The New York Subway | Page 6

an admirable one from the taxpayers' point of view. The road would cost the city practically nothing and the obligation of the contractor to equip and operate being combined with the agreement to construct furnished a safeguard against waste of the public funds and insured the prompt completion of the road. The interest of the contractor in the successful operation, after construction, furnished a strong incentive to see that as the construction progressed the details were consistent with successful operation and to suggest and consent to such modifications of the contract plans as might appear necessary from an operating point of view, from time to time. The rental being based upon the cost encouraged low bids, and the lien of the city upon the equipment secured the city against all risk, once the road was in operation.
Immediately after the vote of the electors upon the question of municipal ownership, the Rapid Transit Commissioners adopted routes and plans which they had been studying and perfecting since the failure to find bidders for the franchise under the original Act of 1891. The local authorities approved them, and again the property owners refused their consent, making an application to the Supreme Court necessary. The Court refused its approval upon the ground that the city, owing to a provision of the constitution of the State limiting the city's power to incur debt, would be unable to raise the necessary money. This decision appeared to nullify all the efforts of the public spirited citizens composing the Board of Rapid Transit Commissioners and to practically prohibit further attempts on their part. They persevered, however, and in January, 1897, adopted new general routes and plans. The consolidation of a large territory into the Greater New York, and increased land values, warranted the hope that the city's debt limit would no longer be an objection, especially as the new route changed the line so as to reduce the estimated cost. The demands for rapid transit had become more and more imperative as the years went by, and it was fair to assume that neither the courts nor the municipal authorities would be overzealous to find a narrow construction of the laws. Incidentally, the constitutionality of the rapid transit legislation, in its fundamental features, had been upheld in the Supreme Court in a decision which was affirmed by the highest court of the State a few weeks after the Board had adopted its new plans. The local authorities gave their consent to the new route; the property owners, as on the two previous occasions, refused their consent; the Supreme Court gave its approval in lieu thereof; and the Board was prepared to undertake the preliminaries for letting a contract. These successive steps and the preparation of the terms of the contract all took time; but, finally, on November 15, 1899, a form of contract was adopted and an invitation issued by the Board to contractors to bid for the construction and operation of the railroad. There were two bidders, one of whom was John B. McDonald, whose terms submitted under the invitation were accepted on January 15, 1900; and, for the first time, it seemed as if a beginning might be made in the actual construction of the rapid transit road. The letter of invitation to contractors required that every proposal should be accompanied by a certified check upon a National or State Bank, payable to the order of the Comptroller, for $150,000, and that within ten days after acceptance, or within such further period as might be prescribed by the Board, the contract should be duly executed and delivered. The amount to be paid by the city for the construction was $35,000,000 and an additional sum not to exceed $2,750,000 for terminals, station sites, and other purposes. The construction was to be completed in four years and a half, and the term of the lease from the city to the contractor was fixed at fifty years, with a renewal, at the option of the contractor, for twenty-five years at a rental to be agreed upon by the city, not less than the average rental for the then preceding ten years. The rental for the fifty-year term was fixed at an amount equal to the annual interest upon the bonds issued by the city for construction and 1 per cent. additional, such 1 per cent. during the first ten years to be contingent in part upon the earnings of the road. To secure the performance of the contract by Mr. McDonald the city required him to deposit $1,000,000 in cash as security for construction, to furnish a bond with surety for $5,000,000 as security for construction and equipment, and to furnish another bond of $1,000,000 as continuing security for the performance of the contract. The city in addition to