The opinion of the court was delivered by: MCVICAR
The petitions of the Securities and Exchange Commission and the City of Pittsburgh, the answer of W. D. George and Thomas Fitzgerald, Trustees of Pittsburgh Railways Company, debtor, and Pittsburgh Motor Coach Company, subsidiary, the reply of the Securities and Exchange Commission and the preliminary objections of the Trustees, were referred to Watson B. Adair, Esq., Special Master, for hearing and report. The action is now before us on the aforesaid pleadings, the report of the Special Master and the objections thereto of the Securities and Exchange Commission and the City of Pittsburgh.
The prayers of the Securities and Exchange Commission and the City of Pittsburgh, in their petitions, were substantially the same; that the Trustee be directed to engage, subject to the approval of the Court, at reasonable per diem, and maximum rates of compensation, a competent qualified and independent transit engineer or specialist or firm of transit engineers or specialists to conduct a survey as to the advisability of substituting bus service in whole or in part for the street car service presently being undertaken by the Debtor, and such other and further relief as may be just and proper.
Petition of the Securities and Exchange Commission.
In the petition of the Securities and Exchange Commission, it is averred that an issue basic to any reorganization is the nature and character of the operations to be conducted by the reorganized company. In connection with any judicial determination that a plan is fair and equitable and feasible, the Court must be satisfied that the reorganized company will be operated efficiently and economically and in a manner designed to secure for investors the maximum benefit from earnings which the enterprise, under all the circumstances, is capable of producing.
In this proceeding, one question on which the Court will be required to pass is whether the continuation of service principally by means of street railways is best calculated to produce the aforesaid results.
The scope of the present operations of Pittsburgh Railways Company embraces all of the urban and interurban street railway and a large part of the bus operations in the City of Pittsburgh and adjacent parts of Allegheny, Washington and Westmoreland Counties.
Bus operations have comprised a relatively small proportion of the system's total operations.
The substitution of busses for street railways, in the opinion of transit experts and of the managements of many transit companies, has resulted in improved service to the public, lower operating costs, and increased earning power for the transit companies. The possibility of similar results from the substitution of busses in Pittsburgh is important to security holders and may affect their participation under the plan.
It is considered judgment of the Securities and Exchange Commission that a bus survey as now proposed is important to the proper administration of this proceeding. Such a survey, conducted independently by competent traffic, engineering and transportation experts, free of the management's apparent predilection for street railway operations, should permit the definite determination of the question whether the Debtor's operations should or should not be converted to bus operations, and the manner, extent and time of such conversion in the event that it is found desirable in whole or in part.
Such a survey would provide answers to such problems as the practicability of transporting the existing volume of transit traffic in busses, loading and fare collection methods, routing and scheduling, size, types and characteristics of desired busses and other facilities, capital required, financing, analysis of comparative operating costs, traffic and earnings possibilities, maintenance and depreciation policies, disposition of superseded equipment and necessary qualifications and adaptability of operating officials and personnel.
The cost of such a survey will be relatively small, considering the vital necessity therefor and the possibility of the substantial benefits to be derived by security holders and the public.
A survey is now timely for the following reasons:
(c) At the reorganization plan hearing it will be necessary to consider the question of the future scheme of operations and future earnings. It is therefore necessary as well as appropriate that there be included in the record of plan hearings an impartial study of the probably effect of bus substitution on transit traffic, operating costs, earnings, valuation, future capital ...