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These charges represent capital costs, such as repayment of the cost of construction of the subway. The IRT's subways were not earning enough money to repay debt, but in strictly operational terms, they were financially sound. The elevated division, however, was an unmitigated financial disaster. Just the operation of the elevated lines incurred the loss of millions of dollars. The "other charges" included not only interest on debt, but also fixed rental charges the IRT was required to pay to the Manhattan Railway Company -- the owner of the elevated lines -- under the terms of a 1903 lease. Still, regardless of the terms of the lease, the elevated lines were inherently unprofitable on an operating basis. The table above reveals the painful total effect – over seven months, the IRT lost more than seven million dollars. The IRT was losing more than one million dollars a month.
     How did New York's once-profitable IRT find itself in so much trouble?

Although ridership was low compared to New York's busier subway lines, it was not inconsequential. Some people did argue the el was still an essential transportation facility. For example, the Mayor received one letter in 1936 that begged him not to forget the needs of the poor who rode the el. The correspondent wrote that "many of the riders are very poor people to whom an extra fare, or the waste of time in walking, would be a great inconvenience." He continued, saying that "it would be an outrage to deprive that part of the City's population which now use the Second Avenue Elevated, of the only convenient method of transportation from their homes to their business." El riders may have agreed that the el was obsolete, and wished that a subway be built on Second Avenue as a replacement, but in the absence of the subway, many people still relied on the el. For poor el riders without access to a private vehicle, improved automobile traffic flow would not have been a meaningful benefit.

Bankrupt IRT, Poor Service
Service on the el was so poor because its operator was fiscally unhealthy during the Depression of the 1930s. The Interborough Rapid Transit (IRT) company, which operated all the els in Manhattan, as well as various subway lines, was losing money, and even had been in receivership since 1932. The IRT's 1940 Abstract Report of Operations, shows how the company was hemorrhaging money, particularly in its elevated division.

At this time, service already had ceased on the Sixth Avenue el – as the Sixth Avenue subway was nearing completion --but the IRT's elevated division continued to operate the Second, Third, and Ninth Avenue els. The table below illustrates the IRT's financial losses.
     Both the subway and elevated divisions showed losses of over a million dollars over seven months. Clearly, however, the subway division was much healthier, financially, than the elevated division. The subway division made an operating profit of over six million dollars. This division lost money only because of the "other charges," which included money paid to the city for the repayment of municipal bonds, and interest on the IRT's own debt.

  Table: IRT report for seven months ended January 31, 1940 (July 1939-January 1940)

Subway division

Elevated division

 Passenger revenue



 Other operating revenue (e.g. advert.)



 Total operating revenue (A)



 Operating expenses






 Taxes assignable to operation



 Total operating costs (B)



 Operating income (loss) (A - B)



 Other charges (incl. interest on debt)



 Net corporate income (loss)



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Updated Tuesday, June 26, 2001

©2001 Alexander Nobler Cohen. ©2001 The Composing Stack Inc. All rights reserved