Date of Publication: October 1, 1947
Source: Chicago Daily Tribune

Check for almost 104 million dollars with which the Chicago Transit Authority bought the Surface lines and Rapid Transit company yesterday. Another check for more then two millions completed the purchase price.

A new era in Chicago's local transportation began yesterday when the Chicago transit authority, a publicly owned corporation bought and paid for the Chicago Surface Lines and the Chicago Rapid Transit company and Immediately ordered Its management personnel to take overt the properties for combined operation at 12:01 a.m. today.

The payment was made in the United States District court of Judge Michael L. Igoe, who has been in charge of the two companies in bankruptcy for nearly nine years. The purchase had been decreed at a court sale last April subject to the CTA being able to finance it; the price of the surface lines was 75 million dollars and of the elevated $12,162,500.

Operating Fund 26 Millions

However, the authority sold a bond issue, secured by revenues, for 105 millions, the excess to be used for adjustments, for working capital and for improvement In equipment. Philip Harrlngton, CTA board chairman, said that with the existing renewal funds of the surface lines the amount of the available modernizing fund was about 26 million dollars.

The first effect or the change in management to be noted by the riders today is a new schedule of fares. The street car basic charge is to go from 9 to 10 cents. The
basic 'L' charge sill remain at a 12 cents, but for this the passenger may have a transfer to street cars or busses Street car passengers may get transfers to the elevated, but pay 2 cents additional at the "L" station.

All Assets Taken Over

The old "L" charge of 13 cents when a transfer is issued is eliminated. The Chicago Motor Coach company, independently owned, will continue to exchange transfers with the street car at a total 10 cent fare and with the "L" at 12 cents.

Suburban fares on the elevated-subway system remain at 15 cents, with no extra charge for transferring to the authority's ground level facilities. For an extra nickel the suburbanite may change to the bus line.

In charge of the authority is the seven man board. Besides Harrlngton, members are Irvin L. Porter, Frank McNair, James R. Quinn, William W. McKenna, Philip W. Collins and Guy A. Richardson. McNair, Collins and Richardson are appointees of the governor; the others were chosen by the mayor of Chicago.

22,000 Employees In System

The merged system has 22,000 employees, with an estimated pay roll at present of 75 million dollars a year. All efficient employees will be retained. The general manager will be Walter J. McCarter, former head of the Cleveland transit system. Retaining their posts as assistants are E J. McIlraith, general manager of the surface lines, and Harley Johnson, general manager of the elevated.

McCarter said the law creating the authority was definite in declaring who could ride free and because soldiers in uniform were not on the free list military men and women will have to pay fares beginning today.

For the purchase money the CTA takes over 3,125 street cars, 193 trolley buses, 693 gas buses, and 1,623 elevated cars. About 300 street cars and 434 buses are of modern types. The "L" has only two new cars. On order are 400 street cars, 210 trolley buses, and 166 motor buses.

Court Takes Final Step

Real estate taken over includes 235 elevated stations, and about a hundred other parcels, most of which are useful in operations. Surface track length is 1,092 miles and "L" tracks, 171 miles. Trolley bus lines total 59 miles.

The money payment was made after a threat of delay was suppressed yesterday by the United States Circuit Court of Appeals. On Monday, Atty. William R. Morgan, representing bondholders whose securities were wiped out In the deal, filed notice of appeal.

Atty. Werner W. Schroeder, for the authority, obtained a hearing from the Appeals court, which dismissed the Morgan motion.

Property and Bonds Not Taxable

One of the immediate effects of the merger will be the removal from the Cook county taxing rolls of the physical properties of the two companies, reducing tax revenues about 3 million dollars a year.

The Bonds of the publicly owned corporation are free of federal income tax in event of default of either interest or principal the security owners cannot foreclose on the property. The only recourse of the bond holders is to require that the board set a higher and sufficient rate of fare.

Compliments Are Exchanged

The large sums in the checks were handled by Walter A. Wade, special master in chancery appointed by Judge Igoe. He received the investment banker group payment and put it to the credit of the CTA. Darrlngton then issued the checks to Wade covering the purchase; Wade is to turn these over to trustees of the companies at the court s order, probably on Friday.

Judge Igoe late yesterday entered an order naming the City National Bank and Trust Company of Chicago as disbursing agent in the handling of bonds and cash in connection with the sale of the elevated lines.

Judge Igoe was praised by Schroeder, who said the traction, settlement would have been impossible without the court's guidance. The judge complimented former Mayor Kelly and Gov. Green for cooperating to get the legislation needed to create the authority. He singled out for special praise William H. Sexton, city traction attorney.