to the stockholders:
 

!^ve^^
 

Ihe Hudson Tubes were completed
early in the century and since then the
population of NortheiTi New Jersey has
increased to nearly two and one-half
times and the annual traffic crossing the
Hudson River has risen by 36 million.
However, while the population and the
traffic increased, our annual passenger
traffic has diminished by 43 million since
1925. This paradox explains the long de¬
cline in the Company's earnings, and at
the same time points clearly to the prob¬
lem we face in attempting to restore the
Hudson & Manhattan Railroad Company
to lasting prosperity. The only true solu¬
tion is a program designed to win back
lost passengers.

Ijefore even beginning consideration of
the problem we must first answer the
questions as to whether or not our facili¬
ties have outlived their usefulness, or are
no longer economically important, or
have been replaced by better and more
modern conveniences. If we are in a de¬
clining industry or are faced with social
and economic changes which are ad¬
verse, the problem could be insoluble.
The answer to our inquiry, however, is
most favorable. We own the only rapid-
transit facility connecting New York and
New Jersey. Furthermore, automobile
traffic has reached the saturation point,
and increasing the number of buses will
do little good. Driving by car from New
Jersey to New York is getting more and
more difficult and expensive every day.
Our rapid-transit facility is the solution—
and the only solution—to the commuter
problem, and it is squarely up to us to
 

provide adequate and acceptable service.

Xoua Management has adopted a pro¬
gram to provide this service and to take
every advantage of the opportunity that
our means allow. As described in the re¬
port which follows, the program includes
new and dynamic measures to attract
passengers, the rehabilitation and mod¬
ernization of our facilities, the streamlin¬
ing of operations for maximum efficiency,
and persevering eftorts to win from rate-
making bodies a recognition of the Com¬
pany's rights to fares commensurate with
the value of our service.

Ihe Hudson Tubes were originally
planned to serve New Jersey-to-New
York commuters living within walking
distance of our stations or who came by
steam train to terminals adjoining our
stations. The automobile was no factor
and buses nonexistent. With the advent
of good roads, suburbanites moved far¬
ther out and depended more and more
on automobiles and buses. The public
credit was used to build tax-free tunnels
and bridges which accelerated the
growth of vehicular traffic until it has
reached 145 million a year. Other factors
contributing to the decline of Hudson
Tubes patronage were the loss of Satur¬
day traffic through the almost universal
adoption of the five-day work week, and
the drop in off-peak shopper travel to
Manhattan resulting from the growth of
neighborhood shopping centers.

IVIany of the 145 million trans-Hudson
bus and auto passengers are now finding