910. They adopted an attitude of co-operation with the Public Service Commission and from that time forward both boards have worked in harmony. The Board of Estimate and Apportionment appointed a special rapid transit committee, the members of which were Borough President McAneny, chairman, and Borough Presidents Miller and Cromwell. That committee was invited into and participated in the conferences between the Commission and the transportation companies, in which the offers of the Interborough Rapid Transit Company, the Brooklyn Rapid Transit Company, the Hudson and Manhattan Railroad Company and other proposals for the building of new rapid transit lines were considered.

Dual System Adopted.

These conferences resulted in a general programme for the construction and operation of what has become known as the Dual System of Rapid Transit. It took its name from the fact that two companies agreed to join the City in carrying out the plan. These two companies were the Interborough Rapid Transit Company, which operates the existing subway and the elevated lines in Manhattan and The Bronx, and the Brooklyn Rapid Transit Company, which controlled the operation of the elevated railroad system of Brooklyn. This agreement was embodied in the joint report of the Public Service Commission and the Rapid Transit Committee of the Board of Estimate and Apportionment, dated June 5, 1911.

The main features of this agreement were that the Brooklyn Rapid Transit Company should operate the Fourth Avenue Subway in Brooklyn, a new subway to be built by the City in Broadway, Manhattan, and make extensions to various lines in Brooklyn, the whole to be operated under contract with the City for a five cent fare; and that the Interborough Rapid Transit Company should obtain for operation various extensions of the existing subway, which were to be built jointly by the City and the company, each contributing one-half the funds necessary for construction, and the company providing the money for equipment. These Interborough extensions included practically all of the Tri-Borough System north of 42nd Street, Manhattan, a line down Seventh Avenue from Times Square, a new tunnel to Brooklyn, and various extensions in Brooklyn, the whole to be operated for a five cent fare; also, that the company should third-track its elevated lines in Manhattan and The Bronx, build and operate certain extensions thereof, extend the Second Avenue Line over the Queensborough Bridge, and turn over to the City and operate as part of the subway the Steinway Tunnel.

From a traffic point of view the net results of this agreement were that the Interborough Rapid Transit Company would get the logical extensions of its subway and elevated systems in Manhattan, The Bronx and Brooklyn, and that the Brooklyn Rapid Transit Company would get connections in Manhattan, namely, the Broadway Subway and the Centre Street loop, by which it could distribute the passengers from its various elevated lines through all the business district of Manhattan, south of 59th Street. The terms and conditions under which these valuable concessions were to be granted to the two companies were set forth in the report. After certain modifications these terms were accepted by the Brooklyn Rapid Transit Company but rejected by the Interborough Rapid Transit Company.

As the joint report provided that if either company refused to accept the terms, the lines offered to it should be offered to the other company, the lines laid out for the Interborough Company were tendered to the Brooklyn Rapid Transit Company, which indicated its willingness to accept the same. The Board of Estimate and Apportionment thereupon, on July 21, 1911, notified the Public Service Commission that it would approve contracts for the construction of the proposed subways for operation by the Brooklyn company.

Construction Begins.

In the meantime the Commission had taken steps toward the construction of the principal sections of the Lexington Avenue Subway in Manhattan, upon which bids had been received October 27, 1910. under the Commission's advertisement for proposals for bids for construction with municipal funds.

The contracts for four of these sections were awarded to the Bradley Contracting Company July 5, 1911, just one month after the joint report had been submitted to the Board of Estimate and Apportionment. The contracts were approved by the Board of Estimate and Apportionment July 21, 1911, and on July 31, following, ground was broken for the first work at Lexington Avenue and 62nd Street.

Interborough Re-enters.

It was not long after the Interborough Rapid Transit Company had refused to co-operate with the City upon the terms outlined in the joint report of June 5, 1911, until overtures were made to the Commission looking to a resumption of negotiations with that company. These overtures came from the Pennsylvania Railroad Company through Samuel Rea, then Vice-President, and now President, whose interest in the question lay in securing for his company adequate rapid transit facilities to and from the new Pennsylvania Station at Seventh Avenue and 34th Street, Manhattan. The proposed extension of the existing subway from Times Square down Seventh Avenue would provide these facilities, and Mr. Rea was very anxious for his company that the line should be built and that the Interborough Rapid Transit Company should operate it in connection with the existing subway.

Following various conferences the Interborough Company on February 27, 1912, submitted a new offer which was approved by the Public Service Commission. A supplemental report by the special committee of the Board of Estimate and Apportionment, approving the same, was presented to that Board May 22, 1912, and adopted. This report gave to the Interborough Rapid Transit Company, on terms similar to those of the report of June 5, 1911, although somewhat modified, the lines awarded to that company for operation in the previous report. The supplemental report was adopted by the Board of Estimate and Apportionment, and the Public Service Commission was informed that that board would give its approval to contracts with the two companies drawn in accordance with the terms of the report. As the Brooklyn Rapid Transit Company was apparently content to receive the lines originally allotted to it upon the modified terms suggested in the report, there was no difficulty in providing for the re-entrance of the Interborough Rapid Transit Company into the rapid transit agreement, and the Dual System became an accomplished fact upon substantially the same layout as originally proposed by the joint report of June 5, 1911.

Prepare Contracts for Signing.

During the rest of the year 1912 the Commission's counsel prepared forms of contracts with each company to carry out the terms of the Dual System agreement. The Brooklyn Rapid Transit interests organized a new company, known as the New York Municipal Railway Corporation, for the purpose of entering into the new contracts. As soon as the draft contracts had been prepared the Commission's counsel and counsel for the companies conferred upon their provisions, and by the close of the year many of the points of difference between the Commission and the companies were adjusted. With a firm agreement with each company in sight, the Commission in January, 1913, held public hearings on the forms of all the new contracts. After the public hearings conferences with the two companies were resumed and such points of difference as still remained were adjusted. The contracts were then ordered printed in final form for execution by the Commission, on behalf of the City, and by the two companies.

On February 3, 1913, Governor Sulzer appointed Edward E. McCall, then a Supreme Court Judge, as Chairman of the Public Service Commission for the First District, to succeed William R. Willcox, whose term had expired on February 1. Chairman McCall took possession of his new office on February 7, 1913, and at once entered upon a study of the new contracts.

Shortly before Mr. Willcox's term expired John J. Hopper, as a taxpayer, began an action to enjoin the Public Service Commission from executing the contracts. The proceeding prevented the execution of the contracts during Mr. Willcox's term, but the case was dismissed by the Court a few weeks after Chairman McCall had taken office. In the meantime, notwithstanding the fact that public hearings had been held in January according to law, application was made to the Commission for another public hearing. Chairman McCall and his colleagues granted the request and additional hearings were held in the meeting room of the Board of Estimate and Apportionment at the City Hall. Following these hearings Chairman McCall held conferences with representatives of the two companies interested and completed his study of the new contracts.

Transfers to and from Staten Island.

During these conferences the Chairman induced the Interborough Rapid Transit Company to agree to an exchange of transfers with the Municipal ferry boats plying between Manhattan and Staten Island, so that residents of Staten Island could get the ride on the ferry and a transfer to the surface lines in Manhattan for a single fare. The agreement provided that the City should get two cents for the ferry ride and the company three cents for the street railroad ride out of each fare paid. As it was impracticable to embody this agreement in the Dual System contracts a separate contract is now being prepared by the City to put it into effect.

In February, 1913, the Commission was informed that the Directors of the Manhattan Railway Company had refused their consent to the terms of the certificate conveying the grant of rights for the third-tracking of the elevated lines in Manhattan and The Bronx, owned by that company and operated by the Interborough Rapid Transit Company of the Dual System contracts. While it was agreed that the Interborough Company should pay for these improvements, as lessee, it was deemed advisable to make out the certificate conveying the franchise to the Manhattan Company as owner. When the latter company refused its consent the Commission, with the consent of the Interborough Company, decided to issue a new certificate for the same privileges, reading to the Interborough Company as lessee of the Manhattan Railway Company's roads. The new certificate was printed, and a public hearing on it was called for March 15, 1913. Before the date set for the hearing the Interborough Company and the Manhattan Railway Company reached an understanding by which the latter agreed to accept the certificate prepared by the Commission, providing the Interborough Company would increase the amount allowed the Manhattan Company under its lease for office expenses, etc. At the hearing this inter-company agreement was announced, and the Commission took no further action on the certificate to the Interborough Company. Later the certificate to the Manhattan Company was adopted, approved by the Board of Estimate and Apportionment, and finally executed.

Contracts Formally Adopted.

Pending action on this certificate the Commission, on March 4, 1913, formally adopted the other Dual System contracts and transmitted them to the Board of Estimate and Apportionment for approval. The vote on the adoption of the operating contracts with the two companies, as well as on the trackage agreements, was three to two, Chairman Edward E. McCall and Commissioners John E. Eustis and George V. S. Williams voting in the affirmative, and Commissioners Milo R. Maltbie and J. Sergeant Cram in the negative. On the motion to adopt the certificates for elevated railroad extensions to the two companies and the certificate for additional tracks to the New York Municipal Railway Corporation the vote was four to one, Commissioner Milo R. Maltbie alone voting in the negative. The third-track certificate made out to the Manhattan Railway Company was formally adopted by the Commission on March 15, 1913, and transmitted for approval to the Board of Estimate and Apportionment. The vote in the Commission on the motion to adopt this certificate was three to one, Chairman McCall and Commissioners Eustis and Williams voting in the affirmative, and Commissioner Maltbie in the negative, Commissioner Cram being absent.

On March 18, 1913, the Board of Estimate approved the various contracts and granted the requisitions made on the same day by the Public Service Commission for $28,200,000 on account of the Interborough contract and $60,000,000 for the Brooklyn company contract, in addition to $35,135,637.84 previously registered on account of the work on Interborough lines and $40,501,991 previously registered on account of the work on lines for operation by the Brooklyn company.

Upon receipt of the official notice of this action the next day, March 19, 1913, the Commission met in public session in the large hearing room on the third floor of the Tribune Building and executed the contracts. Many representatives of the city government, the two companies and the public generally were in attendance.

Later each company filed the required bonds and deposited the required securities. Each company then submitted to the Commission for approval a mortgage upon all its property. These mortgages, $300,000,000 for the Interborough company and $100,000,000 for the Brooklyn company, were duly approved, as well as the proposals to issue bonds under them. The Interborough was authorized to issue $160,957,000 and the Brooklyn company $40,000,000 in bonds. The proceeds of these bonds will be used by the companies to carry out their obligations under the new contracts.









http://www.nycsubway.org/wiki/Chapter_6:_Growth_of_the_Dual_System
nycsubway.org is not affiliated with any transit agency or provider.