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1921: Jersey City Under Commission Government
A Book of Achievement

Street Transportation -- Trolley And Jitney

This Web version:

HE trolley and jitney problem is a most complicated one. The trolley people and the jitney people are fighting one another, the trolley to put the jitney out of business, and the jitney people to maintain the business which they have built up. The City Commissioners have considered this problem from the standpoint of the interest of the whole people and have evolved a program which will be for the public benefit.

The Public Service people claim that the jitney must go or the trolley must go. This is not true as a matter of fact. It is true, however, that the trolley company cannot go on competing with the jitney without a drastic reorganization of its finances.

The application of electricity to street railways as a motive power about 1890 revolutionized the street car traffic and made that business extraordinarily profitable. In those years contracts were negotiated by the trolley companies with the municipalities of the State, all of which embodied the five-cent fare as a part of the contract. For many years this five-cent fare was extraordinarily profitable. It was, in fact, a veritable gold mine for nearly twenty years. During that time every suggestion to reduce this fare to three cents, which could have been done easily and still left the companies in a position to earn a fair return upon the actual cost of creating the plant, was met with the declaration that these franchises were perpetual and unbreakable contracts.

Trolley Promoters.

In order to take advantage of the unexpectedly profitable traffic which the trolleys developed, the trolley promoters consolidated the various individual trolley corporations into one gigantic corporation, and in this process issued enormous quantities of stocks and bonds which represented no investment whatever in the construction of the plant. It is probable that the total cost of the trolley property operated by the Public Service Railway Company does not exceed seventy millions of dollars. The capitalization now resting upon those properties is one hundred and sixty millions of dollars.

It is probable that even with inflated costs the trolley company, if efficiently managed, could pay out of a five-cent fare a fair return upon the real cost of the plant. However that may be, it is impossible under existing conditions to pay a return upon the tremendous over-capitalization of the corporation.

Five Cent Contract Repudiated.

To meet this situation the trolley company has repudiated its five-cent fare contracts and has secured a judicial construction of the Public Utility Law which permits of this action. This decision was based upon the theory that the Public Utility Commission had the right to fix a fair return, irrespective of contract obligations. The Public Service Railway Company has managed to escape from this power of the Public Utility Commission by having a law passed which empowered the State House Commission to have a valuation made of the Public Service Railway Company.

A firm of financial accountants in New York, whose interests are identified with the trolley interests of the country, has been employed to make this valuation. It is confidently expected by the Public Service Corporation and by every well-informed person that their valuation will be so excessive as to justify a ten or even a fifteen-cent rate. The law makes this valuation binding upon the Public Utility Commis-sion. The Public Service Railway Company therefore by this law is practically freed from public control as to the vital matter of fares by the Public Utility Commission.

Their final step is to eliminate the jitneys and legislation has been passed this winter looking to that end.

The Solution.

This situation presents a very complicated and difficult problem. The present Commissioners of Jersey City offer the following solution of this problem:

It is in vain to attempt to hope for the fixing of a fair return by any State public utility body. The laws secured by the trolley company and the decision referred to practically make them free from State control. That weapon from which so much was expected has proved valueless in the hands of the people. We must seek elsewhere for a remedy.

The public weapon is in the jitneys. The development of the modern smooth pavement and of the gas engine has brought into this transportation problem two new features which if intelligently used by the public can be made the means of destroying the Public Service monopoly in street transportation.

The present Commissioners of Jersey City plan therefore to construct a perfect pavement upon all of the streets where the Public Service tracks now run, and to encourage the development of jitney competition with the trolley. The trolley officials admit that they cannot meet this competition. The Commissioners, therefore, plan to develop this competition until such time as the trolley corporation is ready for a new contract. If this plan can be carried out the Public Service Corporation will not abandon the trolley, as they claim, but will be forced to a reorganization of their corporation and to the squeezing out of the watered stocks and bonds and into a new contract relation with the city.

Service at Cost Plan.

The Commissioners' view is that the solution of the trolley problem, when the corporation shall be compelled by competition to meet the city upon fair terms, is on the principle of the service at cost plan which has been tried with a measure of success in Cleveland and some other cities.

The essential part of this plan is that the capitalization of the company shall be fixed at a figure which represents only the actual cost of the construction of the plant. The amount thus fixed should be made the basis of a permanent contract, and a fare should be fixed which would pay for operating expenses, interest at 6 per cent. upon this agreed upon cost, and a fair depreciation fund. This fare should go up and down automatically with increasing or diminishing costs. Under this plan the Public Service Corporation would be eliminated from politics and would be guaranteed under any condition a fair return upon the actual cost of its plant.

Both Trolleys and Jitneys.

Under these circumstances the Commissioners believe that there would be a field for both the trolley and the jitney, and that both would survive any competition, and that by competition the cost of transportation for the public would be kept at the lowest feasible point.

This is the plan which the Commissioners, if re-elected, will endeavor to carry out for the solution of this vexed and complicated problem.

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