[PRCo] PRC 1924 Reorganization -- Agreement with city

[Phillip Clark Campbell]

For 10 years prior to reorganization PRC was in long series of controversies with various municipalities.  $750,000.00 spent on investigations, reports and valuations.  Six general surveys made by outside engineers.  Crisis caused receivership from 1918 through 1924 (but they didn't specify the crisis did they.)  Since PRC needed new cars, real estate, shops, track the receivership caused problems in securing cash.  Payments to the city for street cleaning, bridge tolls, taxes on poles wires and receipts were not being made.  Both the city and PRC desired receivership to end which it did on Feb.01-1924 in spite of doubt expressed by court as to solvency thus it was arranged to continue a certain measure of protection for ten months, essentially to the end of 1924 isn't it.

Major features of the agreement:

1--$62,500,000 valuation of PRC;  PRC wanted $78,000,000 -- city wanted $48,000,000
2--Fixing annual rate of return of 6% of valuation; previous PA decisions provided utilities with 7%.
3--Adjusting fares to meet allowed return after operating expenses, depreciation, taxes etc.
4--Blanket payment of $300,000 in lieu of previous license fees, paving charges, tolls, taxes -- payment to be made only when earned.
5--Establishing Traction Conference Board  (TCB)  - 4-members representing with 2 appointed by Mayor of Pgh, 1 by boroughs and 1 by railway.  Majority vote rules; in the event of a tie, then the PRC vote doesn't count.

The agreement "paves way for future readjustment of capital structure to result in one united ownership of all underlying properties of which there are more than 100."

At end of any fiscal year any surplus above return on capital and operating expenses is turned over to the TCB which is distributed to city and municipalities according to proportion of track in same.  But if this surplus is created by reason of economy in operation then PRC may retain half but the car fare for the bulk of the year must be less than that in effect at the time of the agreement.

The agreement was easily signed because Mr. A. W. Thompson, president of parent Philadelphia Company, had gained confidence of people of Pgh and had previously done much to improve public relations of Duquesne Light and Equitable Gas.



Phil