-«**- 
 
DEBA TERS' HANDBOOK SERIES 
 
 MUNICIPAL OWNERSHIP 
 
DEBATERS^ 
 HANDBOOK SERIES 
 
 Enlargement of the United States Navy 
 (3d ed. rev. and enl.) 
 
 Direct Primaries (3d ed. rev. and enl.) 
 Capital Punishment (2d ed. rev.) 
 Commission Plan of Municipal Govern- 
 ment (3d ed. rev. and enl.) 
 
 Election of United States Senators (2d ed. 
 
 rev.) 
 Income Tax (2d ed. rev. and enl. ) 
 
 Initiative and Referendum (2d ed. rev. 
 
 and enl.) 
 Central Bank of the United States 
 Woman Suffrage (2d ed. rev.) 
 Municipal Ownership (2d ed. rev. and 
 
 enl.) 
 
 Child Labor 
 
 Open versus Closed Shop (2d ed.) 
 
 Employment of Women 
 
 Federal Control of Interstate Corporations 
 
 Parcels Post (2d ed. rev. and enl.) 
 
 Government Ownership of Railroads 
 
 Compulsory Arbitration of Industrial Dis- 
 putes 
 
 Compulsory Insurance 
 
 Conservation of Natural Resources 
 
 Free Trade vs. Protection 
 
 Reciprocity 
 
 Trade Unions 
 
 Recall 
 
 Other titles in preparation 
 
 Each volume, one dollar net 
 
Debaters^ Handbook Series 
 
 SELECTED ARTICLES 
 
 ON 
 
 MUNICIPAL OWNERSHIP 
 
 COMPILED BY 
 
 JOY E. MORGAN 
 
 AND 
 EDNA D. BULLOCK 
 
 Second and Enlarged Edition 
 
 » J 9 t 
 
 J » » 
 
 9 O J » ' 
 
 • * . * 
 
 THE H. W. WILSON COMPANY 
 WHITE PLAINS. N. Y. and NEW YORK CITY 
 
 1914 
 
% 
 
 Published 1911 
 Second Edition January, 1914 
 
 
EXPLANATORY NOTE 
 
 The vast quantity of literature concerning municipal owner- 
 ship, much of which has been produced within the last few years, 
 is in itself complete evidence of the rapidly widening interest in 
 our public municipal utilities. The material here collected has 
 been gathered and arranged for (i) debaters, (2) students of 
 municipal problems, and (3) others desiring compact informa- 
 tion on municipal ownership. 
 
 The arrangement is natural and logical. First occurs the 
 brief to acquaint the student with the scope and general analysis 
 of the question and the arguments pro and con in outline form. 
 The table of contents precedes the brief. The reprints are ar- 
 ranged in the order of the brief as far as practicable. The 
 bibliography is sufficiently complete to include all important ma- 
 terial, yet not so inclusive as to be bewildering to the inexperi- 
 enced investigator. Annotations have been added where they 
 would be of real value to the student. 
 
 In view of the vast amount of material on this subject, 
 prejudiced, popular, and scientific, it is believed that this book 
 will furnish, not only an inexpensive practical method of supply- 
 ing material on municipal ownership, but will be a guide as well 
 to the novice and the veteran student. 
 
 EXPLANATORY NOTE TO SECOND EDITION 
 
 In this revised edition the additional reprints are found 
 in the concluding pages. They consist chiefly of material on 
 municipal transportation, a subject upon which there is 
 little available literature relating to American conditions. 
 
 December, 1913. 
 
 280186 
 
i 
 
CONTENTS 
 
 Brief xi 
 
 Bibliography 
 
 General References xv 
 
 Affirmative References xx 
 
 Negative References xxiv 
 
 Introduction 
 
 General Discussion 
 
 United States. Industrial Commission. Report 3 
 
 Doherty, Henry L. What the Public Does Not See 
 
 Des Moines Register and Leader 9 
 
 Public Service Enterprises Springfield Republican 9 
 
 National Civic Federation. Report on Municipal and Pri- 
 vate Operation of Public Utilities 10 
 
 Rowe, Leo S. Municipal Ownership and Operation 
 
 American Journal of Sociology 11 
 
 Burdett, Everett W. Municipal Ownership of Engineering 
 Utilities Engineering Magazine 13 
 
 Municipal Ownership Outlook 18 
 
 Municipal Ownership Investigators Nation 22 
 
 Johnson, Edmond R. Public Regulation of Street Railway 
 
 Transportation Annals of the American Academy 24 
 
 Problems of Municipal Ownership Outlook 29 
 
 Donald, Robert. Principles of Municipal Ownership 
 
 Outlook 30 
 
 Affirmative Discussion / 
 
 Parsons, Frank. Fifteen Reasons Why the People Should 
 Own Their Own Public Utilities Arena 39 
 
 Selleck, W. A. Municipal Ownership 
 
 Nebraska State Journal 40 
 
Vlll 
 
 CONTENTS 
 
 Municipal Ownership Outlook 43 
 
 Dunne, Edward F. Municipal Ownership— What It Means. 
 Reader 46 
 
 Adams, Henry C. Municipal Ownership and Corrupt Poli- 
 tics Outlook 48 
 
 Burns, John. ^Municipal Ownership a Blessing 
 
 '. Independent 51 
 
 Dunne, Edward F. Our Fight for Municipal Ownership. 
 
 Independent 55 
 
 Ely, Richard T. Advantages of Public Ownership and Man- 
 agement of Natural Monopolies CosmopoHtan 61 
 
 Brown, George Stewart. Municipal Ownership of Public 
 
 Utilities North American Review 67 
 
 Rowe, Leo S. Municipal Ownership and Operation of Street 
 
 Railways in Germany. .Annals of the American Academy 75 
 Donald, Robert. Municipal Ownership of Street Railways 
 
 in Glasgow Outlook 80 
 
 Argument for the Municipal Ownership of a Street Rail- 
 way Company City Hall 88 
 
 Ely, Richard T. Municipal Ownership of Natural Monop- 
 olies North American Review 94 
 
 Negative Discussion 
 
 Municipal Socialism Quarterly Review 106 
 
 Cravath, James R. Municipal Ownership of Electric Light 
 
 Plants World To-Day 114 
 
 Darwin, Leonard. Municipal Trade Quarterly Review 123 
 
 Hill, John W. Municipal Ownership of Public Utilities. 
 
 World To-Day 125 
 
 Thurber, F. B. Arguments against Municipal Ownership. 
 
 North American Review 133 
 
 Hill, John W. Comparison of the Cost of Steam Power in 
 
 Municipal and Privately-Operated Plants 
 
 Engineering Magazine 141 
 
CONTENTS ix 
 
 Jones, Chester Lloyd. American Municipal Services from 
 
 the Standpoint of the Entrepreneur 
 
 Annals of the American Academy 143 
 
 Main Question in Municipal Ownership 
 
 Journal of Commerce 158 
 
 Brandeis, Louis D. How Boston Solved the Gas Problem. 
 
 Review of Reviews 159 
 
 Burdett, Everett W. Municipal Ownership in Great Britain. 
 
 Journal of Political Economy 164 
 
 Brown, William Horace. Public Ownership and Popular 
 
 Government American Journal of Sociology 180 
 
 Robbins, Hayes. Public Ownership versus Public Control. 
 
 American Journal of Sociology 193 
 
 Additional Reprints 
 
 Calgary, Alberta. City Clerk. Municipally Owned In- 
 dustrial Sites 221 
 
 Municipal Asphalt Paving Plant 223 
 
 Calgary Municipal Street Railway 223 
 
 Regina, Saskatchewan. City Clerk. Electric Light and 
 
 Power Plant 231 
 
 Street Railway and Spur Track System 232 
 
 Winnipeg, Manitoba. City Clerk. Municipal Ownership . . 234 
 
 Sheehan, C. M. and Firmin, Albert. Municipal Lighting. 
 
 Twentieth Century Magazine. 236 
 
 Lloyd, Henry Demarest. Public Ownership of Urban and 
 
 Suburban Street Transportation 
 
 ' Twentieth Century Magazine. 247 
 
BRIEF 
 
 Resolved, That municipalities in the United States should 
 own and operate plants for supplying light, water, and trans- 
 portation. 
 
 Introduction 
 
 I. The question is important. 
 
 A. Transportation is inseparably connected with questions 
 
 of congestion of population, slums, and tenements, 
 and water and light concern intimately the health and 
 comfort of the people and the safety of the commu- 
 nity. ♦ 
 
 B. Stupendous financial interests are involved. 
 
 C. A vast majority of every community is directly con- 
 
 cerned. 
 II. It is generally granted. 
 
 A. That there are three methods by which municipalities 
 
 may deal with natural monopolies. 
 
 1. They may grant private companies franchises to 
 
 build and operate plants. 
 
 2. They may build or purchase plants and lease them 
 to private companies for operation. 
 
 3. They may own and operate the plants themselves. 
 
 B. In American municipalities the first method is almost 
 
 universal in the case of street railways and quite 
 common in the case of water and lighting plants. 
 
 C. The question is whether the last method is preferable 
 
 to the others. 
 III. The solution of the question seems to present four main 
 issues. 
 A. Is the ownership and operation of light, water, and 
 transportation plants a municipal function? 
 
xii BRIEF 
 
 B. Is the system of private ownership of natural municip- 
 
 al monopolies in the United States objectionable? 
 
 C. Would the objectionable features of private owner- 
 
 ship, if they exist, be remedied by municipal owner- 
 ship and operation? 
 
 D. Does the experience of this and other countries show 
 
 that municipal ownership is more successful in prac- 
 tice than private ownership? 
 
 Affirmative 
 
 The affirmative believes that municipalities should own and 
 operate their light, water, and transportation plants, for, 
 I. The ownership and operation of these utilities is a proper 
 function of municipal government. 
 
 A. The ends of government embrace all the benefits and 
 
 all the immunities from evil which government can 
 confer. 
 
 B. It is not socialism. 
 
 II. Private ownership is objectionable because it gives rise 
 to great evils. 
 
 A. There is great waste of forces. 
 
 I. Business is not regulated by competition. 
 
 B. The public is plundered. 
 
 I. Enormous dividends are secured from franchises 
 which belong to the public. 
 
 C. The public is dependent on those who own the mo- 
 
 nopolies. . 
 
 D. Public moral standards are lowered by bribery and 
 corruption, " 
 
 I. The companies spend large sums controlling boards 
 of aldermen. 
 III. Municipal ownership remedies the evils of private owner- 
 ship and is followed by great advantages. 
 
 A. Plants are run for the benefit of the public. 
 
 B. Rates of service are lowered. 
 
 C. Whatever profits are made lessen taxation. 
 T). Needless investment and speculation is checked 
 
c^ 
 
 BRIEF xiii 
 
 E. Regularity and economy of administration is insured. 
 I. Close watch is kept by every taxpayer who is vir- 
 tually a stockholder. 
 
 IV. Municipal ownership and operation is more successful in 
 practice than private ownership and operation. 
 
 A. In operating water plants. . 
 
 B. In operating gas plants. 
 
 C. In operating plants for transportation. 
 
 ■" Negative 
 
 The negative believes that municipalities should not own and 
 operate their light, water, and transporation plants, for, 
 
 I. Municipal ownership of these utilities is unwise in theory. 
 
 A. It is not a proper function of government. 
 
 I. It is not necessary for the promotion of intel- 
 ligence, the care of the unfortunate, or to estab- 
 lish justice. 
 
 B. It increases government interference in the field of 
 
 private action. 
 
 C. It deprives industry of the moral and economic ad- 
 
 vantage of self interest. 
 
 II. Municipal ownership is financially disastrous. 
 
 A. Waste and extravagance result. 
 
 1. Those in charge have little skill or experience. 
 
 2. They have little interest in an economic admin- 
 istration, 
 
 B. There is a constant tendency to rely on the city's 
 
 ability to tax to make up deficiencies. 
 
 C. There is slight chance of extra revenue. 
 
 I. The clamor for low rates precludes the possibility 
 of extra revenue. 
 
 III. Municipal ownership is inefficient. 
 
 A. It is not awake to new inventions. 
 
 B. The service does not secure the best men. 
 
 1, The salary is insufficient. 
 
 2. Opportunity for advancement is too meager. 
 
XIV 
 
 BRIEF 
 
 C. The service is subject to the change of political par- 
 ties. 
 IV. The present status of American city government precludes 
 further consideration of the question. 
 
 A. Most American cities have failed to do efficiently 
 
 what they already have to do. 
 
 1. Jobbery and corruption are common. 
 
 2. The police service is poor. 
 
 3. Laws are not enforced. 
 
 B. To add to municipal functions is simply to aggra- 
 
 vate existing conditions and to delay reforms in- 
 definitely. 
 
 i 
 
BIBLIOGRAPHY 
 
 A star (*) preceding a reference Indicates that the entire 
 article or a part of it has been reprinted in this volume. 
 
 General References 
 Bibliographies 
 
 Brooklyn, New York. Public Library. Books on Municipal 
 Ownership. 27pp. 1906. 
 A useful classified and annotated list. 
 
 Brooks, Robert C. Bibliography of Municipal Problems and City 
 Conditions. N. Y. 1901. 
 Published also in Municipal Affairs. 5: 1-346. Mr. '01. 
 
 Kansas City Public Library Quarterly. 8: 21-71. Ap. '08. Bibliog- 
 raphy of Municipal Betterment. 
 
 Municipal Affairs, 1897-1902. Vols. I-VL 
 
 Bibliography in every quarterly issue. 
 Seattle. Public Library. Municipal Government, a List of 
 
 Books and References to Periodicals. 1911. 
 
 United States. Library of Congress — Division of Bibliography. 
 Select List of Books on Municipal Affairs with Special Refer- 
 ence to Municipal Ownership. 34pp. 1906. 
 
 For sale by the Superintendent of Public Documents, Wash- 
 ington, D. C. Five cents. ^ 
 
 Books, Pamphlets and Documents 
 
 Baker, Moses Nelson, ed. Municipal Yearbook. Engineering 
 News Publishing Co., New York. 1902. 
 
 Beard, Charles A. American City Government. Century. 
 N. Y. 1912. Chapter VIII, Municipal Ownership. 
 
 Bliss, William'^D. P., ed. New Encyclopedia of Social Reform. 
 1908. Municipal Ownership, Gas, Street Railways, Water. 
 
xvi BIBLIOGRAPHY 
 
 r England. Home Office. IMunicipal Trading (United King- 
 dom) ; Return Showing the Nature and Extent and, for 
 Each of the Last Four Years (1902-3, 1905-6) for Which 
 Figures are Available, the Financial Results of Reproduc- 
 tive Municipal Undertakings, v. 1-3 in i. 1909. 
 ' Fairlie, John A. IMunicipal Administration. 1901. Chapter XIL 
 Municipal Improvements. 
 
 Fairlie, John A. Essays in Municipal Administration. Macmil- 
 lan. New York. 1908. 
 
 Foote, Allen Ripley. Municipal Public Service Industries. Other 
 Side Publishing Company. Chicago. 1899. 
 
 Goodnow, Frank Johnson. City Government in the United States. 
 Century. New York. 1904. • 
 
 Goodnow, Frank Johnson. Municipal Government. Chapter XV. 
 Local Improvements. Century. New York. 1909. 
 
 Holcombe, A. N. Public Ownership of Telephones on the 
 Continent of Europe. Bost. Houghton. 1911. 
 
 Howe, Frederick C. European Cities at Work. Scrrbners. 
 N. Y. 1913. 
 
 Illinois. Labor Statistics Bureau. Biennial Report, v. 10. 
 Private and Municipal Ownership of Public Works. 
 
 King, Clyde Lyndon. Regulation of Municipal Utilities. Ap- 
 pleton. New York. 1912. Chapter II. Municipal Owner- 
 ship versus Adequate Regulation. 
 
 League of American Municipalities. Book of American Munic- 
 ipalities. Chicago. 1908. 
 
 Le Rossignol, James E. Monopolies, Past and Present, pp. 117- 
 42. Crowell. 1901. 
 
 Massachusetts. Board of Gas and Electric Light Commis- 
 sioners. Annual Reports. 
 
 Michigan Political Science Association. Publications. 5 : 349-88. 
 Mr. '04. Suggestions for and against Municipal Ownership 
 of Public Utilities. C. A. Kent. 
 
 Municipal Program. Macmillan. New York. 1900. 
 
 Munro, William Bennett. Government of European Cities. Mac- 
 millan. New York. 1909. 
 Bibliography, pp. 380-402. ^ ^ * 
 
 *National Civic Federation. Municipal and Private Operation of 
 
 Public Utilities. 3 Vols. 1907. 
 
BIBLIOGRAPHY xvii 
 
 New International Encyclopedia. Article on Municipal Owner- 
 ship. 
 
 New York (State). Public Service Commission, First District. 
 Annual Reports, 1907-date. 
 
 Pond, Oscar Lewis. Municipal Control of Public Utilities, a 
 Study of the Attitude of our Courts toward an Increase in 
 the Sphere of Municipal Activity. (Columbia University. 
 Studies in History, Economics and Public Law. 15: 1-115. '06.) 
 
 Seabury, Samuel. Municipal Ownership and Operation of Public 
 Utilities in New York City. Municipal Ownership Publishing 
 Co. 1905. 
 
 Shaw, Albert. Municipal Government in Continental Europe. 
 Century. New York. 1895. 
 
 Shaw, Albert. Municipal Government in Great Britain. Century. 
 New York. 1895. 
 
 Tolman, William H. Municipal Reform IMovements in the 
 United States. Revell. New York. 1895. 
 
 Towler, W. G. Socialism in Local Government. Ed. 2. New 
 York. Macmillan. 1909. 
 
 United States. Census Office. Twelfth Census, 1900. Special Re- 
 ports. Street and Electric Railways. 439pp. 1902. 
 
 United- States. Commerce and Labor, Department of. Water, Gas 
 and Electric Light Plants under Private and Municipal Own- 
 ership. 983PP- Fourteenth Annual Report of Commissioner 
 of Labor, 1900. 
 
 Also appears as House Document 713, 56th Congress, 1st Ses- 
 sion. 
 
 United States. Commerce and Labor, Department of. Municipal 
 Ownership. Reports from United States Consular Officers, 
 1897-1905. 55pp. Monthly Consular Reports, May, 1905. pp. 
 284-336. 
 
 ♦United States. Industrial Commission. Report. 1901. Municipal 
 Public Utilities. Vol. IX. 
 
 United States. Labor, Bureau of. Bulletin. 12: 1-123. Ja. '06. 
 Municipal Ownership in Great Britain. F. C. Howe. 
 
 Whinery, S. Municipal Public Works. Municipal Ownership, 
 pp. 189-218. Macmillan. New York. 1903. 
 
 Wilcox. Delos F. American City ; a Problem in Democracy. Chap- 
 ter III. Control of Public Utilities. 
 
xviii BIBLIOGR.\PHY 
 
 Wilcox, Delos F. Municipal Franchises ; a Description of the 
 Terms and Conditions upon which Private Corporations En- 
 joy Special Privileges in the Streets of American Cities. 2v. 
 Gervaise Press. Rochester, New York. 1910-11. 
 >: Zangerle, John A. Larger View of Municipal Ownership. Pub- 
 lished by the Author. Cleveland, Ohio. 1906. 
 
 Magazine Articles 
 
 American City. 6: 709-13. My. '12. Municipal Housekeeping 
 in Europe and America. Harvey N. Shepard. 
 
 American City. 8:. 121-38. F. '13. Public Markets and Market- 
 ing Methods. J. F. Carter. 
 
 American City. 8:215. F. '13. San Francisco's Municipal 
 Street Railway. W. M. Harrison. 
 
 American Journal of Sociology. 11 : 817-29. My. '06. jMunicipal 
 Activity in Britain. T. D. A. Cockerell. 
 
 ♦American Journal of Sociology, 12 : 241-53. S. '06. Municipal 
 Ownership and Operation; the Value of Foreign Experience. 
 
 Leo S. Rowe. 
 
 Published also in National Municipal League, Proceedings of 
 
 the Atlantic City Conference for Good City Government, 1906. 
 
 pp. 280-90. 
 
 American Political Science Review. 5:374-93. Ag. '11. Cen- 
 tral Utilities Commissions and Home Rule. E. H. Meyer. 
 
 Annals of the American Academy. 2"/: 20-36. Ja. '06. Water, Gas 
 and Electric Light Supply of London. Percy Ashley. - 
 
 Annals of the American Academy. 28 : 359-70. N. '06. Municipal 
 Ownership as a Form of Governmental Control. F. A. Cleve- 
 land. 
 
 *Annals of the American Academy. 29: 275-91. Mr. '07. Public 
 Regulation of Street Railway Transportation. Edmond R. 
 Johnson. 
 
 Annals of the American Academy. 30: 557-92. N. '07. Relation 
 of the Municipality to the Water Supply; Symposium. 
 
 Arena. Public Ownership News. See IMonthly Numbers of the 
 Arena from ]\iay, 1901 to August, 1909. 
 
 Arena. 31 : 448, 458-63. My. '04. Municipal Ownership versus 
 Private Ownership. Frederick F. Ingram. 
 
BIBLIOGRAPHY 
 
 XIX 
 
 Arena. 2>7 '• 181-90. F. '07. Opposing Views on Municipal Owner- 
 ship ; a Notable Symposium. 
 
 Atlantic Monthly. 107:433-40. Ap. '11. Tendency of Municipal 
 Government in the United States. G. B. McClellan, 
 
 Cassier's Magazine. 32: 3-1 1, 178-85, 237-49. ]\Iy.-Jl. '07. Munic- 
 ipal Ownership in England. R. S. Hale. 
 
 *Des IMoines Register and Leader. Ag. 26, '08. What the Public 
 Does Not See. Henry L. Doherty. 
 
 *Engineering Magazine. 31 : 741-3. Ag. '06. Municipal Owner- 
 ship of Engineering Utilities. E. W. Burdett. 
 
 Condensed from an address delivered before the National Elec- 
 tric Light Association. 
 
 Fortnightly Review. 89: 489-511. Mr. '08. London's Electrical 
 Future. T. H. Minshall. 
 
 Independent. 60: 1153-7. My. 17, '06. First Municipal Street Rail- 
 way in America. A. M. Parker. 
 
 International Quarterly. 12: 1-12. O. '05. Public Ownership in 
 New York. E. B. Whitney. 
 
 Municipal Affairs. 6: 524-38. '03. Recent History of Municipal 
 Ownership in the United States. 
 
 ♦Nation. 82: 441-2. My. 31, '06. Municipal Ownership Inves- 
 tigators. 
 
 Nation. 83 : 386-7. N. 8, '06. Case of Municipal Ownership. 
 
 National Municipal Review. 2: 11-23. Ja. '13. State vs. Munic- 
 ipal Regulation of Public Utilities. John Morton Eshel- 
 man. 
 
 National Municipal Review. 2:24-30. Ja. '13. State vs. Mu- 
 nicipal Regulation of Public Utilities. Lewis R. Works. 
 '*Outlook. 80: 266-8. Je. 3, '05. Municipal Ownership. 
 ^♦Outlook. 82: 504-11. Mr. 3, '06. Principles of Municipal Own- 
 ership. Robert Donald. 
 ^ *Outlook. 86: 49-51- My. 11, '07. Problem of ^Municipal Owner- 
 ship. 
 ' Outlook. 86: 621-3. Jl. 27, '07. Municipal Ownership, Pro and 
 Con ; the Report of the National Civic Federation's Commis- 
 sion. 1 
 
 Political Science Quarterly. 17: 643-68. Ag. '03. Holyoke Case. 
 A. D. Adams. 
 
XX BIBLIOGRAPHY 
 
 Political Science Quarterly. 24: 23-56. Mr. '09. Municipal So- 
 cialism and its Economic Limitations, with Special Reference 
 to the Conditions in New York City. E. J. Levy. 
 
 Political Science Quarterly. 26: 122-32. Mr. '11. Electric 
 Lighting System of Paris. A. N. Holcombe. 
 
 Quarterly Journal of Economics. 23: 161-74. N. '08. Civic Fed- 
 eration Report on Public Ownership. W. B. Munro. 
 
 ♦Quarterly Review. 205 : 420-38. O. '06. Municipal Socialism. 
 
 ♦Quarterly Review. 209: 409-31. O. '08. Municipal Trade. Leonard 
 Darwin. 
 
 Review of Reviews. 35 : 32g-^2>- ^Ir. '07. Municipal Ownership 
 of Street Railways in Germany. E: T. Heyn. 
 
 Scientific American. 96: 430. My. 25, '07. How Chicago Is Solving 
 Municipal Ownership of Transportation Facilities. A. F. 
 Collins. 
 
 Scribner's Magazine. 40: 98-109. Jl. '06. Glasgow. F. C. Howe. 
 
 ♦Springfield Republican. Ap. 10, '07. Public Service Enterprises. 
 
 Survey. 22: 803-4. S. 11, '09. Socialism in Local Government. 
 W. G. Towler. Review. 
 
 World To-Day. 19: 957-64- S. '10. City and the Public Utility 
 Corporation. Brand Whitlock. 
 
 Affirmative References 
 
 Books and Pamphlets 
 
 American Economic Association. Publications, 1906, 3d Series. 
 
 9' 113-33- Case for Municipal Ownership. F. C. Howe. 
 Baker, Charles Whiting. Monopolies and the People. Macmil- 
 
 lan. New York. 1899. 
 Bemis, Edward Webster, ed. ^Municipal Monopolies. Crowell. 
 
 New York. 1899. 
 
 Papers by experts on waterworks, lighting, telephone and 
 street railways. 
 Bemis, Edward Webster, Municipal Ownership of Gas in the 
 
 United States. Macmillan. New York. 1891. 
 
 ♦Calgary, Alberta, Canada. City Clerk. Municipal Manual, 
 
 1913. 
 
BIBLIOGRAPHY xxi - 
 
 Commons, John Rogers. Social Reform and the Church. Munic- 
 ipal ]\Ionopolies. pp. 123-55. Crowell. 1894. 
 
 Conference for Good City Government, 1910: 12-21. Con- 
 servation in Municipalities. W. D. Foulke. 
 
 Conference for Good City Government, 1910: 156-69. Kansas 
 City Franchise Fight. J. W. S. Peters. 
 
 Cook, W. W. Corporation Problem. Corporations as Owners of 
 Natural Monopolies, pp. 208-13. Putnams. New York. 1891. 
 
 Dolman, Frederick. Municipalities at Work. Methuen. London. 
 
 1895. 
 
 Howe. Frederick Clemson. British City. Scribrier's. New York. 
 IQ07. 
 
 Howe, Frederick Clemson. City the Hope of Democracy. Scrib- 
 ner's. New York. 1905. 
 
 National Convention upon Municipal Ownership and Public 
 Franchises. Proceedings, New York City, 1903 (in Mu- 
 nicipal Afifairs, v. 6, no. 4). 
 
 National Municipal League, Proceedings of the Atlantic City 
 Conference for Good City Government, 1906. Municipal Op- 
 eration in Duluth, Minnesota, pp. 244-8. 
 
 National Municipal League, Proceedings of the Atlantic City 
 Conference for Good City Government, 1906. ]Municipal Own- 
 ership in Jacksonville, Florida. J. M. Barrs. pp. 257-65. 
 
 National Municipal League, Proceedings of the Atlantic City 
 Conference for Good City Government, 1906. One Maj^or's 
 Experience ; Municipal Ownership in Nashville, Tennessee. 
 James M. Head. pp. 269-79. 
 
 Parsons, Frank. City for the People, C. F. Taylor. Philadelphia. 
 1901. 
 
 *Regina, Saskatchewan, Canada. City Clerk. Municipal Man-- 
 ual, 1913- 
 
 Rowe, Leo Stanton. Problems of City Government. Appleton, 
 New York. 1908. 
 
 Shaw, George Bernard. Common Sense of Municipal Trad- 
 ing. Lane. New York. 191 1. 
 
 ♦Winnipeg, Manitoba, Canada. City Clerk. Municipal Man- 
 ual, 1913. 
 
xxii BIBLIOGRAPHY 
 
 Zueblin, Charles. American Municipal Progress. Chapter X. 
 Public Control, Ownership and Operation. Macmillan. New 
 York. 1902. 
 
 Magazine Articles 
 
 American City. 6:411-9. Ja. '12. German City Worthy of 
 Emulation. W. D. Foulke. 
 
 American City. 7: 140. Ag. '12. Town Without Municipal 
 Tax<:s. (Silverton, Colorado). 
 
 American City! 7:424-6. N. '12. Twenty Years of Successful 
 Municipal Ownership in South Norwalk, Connecticut. 
 
 American Magazine. 61 : 685-96. Ap. '06. From Yerkes to 
 Dunne; how Chicago is Trying to Evolve Municipal Owner- 
 ship out of the Worst Traction Problem in the World. H. K. 
 Webster. 
 '^ Annals of the American Academy. 27 : 1-19. Ja. '06. Glasgow's 
 Experience with Municipal Ownership and Operation. Robert 
 Crawford. 
 
 *Annals of the American Academy. 27 : 37-65. Ja. '06. Munic- 
 ipal Ownership and Operation of Street Railways in Germany. 
 Leo S. Rowe. 
 
 Annals of the American Academy. 27 : 72-90. Ja. '06. Movement 
 for ]\Iunicipal Ownership in Chicago. Hugo S. Grosser. 
 
 Arena. 32: 461-71. N, '04. Glasgow's Great Record. Frank Par- 
 sons. 
 Same article condensed. Review of Reviews. 30: 733-4. D. '04. 
 
 *Arena. 34: 645-6. D. '05. Fifteen Reasons why the People Should 
 
 Own Their Own Public Utilities. Frank Parsons. 
 -'-Arena. 35: 526-7. My. '06. Five Reasons why We Favor Municipal 
 
 Ownership. 
 Arena, 38: 401-8. O. '07. National Civic Federation and its New 
 
 Report on Public-Ownership. Frank Parsons. 
 Chautauquan. 62: 19-32. Mr. '11. Municipal Ownership. P. 
 
 Alden. 
 
 Published also in Alden's Democratic Eng-land. 
 Chautauquan. 62: 103-10. Mr. '11. Municipal Ownership in 
 
 the United States. C: Zueblin. 
 
BIBLIOGRAPHY 
 
 XXlll 
 
 *City Hall. 2: 225-7. Ja. '10. Argument for the ^Municipal Own- 
 ership of a Street Railway Company, 
 
 Contemporary Review. S3 : 485-500, 623-39. Ap.-^NIy. '03. Case for 
 Municipal Trading. Robert Donald. 
 
 Contemporary Review. 84: 12-32. Je. '03. The Trust or the Town. 
 Robert Donald. 
 
 ♦Cosmopolitan. 30: 557-60. ]\Ir. '01. Advantages of Public Own- 
 ership and Management of Natural Monopolies. Richard T. 
 Ely. 
 
 Independent. 52: 884-5. Ap. 5, '00. Austin, Texas Argument a- 
 gainst Municipal Ownership. 
 
 ♦Independent. 60 : 449-52. F 22, '06. Municipal Ownership a Bles- 
 sing. John Burns. 
 
 ♦Independent. 61 : 927-30. O, 18, '06. Our Fight for Municipal 
 Ownership. Edward F. Dunne. 
 
 Independent. 71:798-803. Privilege Becomes Property under 
 the Fourteenth Amendment; the Consolidated Gas Deci- 
 sion. J. F. Orton. 
 
 International Quarterly. 12: 13-22. O. '05. Chicago Traction 
 Question. Clarence S. Darrow. 
 
 ♦Lincoln, Nebraska. State Journal. My. 12, '07. Municipal Own- 
 ership. W. A. .Selleck. 
 
 ♦North American Review. 172: ^45-55. Mr. '01, Municipal Own- 
 ership of Natural Monopolies. Richard T. Ely. 
 
 ♦North American Review. 182: 701-8. jNIy. '06. ]\Iunicipal Own- 
 ership of Public Utilities. George Stewart Brown. 
 Same article condensed. Review of Reviews. 33: 724-5. Je. '06. 
 
 ♦Outlook. 70 : 726-7. Mr. 22, '02. Municipal Ownership and Cor- 
 rupt Politics. Henry C. Adams. 
 
 Outlook. 74: 11-3. ]\Iy. 2, '03. Public Ownership Conflicts. 
 
 Outlook. 76: 965-7. Ap. 22, '04. Fear of Municipal Socialism. 
 
 Outlook. 79: 931-4. Ap. 15, '05. Shall New York Own its Sub- 
 ways? R. Fulton Cutting. 
 
 Outlook. 79: 934-8. Ap. 15. '05. Shall New York Own its Sub- 
 ways? Bird S. Coler. 
 "^♦Outlook. 80: 411-3. Je. 17, '05. Municipal Ownership. 
 
 ♦Outlook. 80: 431-5. Je. 17, '05. Municipal Ownership of Street 
 Railways in Glasgow. Robert Donald. 
 
xxiv BIBLIOGRAPHY 
 
 Outlook. 82: 818-9. Ap. 14, '06. Chicago's Municipal Ownership 
 Battle. 
 
 Outlook. 82: 835-41. Ap, 14, '06. Boston Franchise Contest. 
 Robert A. Woods and Joseph B. Eastman. 
 
 Outlook. 83 : 618-20. Jl. 14, '06. Why German Cities are Beauti- 
 ful and Healthful. W. H. Tolman. 
 
 ♦Outlook. 86: 49-51. My. 11, '07. Problem of Municipal Owner- 
 ship. 
 
 *Reader. 7: 477-84. Ap. '06. Municipal Ownership — What It 
 Means. Edw'ard F. Dunne. 
 
 Twenti th Centur\^ Magazine, i: 3-12. O. '09. What Happened in 
 Pasadena. F. M. Elliott. 
 
 Twentieth Century Magazine, i : 127-31. N. '09. Story of Los 
 Angeles Waterworks under Private and Public Ownership. 
 F. M. Elliott. 
 
 Twentieth Century Magazine. 3: 173-5. N. '10. Public Ownership 
 in Seattle. L. B. Youngs. 
 
 Twentieth Century ]\Iagazine. 7:3-8. N. '12. Study in Despot- 
 ism; How a Highly Reputed Street Railway Monopoly 
 Had to Be Beaten to Its Knees in Order That Its Em- 
 ployees ]\Iight Enjoy a Right Conferred by Law. Livy S. 
 Richard. 
 
 ♦Twentieth Century Magazine. 7: 8-15. N. '12. Municipal 
 Lighting. C. M. Sheehan and Albert Firmin. 
 
 ♦Tw'Cntieth Century Magazine. 7:27. N. '12. Public Owner- 
 ship of Urban and Suburban Street Transportation. H. 
 D. Lloyd. 
 
 Twentieth Century Magazine. See also Public Ownership News 
 in monthly numbers. 
 
 'Negative References 
 Boohs and Pamphlets 
 
 American Economic Association Publications, 1906. 3d Series. 
 
 9* 133-43- Municipal Ownership. Winthrop M. Daniels. 
 Avebury, John Lubbock, ist Baron. On ^Municipal and National 
 
 Trading. ]\lacmlllan. New York. 1907, 
 
BIBLIOGRAPHY xxv 
 
 Grant, Arthur Hastings. Comp. List of Defunct Municipal 
 Lighting Plants. Ed. 8. Municipal Ownership Pub. Co. 
 
 1913- 
 
 Knoop, Douglas. Principles and Methods of Municipal Trad- 
 ing. New York. Macmillan. 1912. 
 
 Meyer, Hugo Richard. ]\Iunicipal Ownership in Great Britain. 
 Macmillan. New York. 1906. 
 Reviewed in Political Science Quarterly. 22: 528-32. S. '07. 
 
 Porter, Robert Percival. Dangers of ^Municipal Ownership. Cen- 
 tury. New York. 1907. 
 
 Seligman, Edwin Robert Anderson. Principles of Economics. 
 Development of Public Ownership, pp. 562-75. 1905. 
 
 Magazine Articles 
 
 American Journal of Sociology. 3 : 837-47. My. '98. New Plan 
 
 for the Control of Quasi-public Works. J. D. Forrest. 
 *American Journal of Sociology. 10 : 787-813. My. '05. Public 
 
 Ownership versus Public Control. Hayes Robbins. 
 
 Includes a comparison of street railways of Boston and Glas- 
 gow, and an account of the workings of the Massachusetts Rail- 
 way Commission. 
 
 *American Journal of Sociology. 12: 328-40. N. '06. Public Own- 
 ership and Popular Government. William H. Brown. 
 
 *Annals of the American Academy. 28 : 371-84. N. '06. American 
 Municipal Services from the Standpoint of the Entrepreneur. 
 Chester Lloyd Jones. 
 
 City Hall. 11 : 366-7. Je. '10. ]\Iunicipal Ownership in Vienna. 
 Robert Atter. 
 
 *Engineering ^Magazine. 34: 509-11. D. '07. Comparison of the 
 Cost of Steam Power in Municipal and Privately Operated 
 
 Plants. John W. Hill. 
 
 Condensed from an address given before the Central States 
 TTaterworks Association. 
 
 Harper's Weekly. 51 : 1344, 1357- S. 14, '07. Problem of ^Munic- 
 ipal Ownership ; the Report of the Public Ownership Com- 
 mission of the National Civic Federation. Roland Phillips. 
 
 ♦Journal of Commerce. Jl. 16, '07. Main Question in Municipal 
 Ownership. 
 
 Journal of Political Economy. 13: 481-505. S. '05. Municipal 
 Ownership in Great Britain. Hugo R. Meyer. 
 
xxvi BIBLIOGRAPHY 
 
 *Journal of Political Economy. 14: 257-314. My. '06. Municipal 
 Ownership in Great Britain, Everett W. Burdett. 
 
 Journal of Political Economy. 14: 553-67. N. '06. Municipal Own- 
 ership in Germany; Street Railways and Electric Lighting. 
 Hugo R. Meyer, 
 
 Municipal Affairs. 6: 539-78. '02. European and American Re- 
 sults Compared. Robert P, Porter. 
 
 Municipal Affairs. 6: 579-613. '02. Recent Attacks on Municipal 
 Ownership in Great Britain. Robert Donald. 
 
 Chautauquan. 40: 548-57, F. '05. German Municipal Social Ser- 
 vice. Howard Woodhead. 
 
 *North American Review. 182 : 853-60. Je. '06. Arguments a- 
 gainst IMunicipal Ownership. F. B. Thurber. 
 
 North. American Review, 183: 729-36. O. '06. How London Loses 
 by Municipal Ownership. Ernest E. Williams. 
 
 North American Review. 184: 590-603. Mr. '07. Municipal Glas- 
 gow. Benjamin Taylor. 
 
 Outlook. 82: 765-6. Mr, 31, -'06. Street Railways; Boston and 
 Glasgow. 
 
 Outlook. 92: 407-13. Je, 19, '09. City gets Fifty-five Per Cent; 
 the' Fourth Plain Tale from Chicago. C. Norman Fay. 
 
 Public Service (monthly). Chicago. 
 
 A corporation organ, its object being to prevent municipal own- 
 ership. 
 ^ *Quarterly Review. 205 : 420-38. O. '06. IMunicipal Socialism. 
 
 *Quarterly Review, 209: 409-31, O. '08, Municipal Trade. Leon- 
 ard Darwin. 
 
 *Review of Reviews. 36 : 594-8. N. '07. How Boston Solved the 
 Gas Problem. Louis D. Brandeis. 
 
 World To-Day. 7: 1536-42. D. '04. Philadelphia and its Gas- 
 w-orks. Hayes Robbins. 
 
 *World To-Day. 12: 374-9. Ap. '07. Municipal Ownership of 
 Electric Light Plants. James R. Cravath. 
 
 *World To-Day. 12: 621-5. Je. '07. Municipal Ownership of Pub- 
 lic Utilities, John W, Hill, 
 
 World To-Day, 13: 1037-40, O. '07. Philadelphia Gas Works un- 
 der Private Operation, T: L. Hicks. 
 
• • • • • • ■ 
 
 • •• • • •. . *. • : •% • • •• 
 
 . . ...... •••.%••,,,•, 
 
 SELECTED ARTICLES ON 
 MUNICIPAL OWNERSHIP 
 
 INTRODUCTION 
 
 Present Status of Municipal Ownership 
 
 The municipality, as we are familiar with it in America 
 to-day, is, like the great corporation, a product of our wonder- 
 ful development. Early statesmen did not and could not foresee 
 the possibilities, problems, and dangers that characterize present 
 day municipal institutions. The lack of similarity between the 
 conditions that prevail in our different cities renders municipal 
 problems more difficult. Each city is organized under a different 
 charter and is a problem in itself. A plan that would be success- 
 ful in one might entirely fail in another. 
 
 There is a growing tendency, however, to extend municipal 
 activity to include those enterprises that involve moral, hygienic, 
 social, and educational questions ; altho there is difference of 
 opinion as to just how much importance should be given these 
 various considerations. 
 
 Functions of the Municipality 
 
 The state and federal governments must solve those political 
 and economic questions that in their nature are broad in scope 
 and policy and require extended legislation, administration, and 
 adjudication. On the other hand, the city works in a limited ter- 
 ritory and is chiefly concerned with the details of its own needs 
 and the problems growing out of those needs — problems greatly 
 
2, , SEIxECTED ARTICLES 
 
 intensified by the larger number of people crowded into a small 
 area. For example, the ownership of interstate railroads creates 
 a problem less pressing than the ownership of city transporta- 
 tion facilities. It may be necessary for the city to own and oper- 
 ate the latter in order to relieve congested conditions and to allevi- 
 ate the slum and tenement evils. No such reasons could be 
 urged for the ownership of interstate railways. 
 
 Authorities and the Issue 
 
 The arithmetical facts as to the financial status of municipal 
 ownership may be gleaned by the student from this book and 
 from many other sources. Here again, authorities will not agree 
 as to the figures or their bearing on the issue. Each authority 
 writes from his own point of view and gathers data and inter- 
 prets it to favor the conditions that he wishes to prevail. It is 
 for the student to study each case painstakingly and thoroly be- 
 fore he makes his conclusion. He must not assume that because 
 municipal ownership has been a success in one community it will 
 succeed in another or vice versa until he has shown that the con- 
 ditions which determine its success or failure are the same in 
 both cases. 
 
 The issue before the student is : Are the utilities in question 
 of such a nature that their operation is a municipal function and, 
 all things considered — condition of municipal politics and finance, 
 the cost of operation, and the probabilities of success, — is it bet- 
 ter morally, socially, and economically ,for American municipal- 
 ities to own and administer these utilities? 
 
• •' • • * • 
 . » » » • «, 
 
 
 GENERAL DISCUSSION 
 
 United States Industrial Commission. 1901. 
 Report. Volume IX. Introduction, pp. 239-41. 
 
 Municipal Public Utilities. General Discussion of Regulation 
 
 and Public Ownership. 
 
 Importance of Problem. 
 
 Professor Edward W. Bemis, of the Bureau of Economic Re- 
 search, says that the problem of municipal public utilities is made 
 important by the fact that competition has broken down under 
 them and that they are virtually monopolies. The same problems 
 are already confronting us in cities as will later become con- 
 spicuous regarding railroads, and the experience in the manage- 
 ment of public utilities in cities will be a valuable lesson. The 
 magnitude of the problem may be judged from the fact that the 
 capital of the privately owned water, gas, and electric plants in 
 the country is nearly $1,400,000,000, while the capital of street 
 railways is $1,800,000,000. The further fact that certain syndi- 
 cates and individuals are getting controlling interests in the 
 street railway, gas, and electric-light companies of very many 
 different cities increases the importance of the problem. 
 
 Tendency of Public Utilities toward Monopoly. 
 
 Professor Bemis declares that competition in the street rail- 
 ways, electric light, and water supply business has almost en- 
 tirely broken down. Efforts have been made in the most im- 
 portant cities in this country to maintain competing companies, 
 but in nearly every instance the experiment has ended in con- 
 solidation. The tendency toward consolidation has been slightly 
 less marked in the case of electric-light companies, but consolida- 
 tion has still gone on very rapidly, and in most cities street light- 
 
4 , SELECTED ARTICLES 
 
 ing and household lighting are furnished by a single corporation, 
 altho large establishments are able to supply themselves by 
 means of private plants. 
 
 Consolidation of plants of this sort results in great economies. 
 There is a saving in office force, in avoiding the duplication of 
 mains, pipes, and wires, in the collection of bills, and in other 
 ways. 
 
 Consolidation of Plants of Same or Similar Character. 
 
 Professor Bemis says that in recent years there has been a 
 marked tendency toward the concentration of ownership of plants 
 in different cities and of plants of different character in the same 
 city. Thus in New York City the Consolidated Gas Company 
 increased its stock in July, 1900, to $80,000,000, and bought up 
 the other gas and electric light companies of that city. The same 
 syndicate has also a controlling interest in the street surface 
 railways of New York, altho the elevated roads are in the hands 
 of a different syndicate. The Elkins-Widener-Whitney syndicate 
 also controls the street railways of Philadelphia, Chicago, and a 
 rapidly increasing number of other cities. Similarly, the United 
 Gas Improvement Company of Philadelphia has a controlling 
 interest in the gas companies of over 40 different cities, among 
 them Jersey City, Kansas City, and Atlanta. The officers of the 
 Standard Oil Company have also a very large interest in gas and 
 street railway enterprises all over the country. In Chicago the 
 surface railroads and several of the elevated railroads have been 
 at times in the past, and doubtless will be in the future, owned 
 by a single syndicate. 
 
 Mr. Allen Ripley Foote advocates the consolidation of the 
 gas and electric-light plants of a municipality, and also the con- 
 solidation of the electric street railways with the electric-light 
 plants. It would make a saving in the cost of management and 
 would cheapen the cost to the consumer. 
 
 In dealing with a consolidated syndicate, however, there 
 should be thoro control of capitalization to prevent stock water- 
 ing, and thoro publicity of accounts. Without such system of 
 public accounting consolidation might not be beneficial to any- 
 body but the syndicates themselves. 
 
MUNICIPAL OWNERSHIP 5 
 
 f' 
 
 Possible Methods of Managing Public Utilities. 
 
 Professor Bemis says that there are three possible methods of 
 solving the problem of public municipal utilities. One is to regu- 
 late the private operation of them ; another is direct public owner- 
 ship and operation, while a third is public ownership with private 
 operation. Regulation of private ownership has been most ad- 
 vanced in England and Massachusetts ; public ownership has 
 gone furthest in England, while the system of public ownership 
 and private operation scarcely exists in the United States, but 
 is very common in England. 
 
 Comparison of Public and Private Ownership of Municipal 
 
 Utilities. 
 
 Professor Bemis declares that there are certain evils and 
 dangers in public management to be carefully guarded against, 
 but he still believes that progress lies in the direction of public 
 management of municipal utilities. Private companies in Eng- 
 land do not oppose the public as they do here. Since the Brook- 
 lyn Bridge Railway has been taken over by private management 
 there is a great deal more dissatisfaction than ever before, while 
 under public management for many years it had given universal 
 satisfaction. 
 
 Professor Bemis holds that the principle of municipal owner- 
 ship of gas, electric lights, and street railways is the same as that 
 in respect of water supply, which is generally considered a public 
 function, but that it is more a question of expediency as to how- 
 fast we should go in relation to those utilities. He does not be- 
 lieve all industries should be owned and controlled by the people, 
 but where competition breaks down of its own weight and 
 monopoly thus results, then the public must control it in some 
 way. We should begin by learning thru publicity of accounts 
 what profits these monopolies are making and by seeing what can 
 be done thru regulation and taxation ; but experiments in 
 municipal operation should be at once undertaken and the causes 
 of success or failure carefully studied. 
 
 Mr. Foote thinks that in a sense the socialistic idea is the 
 basis of the initial point in the advocacy of municipal ownership. 
 
6 SELECTED ARTICLES 
 
 The people feel that the public should have the benefits and the 
 profits, if there are any, in the operation of the quasi-public 
 plants, and that private corporations have been making excessive 
 profits and have exercised more or less venality, not only in the 
 securing of their franchises, but also in the operation of the 
 plants. 
 
 Mr. Foote asserts that it is impossible to compare the results 
 of a municipal or political monopoly with those of the properly 
 supervised private industrial monopoly. When the water works 
 are under private ownership, everything has to be paid for by 
 private capital in the way of extending lines and making improve- 
 ments, etc., and the rates have to be sufficient to pay all operating 
 expenses and whatever profit is made. If the municipalities 
 should buy these works, they would frequently reduce the price 
 to the consumer, but would make up the dift'erence by taxation. 
 They w^ould especially extend the service lines and charge the 
 cost to special improvement assessments on property rather than 
 to consumers. The city does not have to earn profits. 
 
 As to whether there is any advantage in municipal ownership,, 
 assuming honesty of operation in both cases and the same ele- 
 ments of cost, etc., there are not sufficient data at hand to reach 
 a conclusion, and they cannot be obtained without having the 
 accounts of the municipalities and quasi-public corporations 
 public and uniform. The witness, however, does not think the 
 business of the municipalities of the country is yet sufficiently 
 developed to permit the satisfactory operation of their public 
 utilities by the taxpayers. As yet it always costs more to do^ 
 public business than to do private business of the same nature. 
 
 Mr. Foote says further that if it were possible to get men 
 sufficiently patriotic to work for the people as a whole as loyally 
 as they would in their own business, municipal ownership would 
 be very desirable ; but such a condition does not exist, and when 
 the factor of self-interest is eliminated from industrial manage- 
 ment there is eliminated at the same time the factor of efficiency. 
 The witness has never yet seen an industry so well managed 
 by the public but that a set of private men, having the same 
 opportunities in the details of management, could operate it and 
 make a profit, and give the price as low, if not lower. 
 
MUNICIPAL OWNERSHIP 7 
 
 Mr. Foote believes, however, that there are more reasons 
 why waterworks should be managed by municipalities than any 
 other of the public utilities, because there are more regulations 
 required in the operation of these plants that partake of the 
 nature of police regulations. He sees no reason, indeed, why a 
 small municipality might not operate its own waterworks plant 
 more economically than a private company, because in a small 
 plant the duties of the officials of the private company would be 
 so light that to pay any sort of a salary to them the cost of 
 operation would be high; whereas,- if the plant were operated 
 by a municipality, the work could be performed by officials of 
 the municipality who had other municipal duties to do. 
 
 Mr. Foote says that if the theory of municipal ownership 
 should be adopted he would recommend the management by the 
 municipality of every public utility where an economic gain could 
 be made to the public ; but he would still insist that the accounts 
 of the municipalities should be kept in such a way that it could 
 always be ascertained what the actual cost of construction and 
 of the management of the plant would be. He instances several 
 cases of municipalities owning and operating certain utilities in 
 which the accounts were so kept that while on the face of the 
 records there seemed to be great economy in such operation, 
 yet as a matter of fact they had been operating less cheaply 
 than a private corporation could have done. 
 
 Political Effects of Extension of Public Ownership. 
 
 Professor Bemis asserts that whenever there has been a 
 failure of any municipal public-service pFant, such failure can be 
 traced generally to the spoils system in politics or to a lack of 
 general business sense in the council, which has led to the selec- 
 tion of poor managers, or to the plant not being properly 
 equipped. A proper reform in the civil service would show the 
 people that they could improve the government, and have it 
 practically useful in a cooperative way, by cheapening transporta- 
 tion, fuel, light, telephone, and telegraph service. Moveover, an 
 increase in public functions increases the popular inter-est in hav- 
 ing the government better managed. 
 
8 SELECTED ARTICLES 
 
 Professor Bemis thinks the efforts of the influential and 
 wealthy companies to keep their own old franchises, or get better 
 ones, or to escape their share of taxation, are a potent source of 
 municipal corruption. A very intelligent employee of a certain 
 gas company informed him that all the employees in that com- 
 pany had to be recommended to their places by the political 
 boss of their precinct, and had to keep up their membership in 
 the political organization in order to retain their positions. 
 When the Philadelphia Gas Works were still under public 
 management, they were buying 40 per cent of their gas from a 
 private company, and they always took their employees at the 
 recommendation of the Philadelphia alderman, and did not keep 
 them longer than they could help. Their motto was : "The more 
 different people we can hire in a given month the more aldermen 
 we can please the more times." It would be easier to convince 
 the people of the need of civil-service reform and business 
 efficiency than it would to get rid of the demoralization con- 
 nected with this relation of private companies to legislative and 
 administrative bodies. 
 
 Civil Service in Municipal Affairs. 
 
 Mr. Foote advocates a rigid civil-service reform in municipal 
 affairs in case municipalities should take over to themselves the 
 operation of their public utilities. He believes that the em- 
 ployees engaged in the operation of utilities should be retained 
 for life, during good behavior. The witness declares that he is 
 somewhat different from the average civil-service reformer in 
 that he does not believe that it is of any interest to the public 
 how a man gets his position, but it does interest the public what 
 he does after he gets it. Therefore primary appointments should 
 be made in any way that would seem best — not necessarily by ex- 
 aminations — but there should be a probationary period of six 
 months before the employee goes upon the regular roll. Pro- 
 motions should be made from the lower to the higher grades 
 from those in the service, and not from the outside, thus creating 
 a stimulus for efficient work. 
 
MUNICIPAL OWNERSHIP 9 
 
 The Relation of Municipal Ozi'nership to Labor Conditions. 
 
 Professor Bemis says that the tendency of public employ- 
 ment is to improve labor conditions. The hours of labor are 
 usually reduced. The municipalities in England attempt to pay 
 the standard trade-union rate of wages. Tramways when 
 operated by private companies had refused to recognize unions 
 and had worked their men very long hours ; but as soon as 
 the municipalities took hold of the plants, union wages and 
 hours, etc., were introduced. 
 
 % Des Moines Register and Leader. August 26, 1908. 
 
 What the Public Does Not See. Henry L. Doherty. 
 
 Throughout this state there are a great many small cities ; 
 the growth of these cities depends primarily on their ability 
 to have conveniences and comforts that are not enjoyed in 
 country life. The only reason that a city lot representing one- 
 seventh of an acre may be worth $50,000, while the same kind 
 of dirt some place else is worth $100 for a full acre, or $14 
 for the area of the lot, is the opportunities that it presents 
 and the opportunities primarily due to the quasi-public and 
 municipal service of that particular community — sewerage, water, 
 gas, electric light and matters of that sort. Nothing so con- 
 tributes to the growth, prosperity and enhancement of wealth 
 of those cities as the liberal conduct of the quasi-public utilities 
 or the advantages such as sewerage, furnished by the munici- 
 palities. Failure to furnish those various advantages means 
 that the city cannot grow ; and these quasi-public corporations 
 can be a great factor in the growth and prosperity of these 
 communities ; they can either retard or accelerate their growth 
 by anticipating the needs of the communit}' or failing to do so. 
 
 Springfield Republican. April 10, 1907. 
 
 • Public Service Enterprises. 
 Ambassador James Bryce spoke before an audience of Chi- 
 
10 SELECTED ARTICLES 
 
 cago business men on the policy to be pursued by a city in 
 
 relation to public service enterprises as follows : — 
 
 "It is a pre-condition to the giving to a municipal authority of 
 any control over public work and public utilities that are not neces- 
 sarily involved in the varying existence of that municipal author- 
 ity, that the authority itself should be honest and capable — that Is 
 to say that the administrators should be upright and intelligent 
 men. Whether they are will depend on the conditions of the 
 particular city. It will depend mainly on the public spirit of the 
 citizens and the sense of civic duty which animates them. If 
 there is a lively sense of public duty and of the responsibility of 
 the individual citizen for the good government of the community, 
 if he givrs an honest vote based on his judgment of the char- 
 acter of the candidates; if he watches the conduct of those who 
 administer on its behalf and calls them to strict account for 
 any misdoings, it will obviously be safe to intrust to the munic- 
 ipality functions which otherwise it might be desirable to with- 
 hold." 
 
 That all this is an indispensable condition of success in 
 municipal enterprises, no one will dispute; and it is equally 
 to be admitted that few, very few, American cities can meet 
 this pre-condition of a successful public ownership policy. 
 
 But there is one point to be noted in this connection 
 which Mr. Bryce did not touch upon and which is very important 
 in any consideration of the subject. It is this — that the existing 
 close limitations upon the functions of municipal government in 
 America are well calculated to injure that public spirit of the 
 citizen and impare his active sense of civic duty which are so 
 essential to good government in any case ; while it may most 
 plausibly be asserted that an extension of these functions to 
 the city ownership and operation of such public services as 
 have been mentioned would tend to cultivate strongly that 
 spirit of individual watchfulness over and concern in the con- 
 duct of the government which are now so lamentably lacking 
 in American cities. 
 
 National Civic Federation. Report on Municipal and Private 
 
 Operation of Public Utilities. Vol. I, p. 441. 
 
 Messrs. Edgar and Clark in closing their review summarize 
 their opinions as follows: — "Our investigation has determined 
 with certainty many heretofore mooted questions. We believe 
 no intelligent reader of this Commission's work will fail to con- 
 
MUNICIPAL OWNERSHIP ii 
 
 elude that it clearly proves municipal ownershp to be productive 
 of many and serious ills, with little or no compensating good. 
 The writers of these chapters agreeing, we believe with the 
 other members of the Committee of Twenty-one, that public 
 service companies should reasonably be regulated and afforded 
 the protection that comes with regulation, and appreciating that 
 the Committee was not appointed or constituted to consider 
 methods of regulation, nevertheless desire to record their opinion 
 that some form of regulation of private companies be adopted in 
 each of the United States. What that form should be this Commis- 
 sion is not prepared, by any investigation or study it has made, to 
 suggest. As it has always been the function and duty of govern- 
 ment to insure that individuals shall deal justly with their fellows, 
 it is now the function and duty of government to protect the 
 governed against injustice on the part of these associations of 
 individuals working under the name of public service corpora- 
 tions. Any government that is too feeble or corrupt to control 
 with justice the conduct of a public service corporation has little 
 prospect of being able to itself supply such public service with 
 efficiency and justice. Our duty is to elect to office men of in- 
 telligence and integrity to govern efficiently, honestly and justly: 
 men who can and will curb the unjust aggressiveness of the 
 individual, or of the voluntary association of individuals, and 
 who can and will compel each to bear its share of the burdens 
 of government, and give in price, service or otherwise a proper 
 consideration for special privileges enjoyed." 
 
 American Journal of Sociology. 12: 241-53. September, 1906. 
 
 Municipal Ownership and Operation ; the Value of Foreign 
 
 Experience. Leo S. Rovve. 
 
 A final financial lesson, of a negative rather than of a positive 
 character, relates to the policy to be adopted in fixing the cost 
 of service to the consumer. It has been pointed out time 
 and again that the industries usually referred to as public-service 
 industries occupy an exceptional position because of the special 
 franchises or privileges necessary for their operation. While 
 
12 SELECTED ARTICLES 
 
 this is true, a far more important fact is often lost sight 
 of — namely, that these industries are capable of subserving 
 certain broad social purposes, and that it is within the power 
 of the municipality so to adjust the cost of service that these 
 larger social ends will be attained. It is one of the common- 
 places of social economy that the transportation service is the best 
 means of relieving congestion of population, and that the gas sup- 
 ply can be made one of the most effective means of influencing 
 the habits and customs of the people. In the transportation 
 service the plan adopted in most of the large European munici- 
 palities has been to adjust the fares under a zone tariff, thus 
 increasing the cost of service with the increase in the length of 
 ride. Although this has given satisfactory financial results, it 
 has prevented the municipalities from performing their greatest 
 service to the social well-being of the community, namely, 
 to induce the population to move into outlying and less-con- 
 gested sections of the city. It is true that the uniform fare of 
 our American cities is unnecessarily high, and is no doubt a 
 considerable tax on the short-distance passenger, but it is a tax 
 which ultimately redounds to the social welfare of the community 
 in contributing to that more equal distribution of population so 
 necessary to the social advance of the community. In this mat- 
 ter of the adjustment of transportation rates to the attainment 
 of social ends, German municipalities are considerably in advance 
 of the English, but they have all much to learn from the condi- 
 tions prevailing in our American cities. 
 
 As regards the gas supply, it is evident that a reduction in 
 the price of gas so as to permit the substitution of the gas-stove 
 for the coal-stove is certain to have a far-reaching influence 
 on the diet of the poorer classes. In this respect the British 
 municipalities have done splendid service. The readiness with 
 which food is heated on the gas-range, as compared with 
 the effort to start a coal-tire makes it possible to introduce a far 
 larger proportion of, warm cooked food into the workingman's 
 diet. The little that has been done in this direction is sufficient 
 to show the tremendous power of the city in furthering social 
 w-elfare. 
 
 These are but a few of the many instances in which the 
 
^lUXICIPAL OWNERSHIP 13 
 
 municipality, in the management of its public-service industries, 
 is able profoundly to influence the industrial efficiency, the social 
 welfare, and the general well-being of the community. European 
 municipalities have all begun to appreciate the power which they 
 can wield in this way. Although the sum-total of actual achieve- 
 ment is somewhat meager, the general principle involved is one 
 of the greatest moment ; the full import of which we have 
 but begun to appreciate in the United States. 
 
 Whatever lessons may be drawn from foreign experience — 
 and they are numerous and important — no one will contend that 
 this experience can do more than throw an interesting sidelight 
 on the problems that confront our American cities. The final 
 choice between private and public ownership and operation must 
 be made on the basis of our own peculiar conditions. In this 
 choice, factors which are entirely absent in European countries 
 will play an important part. We must recognize, in the first 
 place, that the attitude of the American people toward the city 
 is totally different from that which prevails in the countries of 
 Europe. With us city government is a negative rather than a 
 positive factor. We look to it for the protection of life and 
 property, but it is with considerable reluctance that we accept any 
 extension of function beyond this limited field. In Europe, on 
 the other hand, the city is a far more positive factor in the life 
 and thought of the people. As new needs arise, the inhabitant 
 of the European city looks to the community in its organized 
 capacity for the performance of each service. With us in the 
 United States the presumption is against any extension of 
 municipal functions, and it requires considerable pressure to 
 induce the population to accept an increase in municipal powers. 
 
 Engineering Magazine. 31: 741-3. August, igo6. 
 
 ^Municipal Ownership of Engineering Utilities. 
 
 Everett W. Burdett. 
 
 In view of the present spirit of unrest and discontent regard- 
 ing the operation of public utilities in the United States, leading 
 to the agitation for municipal ownership of enterprises hitherto 
 
14 SELECTED ARTICLES 
 
 mostly conducted by associations of private capital, the thoughtful 
 address delivered before the National Electric Light Association 
 by Mr. Everett W. Burdett demands attention. 
 
 Mr. Burdett admits that there has been good reason for 
 adverse criticism, and refers to the manner in which, in certain 
 instances, there has been just objection to the manner in which 
 corporate organizations have abused the confidence which has 
 been placed in them. This, however, is but one side of the 
 question, and the other side should be given fair consideration, 
 before the advisability of transferring the control of public 
 utilities to municipal control should be conceded. 
 
 "Forgetting the beneficent results which have been obtained 
 only through the accumulation of great wealth derived from 
 corporate organizations, the dissatisfied citizen sees only the 
 abuses of financial and corporate power of which he has 
 been, or imagines himself to be, the victim. The very word 
 'corporation' has come to have an opprobrium of its own. 
 
 "And yet, of course, this wholesale distrust and condemna- 
 tion of wealth and corporate power is unreasonable. It loses 
 sight of the fact that we are unable to assert from what other 
 source the people at large would have derived the blessings 
 which have come from the establishment and maintenance of 
 the almost countless hospitals, libraries, colleges, parks, museums 
 and special funds for the encouragement of learning, the pro- 
 motion of science, the reward of courage and endeavor, and 
 the various other beneficent uses for which they have been estab- 
 lished and maintained by private wealth, largely derived from 
 corporatioins. They forget that it has been only by the uniting 
 of the funds of the rich and the savings of the poor in corporate 
 organizations that the country has been developed by the estab- 
 lishment and exploitation of numberless forms of industrial 
 enterprises, which have given employment to labor, activity and 
 volume to trade, and a market for all the products of our soil and 
 all the talents of our people. 
 
 "In electrical enterprises the central station electric lighting 
 investment in the United States alone already aggregates 700 
 million dollars, involving an annual operating expense of nearly 
 
MUNICIPAL OWNERSHIP 15 
 
 or quite 100 millions, distributed among all classes of workmen 
 and through every artery of trade. The census reports show 
 that in the single year 1904 there was an output of new electrical 
 apparatus of the value of more than 150 millions. There are 
 nearly 5,000 central electric lighting stations. There are 23,000 
 miles of electric railway, carrying each year over 5,000 million 
 passengers. A network of nearly 300,000 miles of steam railroad 
 gridirons the country, transporting upward of 750 million pas- 
 sengers annually. Spoken words are transmitted through more 
 than five million miles of wire, by the use of more than three 
 million telephones, by which more than 5,000 million messages 
 are transmitted yearly. 
 
 "All these wonders we owe to corporations. They have given 
 free play to tWe enterprise and individual energy of our people, 
 and have made that enterprise and energy vastly more powerful 
 and effective than it otherwise could possibly have been. They 
 have enabled the man of small means to do a part of the world's 
 work by joining his savings with the capital of his wealthier 
 neighbor. They have encouraged thrift and the spirit of invest- 
 ment. They have advanced civilization and brought to every 
 man's door the diversified products of our own and other coun- 
 tries." 
 
 Mr. Burdett calls attention to the fact that the principal 
 beneficiaries of the development of corporate organizations 
 have been, not the organizers, managers, and stockholders of 
 these enterprises, but the general public, and that the community 
 at large has obtained vastly greater benefits from corporate enter- 
 prise than have those whose money has made them possible. A 
 comparison of dividends paid with services rendered shows the 
 truth of this statement, and demonstrates that the tax-gatherer, 
 the employe, and the general public have each and all reaped 
 rewards vastly greater than have been realized by the stockholders 
 in the enterprises. The existing widespread agitation for the 
 municipal ownership and operation of public utilities may 
 really be attributed to the influence upon the popular mind of 
 the widespread dissatisfaction and resentment occasioned by the 
 abuses of great wealth and corporate facilities. To this must 
 be added the skilful use of this dissatisfaction by politicians,. 
 
i6 SELECTED ARTICLES 
 
 seeking to turn public opinion to the advancement of their own 
 ends. 
 
 'Tn pointing out the fallacy of adopting municipal ownership 
 in the United States on the strength of its alleged successes 
 abroad, the first thing which is to be suggested is the danger 
 which always Hes in the offhand adoption of foreign methods, 
 laws or practices in another country. It can seldom be done suc- 
 cessfully. Differences in political, economic or social conditions 
 almost always exist which render the transplanting of the cus- 
 toms or methods of one country into another inexpedient. 
 
 "As contrasted with American municipal service, that abroad 
 is less political and more business-like in its character, more 
 certain in its tenure, more continuous in its service and more 
 disinterested in its activities. Its desirable features are not only 
 secured and protected by law, but are demanded by public senti- 
 ment. While the raw material is perhaps as good or better in 
 the United States than in the European cities, it is handicapped 
 in its efficiency by its political character and the uncertainty 
 of its tenure. The American municipal servant never knows 
 how long he is to be permitted to hold his place and is subject 
 to constant changes in policy and supervision. The only thing 
 he can be reasonably sure of is that his head will ultimately 
 drop into the basket. This system, for system it has come to be, 
 may perhaps prevent dry rot and some of the evils of bureau- 
 cracy, but it is at the expense of efficient public service." 
 
 An examination of the operation of municipal ownership 
 in Great Britain does not give positive assurance as to the suc- 
 cess or failure of the system in the United Kingdom. In some 
 instances, in electric lighting, for example, a little more than 
 one-half of the municipal undertakings have showed a profit, 
 while a much larger proportion of private enterprises have been 
 found profitable. It is not by financial returns alone, however, 
 that a system is to be judged. A well managed system shows 
 its efficiency by the extent and nature of its development, by the 
 completeness of the public service rendered, and by the real 
 additions to the wealth of the community which are effected 
 by its operation. Judged by this standard the operation of such 
 utilities as electric lighting, telephone service, electric power 
 
MUNICIPAL OWNERSHIP 17 
 
 distribution, and the like, by municipalities, cannot compare in 
 efficiency with the work of private corporations. In support of 
 this view Mr. Burdett refers to the action of the Institute of 
 Electrical Engineers to endeavor to overcome the restrictive 
 action of local authorities upon the development of the electrical 
 industries in Great Britain. 
 
 "The remedy for existing conditions must come from both 
 within and w^ithout. The companies interested, the public au- 
 thorities and the public at large must each contribute to the 
 solution of the problem. None of them can or will be w'holly 
 effective without the others. Human nature is such that it can 
 not be trusted to regenerate itself, public clamor is frequently 
 ineffective, while enactments of the legislature can not accom- 
 plish all that is desired. 
 
 'Tn the first place, the companies engaged in furnishing 
 public services must, in their own interests, strive more and 
 more to give good service at fair rates. While they can not 
 all avail themselves of the advantages of the legal so-called slid- 
 ing scales, they can hope for the best results only along the line 
 of the theory of the sliding scale. In my judgment, the time 
 has gone by, if it ever was, when extortionate rates and 
 wretched service will promote the interests of the corpora- 
 tions. He who serves the public best serves his company 
 best. Patience and a spirit of conciliation, and a real desire 
 to increase facilities and reduce charges as rapidly as consist- 
 ent with such management, will ultimately bring their rewards 
 in the form of increased earnings and larger dividends. And 
 when the public, in any given community, comes to see that, 
 notwithstanding the mouthings of the demagogue and the 
 agitator, it is being fairly treated by the corporations, its ob- 
 jections to large and increasing returns upon invested capital 
 will gradually disappear. 
 
 "Next : the abuses of great wealth and corporate privileges 
 to which I have alluded must cease, or at least be greatly 
 mitigated. Self-interest must realize the fatality of a con- 
 tinuance of the abuses involved in gross over-capitalization, 
 poor service, high-prices, discrimination among consumers and 
 
i8 SELECTED ARTICLES 
 
 above all the attempt to control the law-making power for 
 purely selfish ends. 
 
 "Third : Public sentiment must be cultivated. The one great 
 need in the economic world, is popular education along sound 
 economic lines. Let us no longer leave the exploitations of 
 vital economic principles to the visionary or the doctrinaire, 
 on the one hand, or to the irresponsible politician or sel'fisH 
 agitator, on the other. A real campaign of education is what 
 is needed, a broad, comprehensive, intelligent, persistent, ag- 
 gressive and well-directed campaign, which shall leave nothing 
 in reason undone to spread sound economic doctrines. So far 
 as self-interests enter into it, let it be an enlightened self- 
 interest, having in mind the rights of all; let it be devoted 
 to the fundamental proposition that all members of the com- 
 munity are bound together in such intimacy of relation that 
 no member can ruthlessly injure another without ultimately 
 feeling the recoil upon himself. 'Live "and let live,' should 
 be the motto." 
 
 Outlook. 80: 266-8. June 3, 1905. 
 
 V Municipal Ownership. 
 
 The problem on which the American people are thinking 
 more or less clearly and definitely is this : Where is the 
 line to be drawn between those industries which the munici- 
 pality should control and those which should be left to indi- 
 vidual ownership and administration? Without attempting to 
 answer that question, we here suggest three principles by 
 which the thinker may be guided in seeking a sane and rational 
 conclusion : 
 
 L We are not to go back. Industries which are now 
 controlled with fair measure of success by the municipality 
 ought not to be abandoned by the municipality and turned over 
 to public service corporations. The city of New York has 
 built and owns a water system, and has carried it on for 
 years with fairly satisfactory results. No consideration should 
 induce it to consider the proposition to turn over the control 
 of its water supply to private owners. This proposition, made 
 
MUNICIPAL OWNERSHIP 19 
 
 on behalf of thq notorious Ramapo Water Company, was suc- 
 cessfully resisted, but not without a battle. New York for 
 years owned and controlled its streets. In order to secure 
 greater convenience of transportation, a few years ago it allowed 
 a private corporation to build a second-story street and own 
 and control it. It allowed another corporation to acquire 
 a quasi ownership and a practical control of the center of 
 its great avenues. It never ought to have done this. It has 
 not allowed a private corporation to own its great subway, 
 and no impatience for immediate convenience should tempt it 
 to allow its future subways to become private property. It 
 should own and control its highways, whether under the ground, 
 on the ground, or above the ground ; and if it allows the 
 system of transportation on these streets to be administered 
 by private corporations, it should keep that administration sub- 
 ject to governmental supervision and control: 
 
 11. There is a very simple and a very clear distinction be- 
 tween those industries which are carried on by individuals for 
 individuals, and in which, therefore, competition will probably 
 be maintained, and those industries which are of necessity 
 carried on by one great organization for the community as 
 a whole, and in which, therefore, competition cannot be main- 
 tained. The bakers and butchers and tailors and shoemakers 
 belong in the first category; the water supply, lighting, and 
 transportation belong in the second. If the baker furnishes 
 me poor bread, I can go to another baker ; but if the gas 
 company furnishes me poor gas, I cannot go to another gas 
 company. If my shoes pinch my feet, I can try another shoe- 
 maker ; but if the trolley line puts on so few cars that I 
 have to hang on to a strap in my daily trip between my 
 home and my office, I cannot try another trolley line. 
 
 Are there, not, the reader may ask, a beef trust, and a 
 sugar trust, and something very like a coal trust? Yes. But 
 municipal ownership furnishes no remedy for these combina- 
 tions. That must be sought in State or Federal legislation. If 
 the city were to take over all the butcher shops, it would 
 still have to buy its meat of the beef trust. Again, the reader 
 may ask : If the gas company charges too much or furnishes 
 
20 SELECTED ARTICLES 
 
 inferior gas, can we not charter a competing company? if 
 the trolley line gives poor service, can we not give a franchise 
 to a rival line? The answer is, No! History has demon- 
 strated the truth of the economic aphorism. Where combina- 
 tion is possible, competition is impossible. The gas companies 
 combine under one management, or divide the city into dis- 
 tricts, and leave the individual no option but to take gas from 
 his district company. The street has already been given to 
 one trolley line, and cannot be given to another. And if a 
 rival line is built to parallel it, the two soon combine, if not 
 under one management at least in one policy. 
 
 Speaking broadly, then, there are in the city certain natural 
 monopolies. Water, lighting, transportation, are illustrations. 
 The city is not called upon to undertake all industries, nor all 
 that are necessary to human well-being. It need not open 
 city bakeries and groceries. But it may well take over the 
 natural monopolies. That is, it may well undertake the ex- 
 periment of doing for itself those things which are necessary 
 to the welfare of the city as a whole, and in which, therefore, 
 practically all the citizens have a common interest, and which, 
 in the nature of the case, must be done by one corporation, 
 either private or public. 
 
 III. There is also a simple and clear line of distinction 
 between ownership and administration. The city may both own 
 the plant and administer the industry, or it may own the 
 plant and allow private enterprise to administer the industry 
 subject to governmental rules and regulations. If the city ad- 
 ministers the industry, it must employ a large number of men 
 and disburse weekly large sums of money; and in the present 
 state of public morals this involves some public peril. The 
 apprehension of this peril constitutes the most common argu- 
 ment against municipal ownership ; but it is really only an 
 argument against municipal administration. If the city owns 
 the plant and permits private enterprise to administer the in- 
 dustry, neither such employment nor such disbursement by the 
 city is involved. The city of New York owns the subway, 
 and this ownership enables it to exercise a certain supervision 
 and control over the administration of the subwav. But this 
 
MUNICIPAL OWNERSHIP 21 
 
 ownership involves no considerable addition to its pay-roll and 
 gives no considerable increased political control to the party 
 in power. So it may own the gas plant or the telephone plant 
 and lease the right to operate for a term of years. Does the 
 reader satirically remark, "Philadelphia !" We have not for- 
 gotten Philadelphia. But the difficulty in that city is not pri- 
 marily due to the fact that the city has a gas plant to lease ; 
 it is primarily due to the fact that Philadelphia has long 
 suffered from an unscrupulous and corrupt political ring on 
 the one hand, and a somewhat self-complacent and very apa- 
 thetic content among the citizens on the other ; until now the 
 city is so bound hand and foot that it is difficult to untie 
 the knots with celerity and perilous to cut them by a revolution. 
 The question of municipal administration of municipal in- 
 dustries we reserve for future consideration. In our judgment, 
 the political peril involved in such administration is less than 
 the political perils in which we are already involved from having 
 public service corporations which, on the one hand are eager to 
 get special advantages from the Legislature, and, on the other 
 hand, are subjected to blackmail by corrupt legislators. Xh^ 
 cor ruption in our publi c, schools and in our Water and Fire 
 and Street Cleaning Departments does not compare with the 
 corruption traceable to the connection of public service cor- 
 porations and municipal governments in our lighting and our 
 trolley systems. But the two questions of municipal ownership 
 and municipal administration are distinct in fact, and should 
 be kept distinct in our thinking. 
 
 We submit, then, these three principles to the consideration 
 of any of our readers who are pondering the problem of mu- 
 nicipal ownership: i. Do not permit the city to lose a control 
 which it now possesses. 2. In extending control, extend it 
 over natural monopolies — that is, over those industries which 
 serve the city as a whole and which experience proves must 
 necessarily come under a single control. 3. Keep clearly in 
 mind the distinction between ownership and administration. 
 First let each city secure municipal ownership. Even if it is 
 not ready also to assume municipal administration, it should 
 not grant any long-time lease ; for it should not estop itself 
 
22 SELECTED ARTICLES 
 
 from considering the question of municipal administration when- 
 ever it finds private administration of a public service, for any 
 reason, unsatisfactory. 
 
 Nation. 82: 441-2. May 3, 1906. 
 
 Municipal Ownership Investigators. 
 
 There is little doubt that English experience will be made 
 to support both sides of the argument with equal conclusive- 
 ness. . . . One investigator will observe the London County 
 Council's steamboats plying on the Thames, and will say, 
 "What geese Americans are not to insist that their cities own 
 every ferryboat !" Another will look into the complaints of 
 poor service by the same boats, will scan the balance sheet 
 which shows that they have been run at a great loss, and 
 will say: "Heaven deliver us from such disastrous experiments." 
 So of municipal tramways in Manchester, city electric lighting 
 in Birmingham, Government-controlled telephones, and so on. 
 Their bad and good points will be vociferously and contra- 
 dictorily explained to the American people, who will be expected 
 to be made thereby wise unto their political salvation. 
 
 We by no means wish to disparage the investigation. The 
 investigators at least will learn something. And if they offer 
 us divided counsels, the inference that the whole matter is com- 
 plicated with difficulties will not be without its uses. We al- 
 ready have a sort of advance agent of investigation in the 
 person of Everett W. Burdett of Boston, whose paper on "Mu- 
 nicipal Ownership in Great Britain" is published in the Journal 
 of Political Economy for May.* Preliminary extracts from it 
 vexed the righteous souls of the municipal-ownership enthusi- 
 asts in Chicago. But they could not suppress Mr. Burdett's 
 article, as they did the famous Dalrymple report; here it stands 
 in its 56 pages of type. 
 
 Its most valuable part is the statistical information which 
 Mr. Burdett has amassed. His arguments may be combated and 
 his applications parried, but his facts must be at least chewed 
 
 *See portions of Mr. Burdett's article given in this handbook. 
 
MUNICIPAL OWNERSHIP 23 
 
 and digested. We can all draw inferences — even a horse can, 
 as the farmer said, if he "gets a good hitch." But the facts 
 and figures we are to hitch to must first be provided; and 
 those which Mr. Burdett presents are very much what was 
 needed. Some things they put beyond reasonable dispute. 
 Whatever else may be said of the policy of government own- 
 ership of electric lighting, power, and traction, English and 
 Continental experience shows that it has a hampering effect 
 upon the development of the electrical industry, and that the 
 practical extensions in the way of public service are not 
 nearly so great as in this country. Mr. Burdett's summary is : 
 "The United States, with less than double the population of 
 Great Britain, has six times the amount of apparatus installed 
 for furnishing electric light and power, sixteen times as much 
 for electric traction, twenty-three times as many miles of 
 electric railway, twenty-six times as many motor cars, and five 
 and one-half times as much money invested in such enterprises." 
 Such differences are, of course, to be explained in part by 
 differences in extent of area and in the distribution of popula- 
 tion and in national customs, but the salient fact remains well 
 established. Governments, like monopolies, are not enterprising. 
 They do not encourage invention because they do not offer 
 the great stimulus of a big money prize to either inventor or 
 promotor. On the other hand, relieved of the pressure of com- 
 petition, they are not forever turning, as private investors and 
 corporations are, to plans for reducing the cost of production 
 and improving while cheapening the public service. Hence the 
 result which jMr. Burdett's studies set forth so impressively: 
 quite aside from the debate about policy and cost, municipal 
 ownership in Great Britain appears to be demonstrably sluggish 
 in taking up with new processes and in venturing upon en- 
 largements of the service looking far into the future. A city- 
 owned trolley-line, for example, would not push out into the 
 thinly-peopled suburbs — such an extension would not immedi- 
 ately pay. But a private corporation could afford to wait 
 for returns; while its directors, by means of real-estate specu- 
 lation along the suburban lines, would see their way to making 
 a great deal of money. Americans may be bled by corporations, 
 
24 SELECTED ARTICLES 
 
 but they at least get the service. Englishmen may or may not 
 have to pay more for their municipally owned utilities — the 
 actual cost is in dispute — but they confessedly suffer from what 
 Mr. Burdett calls "the inertia and lack of business enterprise 
 which are inseparable from municipal ownership." 
 
 If the Government is a fool and the corporation a knave, 
 what woods are we to take to. Reform your governments, say 
 some, and make them pure enough and capable enough to under- 
 take municipal operation. Short of that millennium, however, 
 there are those who would be content if our governments 
 could be made pure enough and wise enough to regulate public- 
 utility corporations. That would not at once open heaven to 
 us, but it would make earth a little more comfortable ; and it 
 would give the people more for their money, while at the 
 same time stimulating inventive genius and managing talent 
 by giving them more for their brains. 
 
 Annals of the American Academy. 29: 275-91. March, 1907. 
 
 Public Regulation of Street Railway Transportation. Edmond 
 
 R. Johnson. 
 
 Comparison of Municipal and Private Ownership. 
 
 In the United States, street railways, with the exception of 
 certain subways, are owned by private companies. In Europe, 
 although the majority of the street railway enterprises are still 
 owned by corporations, the tendency is towards the purchase 
 and operation of the tramways by city governments. The suc- 
 cess that has attended municipal ownership and operation has 
 been such as to lead some persons to conclude that all cities, 
 both European and American, might advantageously adopt the 
 policy of municipalization of the street railway service. 
 
 In Great Britain the street railway service during the decade 
 following 1890 was generally unsatisfactory. This was in part 
 due to the fact that the Tramways Act of 1870, by which fran- 
 chises were limited to periods of twenty-one years, foreshadowed 
 a policy of municipalization of the private lines. When the 
 time came for changing from horse to electric traction, the 
 
MUNICIPAL OWNERSHIP 25 
 
 private companies generally neglected the service, with results 
 
 that are well stated in the following quotation taken from the 
 
 minutes of the Plymouth, England, Town Council : 
 
 The main objects of the corporation in purchasing the tram- 
 ways were to get rid of the company management, which had 
 failed to give the public an effective tramway service and which 
 had exhibited so considerable disregard of public inconvenience 
 and remonstrance, and in the second place the direction and 
 control of the policy of the tramway extension in the hands of 
 the* council as representing the general body of ratepayers, for 
 the general benefit of the borough, instead of leaving the tram- 
 way system to be developed and extended for the purpose of 
 securing profits to shareholders without regard to local necessities. 
 
 The main advantages of municipal ownership and operation 
 are : 
 
 (i) The possibility of low fares and of adjusting fares with 
 reference to the most advantageous distribution of population. 
 
 (2) The ability of the city to regulate the wages and hours 
 of labor of the street railway employees. ' 
 
 (3) To secure to the city the increasing profits resulting! 
 from the growth of population and traffic. 
 
 Assuming that a municipal government is honest and is 
 able to manage the street railway service efficiently, the ad- 
 vantages of municipalization are manifest. There are, however, 
 certain dangers connected with municipal ownership and opera- 
 tion even under the favorable conditions prevailing in the cities 
 of Western Europe : 
 
 1. There is the liability that municipal debts may be greatly 
 increased and that the cities may be so desirous of reducing 
 street railway fares as to neglect to provide for the payment 
 of the railway debt within the proper period. 
 
 2. Writers opposed to municipalization claim that the city is 
 more liable than private corporations are to allow the track 
 and equipment to depreciate, and to neglect the construction of 
 new tracks extending the lines into unoccupied suburban regions. 
 
 3. It is also claimed that the municipalization of street rail- 
 ways will restrict the construction of interurban electric lines, 
 for the reason that each city will be disposed to confine its 
 lines to the region within its own limits, and that, having 
 done so, private companies will not find it profitable to con- 
 struct lines connecting the cities. 
 
2(i SELECTED ARTICLES 
 
 * 
 
 European cities have so recently adopted the policy of munic- 
 ipahzation of street railways that it is too early to determine 
 what their policy will be as to the payment of the debts incurred 
 in buying out the corporations or in constructing new lines, or 
 what their policy will be regarding the maintenance of their 
 track and equipment, and whether they will extend their systems 
 with adequate rapidity. In general, it may be said that ,the 
 British and Continental cities have thus far dealt satisfactorily 
 with these questions. Whether municipalization will hinder the 
 construction of interurban lines remains to be seen, but it seems 
 pfobable that this may prove to be a somewhat important con- 
 sequence of municipalization. 
 
 The success that is attending the purchase and operation of 
 street railways by foreign cities argues but little for such a policy 
 for American cities. The condition of municipal government in 
 the United States is such as to discourage the ownership and 
 operation of street railways by public authorities at the present 
 time. For the United States the policy for some time to come 
 should be one of public regulation rather than one of public own- 
 ership and operation. 
 
 The Street Railway Problem in the United States. 
 
 The adjustment of the relations of the public authority to the 
 street railway transportation service is a problem comprising the 
 regulation of the provisions of the charter and franchise granted 
 to the company, the regulation of the capitalization and financial 
 methods of the corporation performing the service, the public 
 supervision of the service, the control of the fares, and the adop- 
 tion and enforcement of wise methods of taxation. This is in- 
 deed a complicated problem, the solution of which has been as 
 yet but partly accomplished. The regulation of the franchises, 
 services and charges of street railways needs to be more detailed 
 than is required in the case of steam railroads, because the street 
 railway service is more completely monopolistic than is the busi- 
 ness of railroad transportation. 
 
 That these facts necessitate a detailed regulation of the street 
 railway service is being increasingly recognized in the United 
 
MUNICIPAL OWNERSHIP 27 
 
 States as shown by the general tendencies discernible in the legis- 
 lation of the states : 
 
 1. There is a tendency to limit the period for which the fran- 
 chises are granted, and to increase the obligations to be met by 
 the companies in order for them to maintain the validity of the 
 franchises they receive from the public. The states are giving 
 the cities power to exact more than they formerly could of the 
 street railway companies, and the cities are showing an increasing 
 disposition to avail themselves of the powers they have received 
 
 .from the states. 
 
 2. The state and municipal control over fares is being more 
 frequently exercised. In several states and in numerous cities 
 efforts are being made to establish an effective public regulation 
 of street railway charges. These eft'orts indicate more clearly 
 than any other movement could the tendency towards a greater 
 exercise of public authority. 
 
 3. There is a growing disposition to tax the franchises and 
 earnings of street railway companies as well as their physical 
 property. The fact is coming to be recognized that taxation 
 levied only on the physical property of street railway companies 
 reaches but a small part of the value possessed by the companies, 
 and that an adequate system of taxation necessitates the taxa- 
 tion either of the franchises or of the earnings of the companies. 
 Moreover, the legal limitations ordinarily placed upon property 
 taxation — that all kinds of property shall be taxed equally — pre- 
 sents another reason for adopting some other basis than physical 
 property for the assessment of street railway companies. In 
 some states the value of the street railway franchise is reached 
 for purposes of taxation by treating the franchises as property 
 and thus avoiding the restrictions of the laws regarding taxation 
 of all physical property. The most convenient and, on the whole, 
 the most practicable method of taxing street railway companies 
 is that of requiring them to turn over to the city annually a liberal 
 percentage of their gross receipts. While the gross receipts tax 
 is not theoretically the most ideal one, the objections to it are 
 not important in the case of the street railway business, and its 
 advantages outweigh the theoretical objections. 
 
28 SELECTED ARTICLES 
 
 The present thought regarding the proper solution of the 
 street railway problem in the United States may be approxi- 
 mately summarized as follows: 
 
 (i) A five-cent fare, with six tickets for a quarter, and a 
 general system of transfers; (2) that the service shall be per- 
 formed by chartered companies, but that each company shall pay 
 to the city a percentage of its gross receipts and be required to 
 pave and sprinkle the parts of the streets occupied by its tracks; 
 (3) that capitalization of the company shall be regulated by pub- 
 lic authority and over-capitalization prohibited ; (4) that fran- 
 chises shall be limited to twenty or thirty years, and that the city 
 should retain the right to purchase at the expiration of this period 
 the property of the company at a fair valuation; (5) that a com- 
 mission or some other public authority shall pass upon the public 
 necessity for a proposed street railway, and regulate the service 
 in the public interest; (6) that the annual reports made to the 
 state and city shall give full information regarding both the 
 service and finances of the company. 
 
 The general problem of the public regulation of street rail- 
 ways has been simplified both by the consolidations that have 
 brought the street railway system in each of the most of our 
 large cities under a single control, and by the recognition on the 
 part of the public of the fact that the street railway service is a 
 monopoly and must be regulated as such. The fact that the 
 street railway service is a monopoly not only necessitates public 
 regulation, but makes possible more efficient public control. The 
 truth of this is well illustrated in Boston, where all the lines, 
 elevated, surface and subway, are operated by a single company. 
 Over-capitalization has been prevented, the fares are being regu- 
 lated, and different parts of the street railway systems are co- 
 ordinated so as to secure a good service in a city where the 
 difficulties of providing street railway transportation were ex- 
 ceptional. What Massachusetts and Boston have done other 
 states and cities can, and doubtless will do. Indeed, hopeful 
 progress is being made in several states, and the successful solu- 
 tion of the "street railway problem" in the United States by 
 public regulation rather than by municipalization seems more 
 than probable. 
 
MUNICIPAL OWNERSHIP 29 
 
 Outlook. 86: 49-51. May 11, 1907. 
 
 ^Problems of Municipal Ownership. '' 
 
 We may accompany this with another general principle. The 
 people, through their government, whether national, State, or 
 municipal, have a right to embark in any business public in its 
 nature and on which the common welfare of the community is 
 depending, provided that they can do it better and cheaper for 
 themselves than they, can hire a private corporation to do it. 
 
 On the other hand, we think it is equally evident from a wide 
 experience that the water-works of a city should never be left in 
 private hands even for temporary operation. The sanitary con- 
 ditions of the city are too dependent upon pure water and the 
 peril from false economies is too great. In w^ater supply, econ- 
 omies are dangerous and extravagance is safe. The city, there- 
 fore, can better afford to pay for a water supply extravagantly 
 administered by the municipality than for a water supply 
 economically administered by private enterprise. In fact, ex- 
 perience shows that whatever economies private enterprise 
 effects rarely diminish the expenditures of the citizens ; they 
 swell the profits of the corporation. What is true of the water 
 supply is true of the school system. No one would propose 
 that the public school buildings should be owned or the public 
 schools operated by private enterprise ; no one would propose 
 to farm the children o ut tq_ tlT e lowp'^t biddpr ; for in public edu- 
 cation as in public Water supply the perils of extravagance are 
 immeasurably less than the perils from excessive economy. 
 
 The practical question respecting m.unicipal ownership relates 
 to public utilities which have generally been carried on in the 
 past by private enterprises and are now being experimentally at- 
 tempted in municipalities, both at home and abroad, by the gov- 
 ernment. These are chiefly the utilities of light and transporta- 
 tion. Should the government own and operate the lighting plants 
 and the street railways? or should it own them and lease them 
 to private corporations for operation? or should it own them and 
 grant a permanent franchise or lease, subject to periodical re- 
 vision of the rent or franchise tax, and exercise over them gov- 
 ernment supervision and control? or, finally, should it leave them 
 
30 SELECTED ARTICLES 
 
 wholly in private hands and subject to private control, and trust 
 to competition for securing efficient service and reasonable rates? 
 In our judgment, no economic thinkers, except a few paid ad- 
 vocates of private enterprises, any longer hold the last of these 
 views. The third of these views is held only as a compromise, 
 because permanent franchises have been granted in the past, and 
 it is not clear how the city can recover the possession of the 
 franchises which it has given away. Except for complications 
 growing out of past legislation, the only practical issue respecting 
 municipal lighting plants and municipal railways is this : Shall 
 they be owned and operated by the city, or owned by the city 
 and leased to private enterprises on measurably short leases for 
 operation? 
 
 We here simply endeavor to state with clearness the issue, 
 without debating it; but our general judgment, considering the 
 political and industrial conditions in this country, is in favor of 
 municipal ownership with private operation on short leases. 
 
 Outlook. 82: 504-11. March 3, 1906. 
 
 Principles of Municipal Ownership. Robert Donald. 
 
 I have now reviewed the attitude which advocates of munic- 
 ipal ownership assume towards the least industrial and commer- 
 cial of communal undertakings. I will now deal with the more 
 industrial, which raise serious contentions. 
 
 What are the principles which should guide municipal action 
 with regard to the larger and more profitable services, including 
 street railways, electricity and gas supplies, telephones, etc? 
 
 The operations of these services cannot, on any intelligent 
 principle, be left to free trade. xA-lmost every American city has 
 started by having several street railway corporations, and more 
 than one electric or gas corporation ; but the irresistible tendency 
 has been for absorptions and amalgamation to take place until a 
 monopoly has been established — a clear indication that the serv- 
 ices come within the domain of natural monopolies. When, how- 
 ever, monopoly is reached through the stress of competition and 
 the operations of graft, the undertakings are greatly over- 
 
MUNICIPAL OWNERSHIP 31 
 
 weighted with capital and burdened and drained by vested inter- 
 ests, progress is retarded, and cheap rates made impossible. The 
 obvious conclusion is that public lighting services which are 
 monopolistic in character should be kept in control by the 
 municipality. It should not allow privileges which the commu- 
 nity creates to pass beyond its power. 
 
 There is little difference between the principles involved, 
 whether the public service franchise is' for gas, electricity, or 
 street railways. Compensation can be granted to the city for gas 
 supplies on two systems : a tax per cubic meter of gas sold, as in 
 Paris and German cities, in which case the money goes to the 
 municipal exchequer and insures the city getting a share in the 
 profits ; or the enforcement of a sliding scale, the operation of 
 which enables the corporation to increase its dividend as it low- 
 ers its price — a system which enables the consumer to benefit. 
 
 The same systems could be applied to electricity supply. 
 Street railway corporations operating under franchise can be 
 made to pay fees either through a percentage of gross receipts 
 or in some other way. 
 
 It is quite feasible and practical for a city in various ways to 
 grant public service franchises, but the system has drawbacks. 
 Social interests enter very largely into the operation of all city 
 services. It is in the interest of the community that light should 
 be as cheap as possible to the poor, and it helps the police to have 
 the streets well lighted. Efificient and cheap transportation has 
 an important influence on health, and promotes well-being. Cor- 
 porations which exist solely for making profits will not, as a rule, 
 risk a fall in their dividends in order to cheapen a commodity 
 or popularize a service. The corporations have always an eye on 
 the end of the franchise period. They regulate their operations 
 accordingly. They cease to introduce new methods, they neglect 
 adequate maintenance, they allow their plant to become dilapi- 
 dated ; and naturally so, as the future is uncertain, and they want 
 recoupment and profit. 
 
 From a theoretical point of view — assuming for the moment 
 that there are no administrative dif^culties — let us see how com- 
 plete municipal ownership and operation would work. Take 
 street railways. The City Council owns the railroad laid down in 
 
32 SELECTED ARTICLES 
 
 its own streets. It can regulate the time of construction so as to 
 be least inconvenient to the people. The routes would be planned 
 also in conjunction with street improvements, clearing of slums, 
 and rehousing the poor. A corporation holding a limited fran- 
 chise has no interest in the permanent development of a suburb. 
 
 The City Council would always adopt the best systems of 
 transportation, as it will live to reap the benefit. It would have 
 some regard to the appearance of its cars. It would be a model 
 employer. Fair wages would be given and reasonable hours ob- 
 served. Its car conductors would be provided with neat uni- 
 forms. They would be smart and civil. The municipality would 
 study the needs of special classes. For instance, there would be 
 cheap cars for workmen, morning and evening. There would be 
 special services to artisan colonies in the suburbs, to parks and 
 pleasure grounds. The citizens would be made to feel in every 
 way that the cars were their cars, and that every cent they paid 
 would go towards the improvement and development of their 
 own co-operative property. A municipal car service can be made 
 an excellent means for stimulating civic patriotism. 
 
 Then the municipal car system would dovetail into the work 
 of other departments. The cars would be run at night to collect 
 city garbage, market produce, etc., and the day load of electricity 
 required for street railways would be welcomed by the city 
 electricity department. 
 
 All these features of a municipal street railway system, which 
 I say are possible, exist in British and Continental cities. But 
 we can imagine a publicly owned street railway service and sub- 
 ways going much further. The system of transportation in a 
 city is an essential element in its life. The better it is, the more 
 it aids business, the more it adds to social amenities. 
 
 In some British cities the average fare is a little over one cent. 
 It is only a step further to socialize the street railways as we 
 have socialized the highways, bridges, and ferries (for the use 
 of which in former years tolls were levied), and introduce free 
 transportation — that is, free in the sense that the use of the 
 streets, maintained out of local taxation, is free, and the use of 
 elevators in high buildings (paid for in the rent of the rooms) 
 is free. I only refer to the Utopia of free travel to emphasize 
 
MUNICIPAL OWNERSHIP 33 
 
 the difference between private and municipal operation of street 
 railways. While it is the aim of all cities of which I know to 
 make their municipal railways self-sus-taining and profitable, 
 there are cases where a city deliberately incurs a money loss for 
 the sake of a social benefit. Huddersfield, a large manufacturing 
 city in Yorkshire, established tramways because companies re- 
 fused to do so, and ran them for years at a loss, for the general 
 benefit to the community. The steep gradients and hilly streets 
 which the cars had to climb made horse and steam traction both 
 unprofitable, but the conformation of the site made transporta- 
 tion facilities all the more necessary. Electric traction has now 
 turned the city car system into a profitable undertaking. In 
 Cologne, Diisseldorf, and other cities, street railways are run 
 several miles beyond their borders to municipal forests at such 
 low fares that loss is incurred. 
 
 The same principles of social benefit arising from cheapness 
 of service should operate in the case of electricity and gas sup- 
 plies. Both services under municipal ownership can be managed 
 on parallel lines by different committees. Under the Scottish 
 municipal code, municipalities are precluded from making profit. 
 The surplus is devoted to reducing charges and improving the 
 services. This system is not yet general, as municipalities prefer 
 to manage their undertakings so as to give a commercial instead 
 of or in addition to a social profit. A commercial profit means 
 that the surplus left after meeting all payments for maintenance, 
 depreciation, interest, redemption charges, etc., is handed over 
 to the relief of local taxation — thus benefiting all taxpayers. 
 When the other system is adopted, the benefit in the form of a 
 cheaper service is confined to consumers. The contrast between 
 the two systems is most striking in the case of street railways in 
 London. In the wealthy and crowded financial center of London 
 and in the rich West End districts tramways are not permitted, 
 yet the rich taxpayers in these areas get a share of relief which 
 comes from the pennies of the poor who use the tramways in 
 other quarters of the metropolis. 
 
 Hundreds of municipalities in Great Britain and in Conti- 
 nental Europe own and manage efficiently both gas and electricity 
 undertakings. One necessary condition for cheapness of produc- 
 
34 SELECTED ARTICLES 
 
 tion is for the municipality to supply all the city, and not merely 
 produce gas or generate electricity for its own requirements. It 
 is economically wasteful, for instance, for the city of Chicago to 
 distribute electricity all over the city only to light the street 
 lamps. 
 
 In Continental Europe the franchise system has existed both 
 as regards gas and electricity, although it is now being discon- 
 tinued. It did not give low charges and did not make for 
 efficiency. The sole object of the concessionary corporation is 
 to reap the richest harvest it can during the period of the fran- 
 chise, without regard to the future of the undertaking or of the 
 city's needs. In Great Britain the franchise system was adopted 
 for electricity supply. All companies were limited by statute to 
 forty-two years, at the end of which period the municipality takes 
 possession on payment of "the then value" of the plant, without 
 compensation for good will or displacement. This system re- 
 tarded development so that most of the companies have been 
 bought up long before the franchise expired, receiving some- 
 times double their capital expenditure. And it has paid the com- 
 munity to give this compensation in order to develop the business 
 and lower the charges. 
 
 Municipal ownership in Great Britain has been more enter- 
 prising than corporation rule ; it has always considered the inter- 
 ests of the whole community, and has invariably meant lower 
 charges for consumers. 
 
 The same principles of public utility which apply to street 
 railways, gas or electricity supplies are applicable to telephones 
 and the distribution of hydraulic power, or any other service 
 which is monopolistic in character. Telephones, while managed 
 successfully by municipalities in England, Norway, Sweden, and 
 Holland, present some difficulties. Localization is not desirable 
 and isolation is impossible. There should be only one telephone 
 system in order to have the best facilities for intercommunica- 
 tion. The telephone service works most smoothly and answers 
 public needs best in European countries where it is a State 
 monopoly under the post-office. With the telegraph system a 
 State monopoly, as is the case throughout Europe, it is an 
 anomaly to have the telephones under separate management. 
 
MUNICIPAL OWNERSHIP 35 
 
 The general principles of municipal ownership will probably 
 find ready acceptance as theories of civic policy, but what about 
 their practical application? It will be pointed out as an initial 
 material difficulty that street raihvay systems, gas and electricity 
 supplies, cannot be limited by city boundaries. They should 
 serve many areas governed by different authorities. Provided all 
 these authorities are animated by the same ideas of civic policy, 
 the difficulties disappear; working arrangements mutually bene- 
 ficial are entered into, or joint services are established, and 
 parochialism gives place to a wider civic patriotism, which recog- 
 nizes larger communal interests. As a matter of fact, the large 
 cities in England serve their smaller neighbors with water and 
 gas, and are now beginning to do so more and more with street 
 railways and electricity. 
 
 The most powerful and convincing arguments urged against 
 municipal ownership are not, however, advanced on practical but 
 on moral and political grounds. Let the municipality extend its 
 activities and you enlarge the opportunities for patronage. Add 
 to the number of public employees and you swell the power of 
 the party boss. Give the municipality more money to spend in 
 contracts and supplies and you widen the doors for grafters. 
 Municipal ownership, in fact, means more politics, more cor- 
 ruption, more dishonesty in public life, and more power in all 
 elements which degrade a city and demoralize a people. These 
 are the last words, the final crushing arguments, of the anti- 
 municipalists. They apply only if we grant one large assumption 
 and make a humiliating confession. If we take it for -granted 
 that the evil elements in a community are permanent, that corrup- 
 tion will forever triumph, that politicians will more and more 
 make public plunder their business, that the sense of citizenship 
 and the moral conscience of the Nation will continue to wither 
 and fade, then the case against municipal ownership is complete, 
 just as it is against every form of good government. 
 
 If, on the other hand, we have still faith in the moral regen- 
 eration of the people, still believe that purity in politics and 
 public life is possible, then municipal ownership is the greatest 
 and final means of reform. It is radical; it goes to the root of 
 the matter and gets rid of the mainspring of corruption. Graft- 
 
36 SELECTED ARTICLES 
 
 ers, corrupt politicians, and all the other parasites who now live 
 by plunder could not exist if there were no franchises to sell, no 
 contracts to give out. Let the cities keep their franchises, oper- 
 ate municipally their undertakings, and the chief source of cor- 
 ruption and the means of temptation will disappear. So long as 
 corporations and contractors are mixed up in city administration 
 so long will the tempter be there, and grit will interfere with 
 the smooth working of the municipal machinery. 
 
 But, it may be urged, admitting that one evil is eradicated, 
 others are more strongly intrenched. The patronage which falls 
 to the City Council is increased and the power of the city em- 
 ployee is greater — both dangers from which we now suffer. 
 Having extinguished the tempter, the next step is the moraliza- 
 tion of the 'city councilor and the purification of the civil service 
 — neither impossible reforms. The city councilor has long since 
 been discovered in Germany and Great Britain who is prepared 
 to serve his city without any ulterior motive — ready to give his 
 ability and his time freely and honestly to the service of the peo- 
 ple. He is making his influence felt in the United States ; and 
 without this public-spirited servant, animated by a sense of 
 citizenship.' who subordinates all selfish aims, municipal owner- 
 ship cannot succeed. 
 
 Its success also means that a permanent civil service for cities 
 must be organized above party and solely on merit, which only 
 involves an extension of the system which has been introduced 
 successfully in various departments of the United States Govern- 
 ment. • 
 
 While this political danger from the city's employees is always 
 heard of. nothing is said of the much more serious influence of 
 the corporation directors, lawyers, and stockholders. The politi- 
 cal dangers feared from an army of municipal employees have 
 never yet been apparent in British cities. To begin with, the 
 workers benefit doubly by municipal ownership — they share in its 
 general advantages and receive just treatment, for a municipality 
 must always be a model employer. Then the interests of the 
 city's employees are divergent. Workers in various departments, 
 while having the same employer, have not common interests. 
 Combination among all is not practicable. In the most developed 
 
MUNICIPAL OWNERSHIP z7 
 
 of British cities, where every public utility service has been 
 municipalized, the municipal employees have not proved a serious 
 factor at election times, partly from the reason that they are too 
 good citizens to attempt a systematic and combined campaign 
 which would lead to reaction, and also partly from the fact that 
 a large proportion of them live outside the borders of the munic- 
 ipality which they serve. Were combined action ever attempted 
 against a common municipal employer, such a foolish proceeding 
 would lead to the drastic remedy of disfranchisement, just as the 
 civil servants in Washington are deprived of their votes, al- 
 though not for the same reason. The interests and well-being 
 of the whole body of citizens would always preponderate over 
 the action of the city's employees, who must always be a com- 
 paratively insignificant minority. 
 
 There are those who will admit the whole of these premises, 
 but still only regard the system as an ideal to be reached in the 
 far future. Such would argue that the time is not now opportune ; 
 we must go through a transition period ; we could not get honest 
 officials ; we could not trust the people yet ; they do not know 
 how to use their votes. The enemies of reform always fly to dis- 
 trust of the people. The same reasons were advanced for with- 
 holding votes from agricultural laborers in England. They 
 would not, it was said, know how to use them. They could not 
 be trusted. People will never learn how to use political privi- 
 leges until they get them, and, similarly, people will never know 
 how to run municipalies under municipal ownership until they get 
 the opportunity. There will at first be a period of stress, trial, 
 and turmoil, when loyalty to the people's cause will be strained, 
 when the old system will strive hard for mastery. This experi- 
 ence is gbne through before all great reforms are finally estab- 
 lished, and has been successfully weathered by loyal service and 
 steadfast courage. 
 
 Municipal ownership, it should be borne in mind, withdraws 
 from public life the influence of the stockholder, who, when he 
 goes to the poll, has conflicting aims to consider — his position as 
 a citizen and his interest as a stockholder. When the city keeps 
 its franchise and operates its undertakings, it becomes an in- 
 dustrial commonwealth, as far as public works are considered. 
 
38 SELECTED ARTICLES 
 
 with all the citizens as its stockholders. Once the barrier is past» 
 once the new civic regime is inaugurated, the citizens will not 
 be so short-sighted as to damage their own property. Those of 
 them who hold city stock, bearing its moderate but certain return, 
 will not like its value depreciated. They will prefer to see their 
 city's credit stand well in the market. All other citizens are also 
 partners in the co-operative undertakings which they use them- 
 selves or derive benefit from. As good citizens they will do 
 nothing which is likely to impair the efficiency of their co- 
 operative enterprises. Rather they will seek to develop them 
 within their legitimate sphere, and widen the benefits which they 
 confer on the people. 
 
AFFIRMATIVE DISCUSSION 
 
 Arena. 34: 645-6. December, 1905. 
 
 Fifteen Reasons Why the People Should Own Their Own Public 
 
 Utilities. Frank Parsons. 
 
 1. A public plant does not have to pay dividends on watered 
 stock. 
 
 2. It does not have to pay dividends even on the actual in- 
 vestment. 
 
 3. It does not have to retain lobbyists, or provide for the 
 I entertainment of councilmen or legislators or subscribe to cam- 
 paign funds, or bear the expenses of pushing the nomination and 
 election of men to protect its interests or give it new privileges, 
 or pay blackmail to ward off the raids of cunning legislators and 
 officials, etc. 
 
 y 4. It does not have to advertise or solicit business. 
 
 5. It is able to save a great deal by combination with other 
 departments of public service. Speaking of the low cost of elec- 
 
 J trie light in Dunkirk, the mayor of the city says: "Our city owns 
 its water-plant, and the great saving comes from the city's own- 
 ing and operating both plants together." 
 
 6. Full public-ownership (that is, public-ownership free of 
 debt) has no interest to pay, 
 
 7. Even where public-ownership is incomplete, the people 
 not owning the plant free of debt, they still have an advantage in 
 respect to interest, because they can borrow at lower rates than 
 the private companies have to pay. 
 
 8. As cities usually act as their own insurers, public-ownership 
 is free of tribute to the profits and agency-commissions of private 
 insurance companies. 
 
 9. There is often a large saving in salaries. A public plant 
 pays its chief well, but does not pay the extravagant salaries 
 
40 .SELECTED ARTICLES 
 
 awarded by millionaire, monopolists to themselves or their sub- 
 stitutes in office. 
 
 ^ 10. Public plants frequently gain through the higher ef- 
 ficiency of better treated and more contented labor. 
 
 11. The losses occasioned by costly strikes and lockouts do 
 not burden the ledgers of public works. 
 
 12. Damages and costs of litigation are likely to be less with 
 public than with private works. Accidents are fewer in a system 
 that aims ;it good service and safety, and treats its employes well. 
 
 '- 13. The civic interest of the people leads to other economies 
 through the increase of patronage and the lessening of waste. 
 The larger the output, the lower the cost of production per unit 
 of service, other things equal, and the tendency to waste elec- 
 tricity, water, etc.. is much less when the people know that the 
 service is a public one, the profits of which belong to them, than 
 when they know that the service is rendered by a private cor- 
 poration charging monopoly rates and making big profits for a 
 few stockholders. These economies are intensified as education 
 and experience with public-ownership develop the understanding 
 and the civic patriotism of the people. 
 
 14. The cost of numerous regulative commissions and in- 
 terminable legislative investigations into the secrets of private 
 monopolies would be saved by the extension of public-ownership. 
 
 15. Legislation would cost us less were it not for the private 
 monopolies. For a large part of the time and attention of our 
 legislatures is given to them. 
 
 Nebraska State Journal. May 12, 1907. 
 
 Municipal Ownership. W. A. Selleck. 
 
 There is a natural direction in which municipal functions are 
 extending. I quote from Sidney Webb : "First, where the con- 
 sumption of a commodity is compulsory, e. g., water supply, 
 second, where no pecuniary return is received for the supply of 
 any commodity or service r e. g., streets, sewers, fire protection ; 
 third, where the service is furnished irrespective of cost, e. g., 
 public schools, libraries and parks ; fourth, where the good of 
 
MUNICIPAL OWNERSHIP 41 
 
 the community demands . . . that the service rendered be as 
 great as possible, e. g., food inspection." 
 
 There will be slight, if any, criticism on any of the foregoing 
 heads, as we have been accustomed to consider them proper fields 
 for municipal activity. Yet not one of them has been so estab- 
 lished without having passed over debatable ground. Indeed 
 the first, waterworks, may be considered by many as still on the 
 field of, debate. The second, streets, sewers and fire departments 
 are so regarded only because we have accepted the fact that 
 these are public uses which should be furnished without charge 
 and at public expense. This is a matter of growth in knowl- 
 edge and experience. Who of us cannot remember the toll 
 road or the toll bridge? It is not two years since we had a 
 private sewer within the city limits of Lincoln. 
 
 At first thought it may seem to some that the schools have no 
 place in this discussion for surely no one thinks they should be 
 other than public, controlled and financed by the public. Yet 
 why do we so confidently assert this except as we firmly believe 
 it to be for the public good? The owners of private schools, 
 those who believe in the parochial school might well say that the 
 public by establishing free public schools is encroaching on their 
 ground, making their property less valuable, and in many in- 
 stances could without doubt make plausible claim that they were 
 doing as good if not better work in training children than the 
 public school. The fact that the public school is so firmly estab- 
 lished as to be both a national and a state policy and is no longer 
 left to the whim of the individual city does not make the argu- 
 ment essentially dififerent. 
 
 In all of the above mentioned lines municipal ownership is 
 recognized in Lincoln, at least, as beneficial to the public. 
 
 I come now to more debatable ground. The last point was 
 where it was desired that the service rendered, or to put it 
 differently, the consumption by the public should be as great as 
 possible. Reversing that statement brings the fifth head, viz: 
 where it is desirable that the public consumption should be as 
 small as possible, e. g. the liquor traffic. Sixth, where improved 
 standards are desirable, regardless of their being financially self 
 sustaining, e. g., public baths, lodging houses, parks, etc. Seventh 
 
42 SELECTED ARTICLES 
 
 and lastly, where a monopoly is desirable, e. g., street railways, 
 gas and electric light companies, telephone companies, ice plants, 
 heating plants, garbage crematories. 
 
 In this state the public sentiment on the liquor question has 
 apparently divided rather on the line of control or prohibition 
 than of public ownership. One state only, so far as I can recall, 
 having experimented along the line of ownership rather than 
 control of private ownership. 
 
 We als--! recognize parks and libraries as being proper avenues 
 of public activity. In larger and older cities baths and lodging 
 houses are so recognized. The need is not pressing here yet and 
 until the need is felt, public opinion can hardly be said to exist. 
 
 The last list of corporations constitute the debatable ground 
 of the present day. Street railroads, gas and electric light and 
 telephone companies, ice plants, heating plants and garbage 
 plants. I have chosen to approach this group by the somewhat 
 tedious process of this paper for the purpose of showing, if I 
 could, that there is no essential difference between this group 
 and the others on which we are all practically agreed. 
 
 For a moment, let us compare and contrast them. Take the 
 street car and the gas and electric light and the telephone as the 
 types of their class, and the waterworks, public schools and 
 parks as the types of their class. Waterworks, schools and parks 
 are public necessities. So are the others. 
 
 All the people are benefited alike by the waterworks, schools 
 and parks, and are not by the cars, the lighting companies and the 
 telephone, but is that true? On the contrary, is it not more true 
 that the burden of their support falls on all but the benefits are 
 enjoyed by those who happen to be prepared to enjoy them? 
 
 The taxpayer who has no children gets only an indirect bene- 
 fit from the public schools. The man living at a distance from 
 the park does not get the same benefit as the man who happens 
 to have located near it. The house that is not reached by the 
 water main must still depend on the cistern or the well for drink- 
 ing water. Indeed, light, heat and means of communication 
 either of transporting the body or the voice is fully as much a 
 necessity of city life as is water or schooling or library books. 
 
 Does anyone say a man cannot go 'without water and live? 
 
MUNICIPAL OWNERSHIP 43 
 
 I reply I agree, but he is not obliged to have water pumped 
 through mains as long as the rains descend and the springs 
 of earth do not dry up. 
 
 Compare them as you will ; contrast them in any way possible 
 and you will find that the reasons which have made desirable 
 public ownership of schools, libraries, waterworks, streets and 
 alleys, parks, etc., are all applicable and cogent reasons for the 
 ownership of any and all public corporations whose business it 
 is to serve the public at large as a public body, or whose business 
 is such as requires a continuous and permanent use of the public 
 streets. 
 
 Outlook. 80: 411-3. June 17, 1905. 
 
 Municipal Ownership. 
 
 A contributor reports on another page the results of municipal 
 ownership of street railways in Glasgow. We beUeve that his 
 statement of facts can be absolutely trusted ; and they seem to 
 demonstrate that, given the right conditions, municipal ownership 
 and operation of street railways may be made highly advantageous 
 to the citizens. New York and Chicago are not Glasgow. The 
 question whether municipal ownership and administration can 
 be made advantageous to the citizens of an American city is not 
 conclusively answered by the fact that such ownership and ad- 
 ministration have been made successful in a Scotch city. It is still 
 necessary to ask, What conditions in the American city are nec- 
 essary to make such success probable, and can these conditions 
 be brought about? In answering these questions we take a con- 
 crete case, that of New York City, but the general principles will 
 apply equally, though with modifications, to all American cities of 
 considerable size. 
 
 I. The city must not tie its hands by granting to any corpora- 
 tion a permanent franchise to conduct any municipal industry. A 
 franchise to an inter-State railroad to enter the city is not one 
 to conduct a municipal industry ; but even in such cases the fran- 
 chise should always be subject to periodical revaluations. No 
 water, gas, telephone, electric, dock, or transportation franchise 
 should be granted except for a moderate term of years. Where 
 
44 SELECTED ARTICLES 
 
 it is possible, the city should build and own the plant, as it has 
 built and owns the subways in Boston and New York. If it has 
 not the money, and if constitutional limitations deny it the right 
 to use its credit, as is the case in New York, arrangements should 
 be made in the contract with the operating corporation by which 
 the property may be purchased at a fair valuation by the city. 
 
 II. If the city is to carry on municipal industries — as water, 
 lighting, dock, telephone, and transportation systems — it is indis- 
 pensable that the city secure for that purpose honest and capable 
 officials. In Glasgow only rate and rent payers vote in municipal 
 elections. "The slums,'' says Mr. Shaw in his volume on "Mu- 
 nicipal Government in Great Britain," "evade the tax-collector 
 and sacrifice the franchise." Moreover, "the extraordinarily 
 severe laws against bribery, direct and indirect, apply to municipal 
 elections ; and it is next to impossible to get a British voter to the 
 polls who does not contemplate the contest with some glimmering 
 of interest and intelligence." Whether it would be advantageous 
 to attach a property or tax-paying qualification to the suffrage in 
 American cities it is useless to discuss ; because such limitation 
 of the suffrage, however desirable, is impracticable. It is easy to 
 attach qualifications to the suffrage when it is granted, but almost 
 impossible to do so afterwards. 
 
 The result which Glasgow secures by a limited suffrage, 
 American cities must generally secure by another method. By 
 the extension and enforcement of the Australian ballot system, 
 and the abolition of the provision allowing the illiterate voter to 
 take some one into the polling-booth with him. a quasi educational 
 qualification can be attached to the ballot. Quite as important 
 is a political reconstruction of the city to adjust it to modern 
 needs. The municipal council in most of our cities is patterned 
 after the State and National legislative bodies. But a municipal 
 council is not analogous to a State or National legislature. It is 
 far more analogous to the board of directors of a commercial cor- 
 poration. The recent act of the New York Legislature in taking 
 from the New York Board of Aldermen, as its municipal council 
 is called, the power of granting franchises and conferring it upon 
 the Board of Estimate and Apportionment is a step in the right 
 direction. But it is only a step. What is really wanted is the 
 
MUNICIPAL OWNERSHIP 45 
 
 abolition of the municipal council which is elected by wards, and 
 the substitution therefor of a small board of not more than 
 fifteen nor less than nine, who shall be elected on a general 
 ticket, or by boroughs, and shall represent the entire city. Ex- 
 perience has proved that ward representation tends to ward poli- 
 tics — the bane of our municipal system. It has been proved that 
 it is almost impossible to get threescore or more of men who are 
 honest and capable, and who will give their time to the details of 
 city administration. And it has also been proved, by the value 
 of the services rendered by the Rapid Transit Commission and by 
 the Board of Estimate and Apportionment, that it is possible 
 to get a small board of competent, honest, and public-spirited 
 men. The work of a city council is administrative, not legisla- 
 tive ; and for such work a small body, not a large one, is needed. 
 
 Finally, the city must not expect to make money out of its 
 industries ; it must expect only to make them self-supporting. It 
 may be that private corporations will pay into the city treasury 
 more money in the form of taxes than the municipally conducted 
 industry will pay in the form of profits. "The dividends which 
 the city reaps," says our correspondent, "are in the form of civic 
 betterment, lower death rate, and improvement in social condi- 
 tions." The city will pay here, as it has paid abroad, higher 
 wages ; it will prescribe for its employees here, as it has pre- 
 scribed for them there, shorter hours. It will give to the travel- 
 ing public here, as it has given there, lower rates. In other words, 
 the profits which have gone into the pockets of capitalists as a 
 payment for their money and their services will be distributed 
 partly among the employees in better labor conditions and partly 
 among the traveling public in better accommodations and lowered 
 prices. No more may be expected to be paid into the city treasury 
 than is necessary to accumulate a fund for large repairs, for 
 important extensions, and for unexpected exigencies. 
 
 There is no good reason why any American city should 
 not have an experience parallel to that of Glasgow, provided it 
 will comply with the necessary conditions : provided it will not 
 part with the control of its streets by granting indefinite or per- 
 petual franchises ; will frame its city government for adminis- 
 trative rather than for legislative purposes ; will develop a civic 
 
46 SELECTED ARTICLES 
 
 pride and a public spirit which will inspire men of integrity and 
 of ability to serve the city ; will exclude all partisan spirit from 
 the administration of its municipal industries ; and will look for 
 its profits, not to treasury balances, but to a purer and better 
 municipal life. 
 
 Reader. 7: 477-84. April, 1906. 
 
 Municipal Ownership — What It Means. Edward F. Dunne. 
 
 Nature of Utilities. 
 
 If a person seeks to deal with a grocer, a butcher, a baker, 
 a doctor, a lawyer or any other similar purveyor of a needed 
 object, he may transact business with some independence. He 
 is enabled to stand at arm's length, to make a free and voluntary 
 contract. If the character of the goods he seeks to purchase is 
 unsatisfactory, he may go elsewhere. If the price his grocer, 
 or butcher, or baker asks is unreasonable, he may go to another. 
 He is not bound by circumstances to deal with any one person or 
 company in the purchase of such necessities of life. 
 
 But if this same person seeks to purchase gas or electric light, 
 or to utilize the street-cars, the steam cars, the telegraph or the 
 telephone, he finds himself deprived of the right of free contract. 
 He must take such service as is offered him and he must pay the 
 price demanded. There is no alternative. He finds himself face 
 to face with a monopoly, and he must stand and deliver, or do 
 without. Individual protest against such a monopoly is abso- 
 lutely unavailing. He may protest against the character of the 
 street-car service, or against the rate of fare charged. But, if 
 he wishes to ride, he must pay the rate fixed and endure the 
 service given or be thrown off. His gas may be of deficient 
 qualiffT^orthe price exorbitant, but he must meet the corpora- 
 tion's demands or his meter is jerked out. His telephone service 
 may be unsatisfactory, and he may complain against high rates, 
 but he must pay the price charged or the wires will be cut and 
 his telephone removed. 
 
MUNICIPAL OWNERSHIP 47 
 
 Graft and Ownership. 
 
 Private ownership of traction and other utilities has shown 
 that these corporations have wielded, at times, a dangerous 
 power in our political life. Yet the cry has been raised by 
 opponents of municipal ownership that public control of these 
 conveniences would lead to the establishment of a "political 
 machine'' which would prove a menace to any municipality in- 
 volved. This cry is wholly false. Hundreds and hundreds of 
 municipalities, w^here the people have claimed their own, testify 
 to-day to the falsity of this outcry. 
 
 Municipal ownership will take the traction and similar utilities 
 out of politics. Private ownership keeps them in politics. Only 
 a few days ago one member of Chicago's City Council made 
 the statement that he had one hundred and fourteen of his ward 
 "constituents" on the pay roll of the Chicago City Railway Com- 
 pany. 
 
 "That's the way I take care of my fellows," he said. "And 
 I've got a lot more jobs with other corporations." 
 
 And this is but one alderman who has secured jobs for his 
 followers and lieutenants with one traction corporation. This 
 official, it may be remarked, has voted persistently in the Coun- 
 cil for the plans of the traction corporations. Does he get the 
 "jobs" as partial return? I leave the reader to answer. There 
 are other aldermen who have made boast to friends of the number 
 of "constits" they have placed with the traction corporations. 
 Does this look as if private ownership has kept these 
 utilities out of politics? To this cry of "political machine" it 
 might be pertinent to return the inquiry as to whether any 
 "political boss" in any of our cities ever has been found contend- 
 ing for the principle of public ownership of public utilities. On 
 the contrary, the "political boss," wherever he flourishes, is 
 found eager to continue public utilities in private hands. The • 
 reason is plain : Private ownership continues the opportunities 
 for graft, for the traffic in votes for special privileges and fran- 
 chises, for corruption. Municipal ownership, conducted under 
 rigid civil service, as all its true adherents demand, will remove 
 the "traction problem" and similar questions from politics and 
 
48 SELECTED ARTICLES 
 
 effectively and finally displace private corporate and individual 
 privilege-seekers from the positions they have held in corrupting 
 the civic and political body. 
 
 Results of Ownership. 
 
 The success of municipal ownership in the cities of Great 
 Britain, of Switzerland, of Italy, of Austria-Hungary and of 
 Australia has sounded the knell of private ownership of public 
 utilities in the countries of the eastern hemisphere. It has pro- 
 duced, in almost every case, these foremost results : 
 
 First — Reduced the cost of the utility to the public. 
 
 Second — Increased the efficiency of the service ; brought about 
 the re-equipment of lines and plants in accordance with modern 
 methods ; secured regular service with more frequent schedules 
 and less-crowded cars ; reduced accidents. 
 
 Third — Increased the wages and bettered conditions of the 
 workers who operate these utilities. 
 
 ^r'ourth — Made strikes a thing of the past. ^^'"^ 
 
 Fifth — Eliminated public "graft" and corruption. 
 
 Outlook. 70: 726-7. March 22, 1906. ^^^ 
 
 Municipal Ownership and Corrupt Politics. Henry C. Adams. 
 
 The question of the municipal ownership of street railways 
 is not an isolated question, but a part of a great system of indus- 
 trial evolution that is now going on. Whether regarded from the 
 nature of the service rendered or of the conditions under which 
 they are operated, street railways must be classed as public in- 
 dustries ; and, this being the case, the question whether they 
 should be owned and operated by the municipality, or controlled 
 through a commission appointed by the municipality, is the 
 only one to be considered. My own opinion, arrived at with 
 some reluctance after many years of hesitation, is that the policy 
 of public ownership and public administration has more to be 
 said in its favor, all things taken into consideration, than the 
 programme of public control. 
 
MUNICIPAL OWNERSHIP 49 
 
 It is often said that municipal ownership of the street railways 
 would result in the creation of a political machine and in the 
 corruption of city politics. This, without doubt, suggests a most 
 serious criticism upon the plan. At the same time, 1 am inclined 
 to think there is less likelihood of corruption should the street 
 railways be owned by the city than under existing conditions. 
 The franchise of the street railway in a large city is worth an 
 immense amount of money, and increases in value at a rate more 
 rapid than the increase in population. This being the case, there 
 is every motive presented for the purchase of political influence, so 
 long as the street railway remains in the hands of private 
 corporations. If, however, the city itself owns the franchise and 
 operates the railways upon it, the Aldermen have nothing of 
 value to sell, and the present form of political corruption at least 
 would be done away with. 
 
 There are two thoughts in addition that I would like to sug- 
 gest. In the first place, are we entirely clear as to what we mean 
 when we use the term "political corruption"? Many things 
 which in private industry are regarded as all right are character- 
 ized as corrupt if done by an official of the State. 
 
 The truth is, the ideal of public morality entertained by the 
 American people is infinitely purer and higher than the ideal of 
 morality which controls in the business world. We should not 
 forget that municipal ownership means absolute publicity, an 
 established system of accounting, and the unquestioned right on 
 the part of citizens to investigate the manner in which the 
 municipality performs its public duties — a condition which does 
 not and cannot exist so long as street railways continue to be 
 private property. 
 
 The second thought which I wish to express relative to this 
 phase of the question is that public responsibility is always fol- 
 lowed by a development of the sense of respectability. Men of 
 influence and brains are no longer in this generation influenced 
 by the amount of money that can be made out of a situation. 
 The political economy which assumes that the struggle for money 
 is an adequate explanation of industrial conduct is sure to err in 
 its conclusions, because it does not recognize all the motives in- 
 volved. The sense of power and the ambition for influence are 
 
50 SELECTED ARTICLES 
 
 equally strong motives to industrial activity u'ith the desire for 
 money. This being the case, the talents and brains of the country 
 will inevitably be drawn into the service of those organizations 
 which grant the opportunity of an exercise of power and influence* 
 
 The conclusion from this premise is direct. If the municipal- 
 ities wish to secure the services of men of talent and of respect- 
 ability, they must assume functions that call talent into the field 
 and also those that gratify the sense of respectability. History de- 
 clares that the rise of efficient local government follows the as- 
 sumption by the government of social responsibilities, and, as 
 exemplified in the United States, that the decay of local govern- 
 ment follows the restriction of local functions. 
 
 The superficial humorist may reply that this argument in- 
 volves an amendment of the Xew Testament to the effect that he 
 who is unfaithful in little things will surely be faithful in big 
 things, which, of course, is not only a misquotation but a misap- 
 plication of the true quotation. If the city desires the service 
 of respectability and talent, it must grant to its servants respon- 
 sibility and influence. 
 
 The dangers which attend the experiment in municipal owner- 
 ship of street railways arise, as it appears to me, from two 
 sources. In the first place, it is likely that the public will demand 
 an immediate dividend from the new investment in an abnormal 
 reduction in fares, and, in the second place, it is not unlikely that 
 the Common Council of the city, in its desire to justify the 
 purchase, will sacrifice the interests of the future to the present. 
 These difficulties, however, may be easily avoided by two simple 
 devices. In the first place, the municipal railway accounts should 
 provide for a deterioration account, and charge up to operating 
 expenses each year an ample sum to cover deterioration. Pro- 
 vided this is done, fares cannot be reduced too low — assuming, 
 of course, that the railways are not to be operated for the public 
 profit. In the second place, the bonds issued for this purpose 
 should include a sinking-fund provision capable of wiping out 
 the debt in a reasonable number of years. 
 
 It seems to me that the problem of municipal ownership of 
 street railways and the government ownership of commercial 
 railways are independent problems. The great difficulty in gov- 
 
MUNICIPAL OWNERSHIP 51 
 
 ernment ownership of commercial railways does not lie in the 
 technical questions of construction and operation, but in the 
 adjustment of a schedule of rates that shall be fair to all sections 
 of the country. In the question of municipal railways this ques- 
 tion does not find a place. There are no terminal facilities, since 
 the freight carried, being passengers, is self-loading and self- 
 unloading; there is no need of an extended classification of 
 freight, since all freight for the most part is of the same sort. 
 The question of rates is one that may be easily and simply 
 settled. jMoreover, the interests involved in the case of municipal 
 railways are restricted to a small locality, and the result of this 
 is that the policies of administration may be easily adjusted. For 
 many other reasons also that might be mentioned, the decision in 
 favor of municipal ownership for street railways does not in- 
 volve a similar decision for commercial railways. 
 
 Independent. 60: 449-52. February 22, 1906. 
 
 Municipal Ownership a Blessing. John Burns. 
 
 The increase in the "social sense" which the universal de- 
 mand for municipal ownership symptomizes is one of the most 
 hopeful signs of the day in America and thruout the world. 
 Cheap, popular, publicly owned rapid transit is the best way to 
 disperse the ghettos of poverty, the slums of misery and the 
 Alsatias of vice. The basis of a happy life is unattainable so 
 long as railroads, ferries, traction and electric light companies 
 are used as, under present conditions, they often are, against 
 social advancement. The home, which is the cradle of character, 
 can no more be solved by the tenement dwelling than city archi- 
 tecture can be improved by a duplication of flatiron buildings. 
 Mount Kisco is a slope, not an elevation, and till municipal own- 
 ership of street railways, with a deliberate social object in view, 
 is attained, the workers of the lower East Side, the West Side 
 and other congested quarters must remain in that circumscribed 
 pit of Tophet in which limited space, high rents and restricted 
 company tractions now confine them. Men and money, like 
 
. 52 SELECTED ARTICLES 
 
 manure, are no good in heaps. They putrefy. They are only 
 good when scattered over fresh fields and pastures new. 
 
 The greatest agency — indeed, the only agency — is city trac- 
 tions owned by the city, carrying the citizens, taking the town 
 to the country in the evening, bringing the country to the town 
 in the morning. 
 
 Municipal ownership as usually tried in Europe, particularly 
 in Great Britain, has been a counter attraction to drink, a 
 healthy diversion from vice, and has shown the people a more 
 excellent way of personal and national life. The bread of 
 municipal ownership has been cast upon the waters, and has 
 been returned to us, not after many days, but almost immediately. 
 In industry it has made against Sam Parks on the one side and 
 Farley on the other. It has infused the embittered car driver 
 and conductor with a proportionate dignified and civic sense of 
 duty to his neighbors who employ him. The municipal car man 
 has reciprocated his share that municipal ownership has brought 
 to him by greater efficiency, civility and loyalty to his employers, 
 the traveling public. The poor and lowly it has helped by re- 
 ducing distances and saving them from physical fatigue, which, 
 rather than endure by living in the suburbs, when they had to 
 walk, they forfeited for the squalid banalities of slumdum. I 
 know of no section w^hich has lost by municipal ownership in 
 England. Even the dispossessed and generously compensated 
 shareholders have profited by the great increment of social happi- 
 ness that public tractions has brought to all those cities which 
 had the courage to enter upon it. 
 
 The chief contribution that municipal ownership will make 
 in America to State, Federal and civic development will be the 
 extent to which it kills boodle, destroys graft and eliminates 
 from public life and service the petty corruptions that mortify 
 the flesh in the body politic of America, without the cleanliness 
 and the purging of municipal life that can only come from the 
 moral exaltation that communal pride in public property alone 
 brings. America will be confronted with the greatest problem 
 that ever lay athwart the upward path of a democratic people. 
 
 Under municipal ownership there is no one" to off'er bribes, 
 because there is nothing to sell. The occupation of the thief is 
 
MUNICIPAL OWNERSHIP 53 
 
 gone, because the receiver has disappeared. Any doubts as to 
 the greater cheapness and efficiency of municipal ownership are 
 disposed of by the incontestable fact that in Great Britain — un- 
 der municipal ownership — roads are better, the staff more loyal, 
 because more contented, and the amazing cheapness of traction 
 is proved by the fact that the average fare of electric car passen- 
 gers in London is under two cents, while over fifty millions of 
 people ride as one cent passengers. 
 
 The effect on housing has been the disappearance in ten years 
 of eighty thousand one room tenements, a corresponding increase 
 in larger tenements and a diversion to common parks and heaths 
 of the women and children, who by traction alone, without injury 
 or loss to any one, now secure, as an everyday right, what, thru 
 company ownership and dear fares, was an occasional and 
 fatiguing privilege. 
 
 The educational value of municipal ownership on all classes 
 of a community in Europe is most marked. It is the seminary 
 to the statesman, it is the school to the political economist, it is 
 the college to the reformer, it is the polytechnic to the labor 
 leader. On a smaller, but equally useful, scale the larger duties 
 and obligations of government are learned, and as America fifty 
 years hence w^ill possibly have two hundred millions of in- 
 habitants, it is about time that the assimilation of these millions, 
 the co-ordination of these masses, the directing leadership of 
 this host should be provided with civic guides, municipal philoso- 
 phers and neighborly friends, so that the path of the greatest 
 community of free men should be not only straight, but clean, 
 and till some field of apprenticeship for this stewardship for the 
 leaders of the future is provided, America's future will be not 
 the conscious ordering, but a sordid welter and an undignified 
 scramble for mere money, which is the present creed of the cor- 
 rupting boodler. Municipal ownership destroys this species and 
 in so doing discourages and renders impossible the sad revela- 
 tions that your insurance scandals have revealed. Appetite grows 
 by what it feeds upon. The seed of corruption dropped by the 
 political agents in elections, in defense of their franchise and to 
 extend their power, becomes a seed-plot from which is reared 
 the upas tree of state defilement. President Roosevelt realizes that 
 
54 SELECTED ARTICLES 
 
 it may reach, if it has not already done so, Federal political life. 
 Why be wise after the event? Prevention is better than cure, 
 and surely American opinion, after having read the "Shame of 
 the Cities," might save itself another book called "The Crime of 
 the Republic." Both can be avoided thru the trade union, the 
 labor leader, social idealists, city merchants, the governing alder- 
 men, the men and statesmen, all uniting in a movement that ex- 
 perience unanimously testifies in Great Britain is the greatest 
 ameliorative agency, as it has been the greatest moral force that 
 fifty years of brilliant, continuous and glorious success has secured 
 the Anglo-Saxon people. America is not cursed v^ith that heritage 
 of snobbery, feudalism and convention that Old World communi- 
 ties have had to contend against. Its immunity from these dis- 
 abilities gives it greater power than it ever dreamed of, and yet 
 public utilities lie across its continent a fallow field trodden only 
 by privileged monopolies, and denied to the citizen without toll, 
 exaction and fraud. If democracy is to justify itself, as I hope 
 and believe it will, it can only do it by the municipal ownership 
 equipping the American people with the one thing they supremely 
 lack as compared with Europeans, and that is cleaner, purer civic 
 life, without which personal wealth is a mockery, national re- 
 sources a misused gift and their constitution a thing of paper. 
 
 It is said that the municipal employee may become a serious 
 and dangerous influence, when the source of his income is owned 
 by the community in which he is a voter. 
 
 This fear seems to be a stumbling block to a great many well 
 meaning and sincere people. My answer to it is this : The test 
 from experience is all the other way. As a rule, municipal em- 
 ployees have been modest in their claims, reasonable in their 
 demands, and, as an invariable rule, municipal labor has been 
 singularly free from strikes and other disturbances. At the 
 worst, these must always be in a minority. The employees of a 
 municipality never have any difficulty in getting, without threats, 
 as a right, what now is occasionally wrested from the private 
 companies by sacrifice, pain and disturbance for the whole com- 
 munity. In a word, municipal ownership, apart from being good 
 for passengers, best for cities, cheapest for the poor, is the line 
 of least resistance for the solution of industrial problems, is the 
 
MUNICIPAL OWNERSHIP 55 
 
 way that wisdom directs and necessity compels. The extent to 
 which municipal ownership prevails in any country is the stand- 
 ard of class co-operation by common means for common ends. 
 
 The car barn vote introduces into politics the interested "pull** 
 to an extent that is impossible under municipal ownership, be- 
 cause the usual political differences operate with men under 
 municipal ownership, and thus create an electoral equipoise which 
 is impossible so long as men's employment depends upon votes, 
 as it too often does, under company rule. The danger of the 
 municipal employee is a bogie which is always raised in America, 
 which we have buried for all time in the old country. To their 
 credit, they rarely, if ever, abuse the position that municipal 
 ownership gives them, and if they were inclined to do so against 
 the community, the community in turn has always a better, a 
 simpler and more peaceful remedy than now prevails. 
 
 Independent. 61: 927-30. October 18, 1906. 
 
 V Our Fight for Municipal Ownership. Edward F. Dunne. 
 
 In recent years perhaps no subject has engrossed so much of 
 the attention of the public in the great cities of this country, and 
 in Chicago particularly, as the question of ownership and opera- 
 tion by the public of public utilities. By these I mean street cars, 
 gas works, electric light plants, telephones, telegraphs, railroads 
 and other enterprises, the operation of which requires the pos- 
 session and use of public property. 
 
 No subject is of more vital interest to the inhabitants of cities, 
 who are compelled, day by day and year by year, to make use of 
 and pay for these utilities, whether they like them or not. 
 
 A resident of a city may dicker, bargain with and change his 
 butcher, his baker, his haberdasher, his tailor, his lawyer, his 
 doctor, if he is not satisfied with his services or charges, but 
 when he comes to pay his street-car fare, his electric light or 
 telephone bill there is room for neither dicker, trade nor change. 
 He must stand up and deliver, no matter how unreasonable the 
 charge or unsatisfactory- the service. 
 
56 SELECTED ARTICLES 
 
 If he objects to the street car service or the price, he is thrown 
 off the car. If he demurs to the service or price of gas or electric 
 Hght, it is shut off. If he criticises his telephone bill, his 'phone 
 is pulled out. He has learned by experience that individual pro- 
 test or objection is unavailing. 
 
 The existence of grave and scandalous abuses, both in the 
 service given and the price charged for such utilities, and the 
 recognition by thousands of the utter helplessness of citizens, as 
 individuals, to help themselves or correct these evils, which have 
 become over-burdensome and intolerable, have brought about in 
 many of the great cities of the world an unrest and public 
 agitation for the correction of these evils. 
 
 In Chicago a citizen is charged from $40 to $175 for the an- 
 nual rent of a telephone, and the service is not over-good at that. 
 The same service is given in Stockholm, Sweden, for $20 a year, 
 on the average ; in Christiana, Norway, for $22 a year, on the 
 average; in Trondhjem, Norway, for $13.50 a year, on the aver- 
 age ; in Berne and Zurich, Switzerland, for $10 and unward ; in 
 Berlin for $36 per annum ; in Copenhagen from %2'/ to $48, and 
 in Paris, France, for $78. 
 
 The same .disproportion obtains in the cost of the other utili- 
 ties. In Chicago the shortest ride a man can take on the street 
 cars costs him five cents, and then he rides a great part of the way 
 hanging to a strap, jammed, jostled and jolted about in a manner 
 that is irritating to his fellow passengers and indecent to the 
 gentler sex. The fare paid in other great cities of the world, 
 outside the United States, is about one-half that amount. 
 
 This state of facts and figures in Chicago and elsewhere is 
 causing the people to endeavor to find the reason for this condi- 
 tion of affairs, and to find a remedy. 
 
 On the threshold of this inquiry the people of Chicago have 
 discovered that all these public utilities furnished to the citizens 
 of the city of Chicago are owned and operated by private corpora- 
 tions, organized and conducted for private gain. On stepping 
 over the threshold into the vestibule of the investigation they 
 have also found that in all the cities where public utilities were 
 furnished at a cheaper price, these public utilities were generally 
 
MUNICIPAL OWNERSHIP 57 
 
 being owned and operated by the public — in other words, by the 
 municipality itself. 
 
 Must or must we not conclude that the difference in owner- 
 ship and operation is the cause of the wide discrepancy in the 
 cost of these absolutely essential necessaries of life to the resi- 
 dents of cities? 
 
 These facts and their significance had long engaged my atten- 
 tion, in common with that of other thoughtful men of Chicago, 
 when my election as Mayor .in April of last year gave me oppor- 
 tunity to help in the solution of at least one of these problems. 
 I refer to the traction problem, which sooner or later must con- 
 front every growing city in the land. Conditions in Chicago were 
 especially bad, so much so that my campaign was conducted on a 
 municipal ownership platform, and the people at the polls de- 
 clared emphatically in favor of the acquisition and ownership of 
 the traction systems of the city. How far the present adminis- 
 tration has been able to carry out the wishes of the people in this 
 direction doubtless will be of interest everywhere to foes as well 
 as advocates of the municipal ownership idea. 
 
 At the time of my inauguration a great strike of teamsters was 
 in progress. It lasted one hundred and five days, and presented 
 sufficient problems of its own to keep the administration en- 
 grossed until July 5th, 1905, when I took the first step toward 
 carrj'ing out the wishes of the people as expressed at the polls. 
 I submitted to the council a message offering two plans by which 
 the city could acquire possession of the traction systems. 
 
 One of the plans provided for an ordinance under which not 
 to exceed $75,000,000 worth of "Mueller certificates" should be 
 issued, subject to the approval of the people. These certificates 
 were to be in the nature of income bonds, payable out of the re- 
 ceipts of the traction system, and not a general obligation of the 
 city. The theory was that they could be disposed of readily and 
 would yield the money necessary for the purchase of the street 
 railway properties or the building of new roads. This became 
 known as the "city plan." 
 
 The second plan, known as the "contract plan," offered a twen- 
 ty-year franchise to five or more citizens who would agree to ac- 
 cept a charter, issue the necessary bonds and construct a modern 
 

 58 SELECTED ARTICLES 
 
 electric system covering the entire city. These proposed bonds 
 would bear a 5 per cent, interest and be used solely for the acquisi- 
 tion of the street railway properties. The net receipts of the 
 system were to be turned into a sinking fund to the credit of the 
 City of Chicago, to be used ultimately for the purchase of the 
 system by the city. 
 
 Under this plan the enterprise would be undertaken on a purely 
 patriotic basis, for the good of the city, the company receiving 
 no benefit beyond the salaries for the board of directors and the 
 interest on the bonds. 
 
 On the submission of these plans to the council, they were 
 promptly referred to the committee on local transportation, which 
 unfortunately was not in sympathy with the municipal owner- 
 ship idea. This committee held up the plans for several months, 
 and, notwithstanding my repeated protests, invited the traction 
 companies to negotiate with the city for an extension of their 
 franchises. By December 5 these negotiations had so far pro- 
 ceeded that the committee had agreed upon and recommended 
 to the city council ordinances which would have extended the 
 franchises and postponed municipal ownership many years. 
 
 During this period litigation was pending in the Circuit Court 
 of the United States, involving the validity of the companies' 
 claims that their franchises, under the so-called 99-year act, 
 would not expire until 1958. This claim was viewed with alarm 
 by all parties, as giving the traction companies practically in- 
 definite rights in the streets of Chicago, and formed the basis 
 of most of the arguments in favor of granting some franchises 
 by ordinance to the traction companies then and now in posses- 
 sion of our streets. 
 
 It was apparent that nothing could be accomplished by the ad- 
 ministration until a final decision of the courts in this matter 
 could "be obtained. Immediately upon entering ofiice I had ap- 
 pointed Mr. Clarence S. Darrow as special traction counsel and 
 Glen E. Plumb and Edgar B. Tolman as assistant traction coun- 
 sel. These gentlemen, together with the corporation counsel, 
 Hon. James Hamilton Lewis, pushed the pending suit with 
 great vigor. On March 12, 1906, the highest tribunal in the 
 land, the Supreme Court of the United States, declared these 
 
MUNICIPAL OWNERSHIP 59 
 
 so-called 99-year claims without foundation. The city thoroly 
 defeated the companies at every point. 
 
 In January, 1906, it became evident that the ordinances ex- 
 tending the franchises would never be ratified by the people 
 even if passed by the council. Prominent citizens and news- 
 papers who at first had opposed the mayor's policy now advo- 
 cated the defeat of the ordinances extending franchises which 
 had been framed up in committee. The spring election was 
 approaching. This was the situation when unexpectedly, on 
 January 19, 1906, on receipt of the report of the transportation 
 committee, the council passed the ordinance framed by the 
 mayor, authorizing the submission to the people of the question 
 as to whether the Mueller certificates proposed should be issued. 
 
 The issue for the spring election was thus clearly defined 
 and was fiercely contested before the people. Two ordinances 
 were submitted for approval at the polls. One authorized the 
 Mueller certificates ; the other, the operation of the road when 
 acquired by the city. Notwithstanding the solid opposition of 
 the Republican party, the opposition of the press and the 
 hostility of Democratic leaders, the ordinance authorizing the 
 certificates carried by about four thousand majority. The ordi- 
 nance authorizing the operation of the railroad lacked the req- 
 uisite number of votes, 60 per cent, being needed, altho it 
 received a majority of about twelve thousand. 
 
 Immediately after this election I instructed our traction 
 counsel, Messrs. Walter L. Fisher and Samuel Adams, to test 
 in the courts the validity of the Mueller certificates as au- 
 thorized by the popular vote, and of the statute which author- 
 ized the city to own and operate street -cars. The Circuit Court 
 of Cook County upheld the validity of the certificates, the 
 ordinance and the Mueller law. An appeal has been taken 
 to the Illinois Supreme Court, which I am confident will up- 
 hold the decision of the lower court in every particular. 
 
 When this is accomplished our long and successful fight 
 will be over, for I have no doubt that we shall negotiate the 
 certificates readily and be able to purchase the railway proper- 
 ties with the proceeds. 
 
 At the present time the city is negotiating with the traction 
 
6o SELECTED ARTICLES 
 
 companies in accordance with a letter which, as mayor, I 
 addressed to the chairman of the transportation committee. 
 In that letter I suggested that, pending the litigation which 
 would settle the validity of the Mueller law and ordinance, 
 if the present companies were able and willing to enter into 
 an agreement to sell to the city all of their tangible property 
 and unexpired franchises and rights, at a price to be fixed at 
 once, and to undertake the immediate improvement of their 
 service, the city would be prepared to enter into negotiations 
 on the basis of paying the fair cash value of the tangible and 
 intangible property and actual cost of improvements, together 
 with reasonable interest thereon. Pending payment, the roads 
 were to be operated by the companies so as to provide for a 
 sinking fund out of the proceeds to apply on the purchase price. 
 
 The companies, in response to my letter, assented to the car- 
 rying on of negotiations on these lines, and have placed an 
 excessive value upon their properties, some $73,000,000. The 
 city has employed competent engineers to value the plants, the 
 commission consisting of Professor Cooley, dean of the en- 
 gineering college of the University of Michigan ; Bion J. Arnold 
 and A. B. duPont. Failing to reach an agreement with the 
 companies, we shall offer to arbitrate, in accordance with pro- 
 visions in the ordinances under which the companies have been 
 operating. Should an agreement become impossible, we shall 
 place our certificates on the market for sale and with the pro- 
 ceeds build new modern lines. 
 
 Upon the maturity of these certificates, all of them, in my 
 judgment, can be paid in full, and the people then owning their 
 plant, can proceed to reduce fares to the lowest possible cost, 
 as has been done in all the great cities of England and in 
 many of the great cities of Germany, Austria-Hungary, Aus- 
 tralia and Italy. 
 
 Corruption of public officials, the stealing of public property, 
 favoritism in the selection of employees, strikes, inefficient 
 service, exorbitant charges and insolence toward and defiance 
 of the public has marked the history of private management 
 of public utilities in Chicago and elsewhere in America. The 
 people have called a halt. The demand of the people to place 
 
MUNICIPAL OWNERSHIP 6i 
 
 a check upon public corruption by and with the referendum, 
 at first feeble and unheeded, has swelled into a roar whose 
 reverberations are heard in the council chambers of the land, 
 as well as in the temples of finance. 
 
 In my judgment the people are in no condition to be longer 
 trifled with ; no longer will they be despoiled and flouted as 
 they have been in the past, and the legislator, councilman or 
 alderman who remains deaf to the cry of the people and heed- 
 less of the popular demand for municipal ownership under 
 honest civil service rules and the referendum, may as well 
 prepare for sepulture under a stone upon which will be written 
 the epitaph, "He served the corporations — not the people." 
 
 \/ Cosmopolitan. 30: 557-60. March, 1901. 
 
 Advantages of Public Ownership and Management of Natural 
 
 Monopolies. Richard T. Ely. 
 
 It may be said in favor of public ownership and public 
 management, that b}^ this means the regulation required by 
 the general public arises out of the nature of public property. 
 When private persons manage private property, the natural 
 thing for them to do is to manage it in the interests of 
 private individuals. W^ien public property is managed by public 
 authorities, the natural thing is to manage it in the interests of 
 the general public, because the ownership is, by the very hy- 
 pothesis, vested in the general public. The easy and natural thing 
 to do is to manage property in the interest of its owner. It 
 is, as a rule, right and proper to manage private property in 
 the interest of private persons, and not infrequently it is 
 gross abuse of a trust to manage it otherwise. It is, on the 
 other hand, a perversion of public property to manage it in the 
 interests of private persons. As in the case of private owner- 
 ship of natural monopolies it requires a pressure diverting prop- 
 erty from that management springing up out of the nature of 
 property, to secure the public ends, so it is only through an 
 open and acknowledged abuse of a public trust that public 
 
62 SELECTED ARTICLES 
 
 property can be otherwise managed than to promote the general 
 welfare. 
 
 It is a decided advantage of public ownership coupled with 
 public management, that it makes clear the issues before us with 
 respect to natural monopolies. Exactly what the situation is, 
 may readily be discovered. The source of evils which exist 
 can be ascertained, and steps taken to introduce appropriate 
 remedies. Naturally there may be resistance, and frequently 
 there is resistance, on the part of private interests to a wise 
 management of public property and public business. This re- 
 sistance has various sources. Partisan politics will occur to 
 every one as one source. The low and degraded view of public 
 office as a reward of party service and not as a public trust, 
 is one of the great evils against which the American people 
 have been contending for a generation. On the whole this 
 contest has been successful, although there still remains much to 
 be done to bring about popular enlightenment concerning the 
 true nature of public office and to cultivate a finer sense of 
 right and wrong with respect to it. A more dangerous, because 
 frequently a more powerful and always a more insidious, 
 source of resistance to right management of public undertakings, 
 is found in the selfish interests of private corporations and 
 powerful private combinations of one sort and another. It 
 was the political machine of Philadelphia acting in harmony 
 with a private corporation, which turned over the public gas- 
 works to a private corporation. At the time this article is be- 
 ing written, this same political machine is opposing the im- 
 provement of the public water-works, and is favoring a plan to 
 lease them to a private corporation. The people of Philadelphia 
 have already approved a loan the design of which is to improve 
 the public water-works, but the political machine, in the service 
 of private interests, resists needed improvements. There is 
 strong reason to suspect that private parties in their own private 
 interests sometimes do what they can to make public enterprises 
 a failure, and there is also a very wide-spread effort to repre- 
 sent public activities of every kind as much worse than they 
 really are, coupled with a reluctance to acknowledge merit on 
 the part of those engaged in the public service. In consequence 
 
MUNICIPAL OWNERSHIP 63 
 
 of this, it becomes necessary to go behind the politician, often 
 a mere tool, to find the real power behind him, and this real 
 power may belong to the very respectable elements of the com- 
 munity. 
 
 There must inevitably be a struggle to establish the policy 
 of public ownership of natural monopolies, but when this policy 
 is once thoroughly established, when it comes to be so thoroughly 
 approved and so firmly rooted in our life that an effort to 
 upset it is manifestly hopeless, it must enlist in the cause of 
 good government the intelligent and well-to-do element in the 
 community. There will then be established a harmony of in- 
 terests which is now so sadly wanting. 
 
 It is often said, it is said, every day by press and pulpit, that the 
 better class of the community is apathetic. But why is this the 
 case? What is the deeper, underlying cause? When the better class 
 of the community feels itself and its interests seriously threat- 
 ened, it is by no means apathetic. Take the better class of 
 New York and Boston in its attitude upon the question of 
 silver monometallism. This better class has a very clear idea 
 concerning its own interests with respect to the free and un- 
 limited coinage of silver, and will any one claim that with re- 
 spect to this question it is apathetic? But what is the interest 
 of this better class with respect to excellence in municipal gov- 
 ernment? W^ould not their franchises suffer, would not the 
 terms under which they are able to serve the public with their 
 property, be changed for the worse for them, by municipal 
 reform? Probably in every great city in which the policy of 
 private ownership of municipal monopolies obtains, the number 
 of persons financially interested in this private ownership ex- 
 ceeds by far the number of officeholders. Can the apathy and 
 indifference they show be a source of surprise? Must it not, 
 on the other hand, be a source of surprise that in many of our 
 cities there is so much effort as we actually see on the part 
 of the well-to-do to establish good municipal government, even 
 when this involves a considerable amount of self-sacrifice? 
 
 We indulge in no attacks on individuals or classes. We 
 are attempting to show what course of action men's interests 
 lead them to take, and we ask this question : Can we base a pub- 
 
64 SELECTED ARTICLES 
 
 lie policy upon the hypothesis that a large and powerful class 
 in the community will act in a manner contrary to its own 
 interests? 
 
 In all the cities of the world where there is a thoroughly 
 established policy of public ownership and management, the 
 well-to-do find that their interests are bound up with those 
 of good government. It is a great thing so to clarify the 
 situation that we can find out exactly what are the obstacles 
 in the way of improvement. 
 
 Closely connected with what has gone before, it must be 
 observed that while malignant forces tending to degradation 
 will still exist under public ownership, some of the more power- 
 ful forces of corruption will disappear. The purity of public 
 life will then simply depend upon the general level of intelli- 
 gence and morality, and if that is as high in New York as in 
 Berlin, there is no reason why in the course of time New 
 York should not, equally with Berlin, secure a model govern- 
 ment. 
 
 Another advantage resulting from public ownership of natural 
 monopolies, coupled with excellence in their management, 
 would be the fair and impartial conditions under which private 
 business would hereafter be conducted. We have now a class 
 of dependent monopolies, monopolies which are not such in 
 their own nature but such because they receive favors from 
 monopolistic enterprises. It is at least questionable whether in 
 agriculture, manufacture or commerce any monopoly could be 
 built up without public or private favors. If an agricultural, 
 manufacturing or commercial business is not aided by positive 
 legislation, and is not assisted by special railway rates or favors 
 of any sort coming from any other monopolistic undertaking, 
 the writer is not prepared to admit that it can become a monopoly. 
 An exception, of course, is made of those enterprises based upon 
 very limited supplies of natural treasures, such as anthracite 
 coal. 
 
 Enlarging the field of public industry would give a career 
 in the service of the public to talent ; it would tend to establish 
 a balance between the advantages of public and private life, 
 
MUNICIPAL OWNERSHIP 65 
 
 and could not fail in an intelligent and, on the whole, upright 
 community to ennoble public life. 
 
 It is gratifying to see that to an ever-increasing extent these 
 truths, not after all difficult of comprehension when serious at- 
 tention is given to them, are coming to be accepted. While 
 this article is being written, a campaign is in progress in one 
 city in which the candidate of the Republican party has given 
 as clear expression to these truths as one could desire. As re- 
 ported by a prominent newspaper, he states his views in part 
 in these words : "If elected, I expect to continue in my at- 
 tempts to carry out the principles of my platform of two wears' 
 ago, reiterated in the platform of this year, for the public 
 ownership and control of public utilities, such as water, 
 gas and electric-light plants, street-railways and telephones. 
 I should like to see a civil service law enacted 
 to go hand in hand with these reforms, but I do not believe 
 that we should wait for such a measure. I am firmly 
 of the opinion that the public ownership of such franchises 
 will of itself bring about civil service reform. Municipal own- 
 ership will do more than any other one thing to improve city 
 government in America. In my opinion much of the poor 
 and bad government in city affairs is due to the influence of 
 franchise-holding corporations. It is to their interest to have 
 poor government, to secure the election and appointment of offi- 
 cials whom they can control to their selfish ends. We have 
 seen examples of this in our own city, \vhere local corporations 
 exerted their influence against salutary measures looking toward 
 civil service and other similar reforms." 
 
 On the other hand, the platform adopted by the Democratic 
 party in another city in the campaign which is at the same 
 time in progress, shows that the recognition of these principles 
 which the writer is endeavoring to establish in this article is 
 not confined to any one party. The follow^ing is one of the 
 planks in this platform : 
 
 "We believe the prevailing corruption and bribery in all large 
 cities to be caused by the fact that' public utilities are controlled 
 l)y private corporations. The dependent relation of corpora- 
 tions upon the good will of aldermen, coupled with the frailty 
 
66 SELECTED ARTICLES 
 
 of human nature, makes it impossible to secure official honesty. 
 While there are disadvantages attendant upon municipal control 
 and ownership of public utilities, they are insignificant compared 
 to the wholesale corruption and bribery incident to control by 
 private corporations." 
 
 The methods to achieve the desired transformation in our 
 public life are many. Every improvement in the civil service 
 is helpful. The diffusion of knowledge begetting clear-cut ideas 
 concerninc^ the nature of public corruption, as well as sound 
 ideas concerning social progress, is the chief force producing 
 a movement in the right direction, and the number of educa- 
 tional agencies at work in the enlightenment of public opinion 
 is as gratifying as it is surprising to one who has not considered 
 the subject. The popular educational agencies which have come 
 into operation in the United States during the present generation, 
 are something without a parallel in the world's history. We 
 have our great Chautauqua movement and other similar move- 
 ments almost innumerable. We have our University Extension 
 movement, together with the unparalleled activities of our 
 universities in all branches of learning which pertain to public 
 life. Our state universities, a part of the governmental ma- 
 chinery of our states, are undergoing an expansion and an 
 improvement which would have been deemed incredible even 
 ten years ago. Once more, we have a serious proposal to 
 establish a national university at Washington, and if this is 
 ever established it will no doubt become a civic academy, doing 
 for the civil service something like the work which West Point 
 and Annapolis do respectively for the army and the naval service. 
 While the influence of the press is often devoted to private 
 interests, it is gratifying to see the stand which not infrequently 
 influential newspapers take in behalf of the public, even against 
 powerful private interests. At the same time, the public con- 
 science is being educated by the pulpit. Most gratifying is the 
 public spirit of many men of large wealth who are active in 
 the promotion of good government, while organizations of 
 business men, for example the merchants of New York, are 
 frequently taking a noble stand in defense of popular rights. 
 We may, then, in conclusion say that while the obstacles to 
 
MUNICIPAL OWNERSHIP (^7 
 
 reform are many and progress must in the nature of things be 
 slow, the situation is on the whole a hopeful one. We must not 
 expect great changes this year or next year, but we may feel 
 pleased if there is a steady movement in the right direction. 
 Nor must we be fanatical adherents of any one particular reform. 
 Social improvements come in many different ways and from 
 every direction. Each one sees but a fractional part of the 
 truth, and must be satisfied if he contributes a little part to 
 the grand work of social amelioration. 
 
 ■^ North American Review. 182: 701-8. May, 1906. 
 Municipal Ownership of Public Utilities. George Stewart Brown. 
 
 Progressive Democrats are for municipal ownership, pri- 
 marily, because they believe in democracy. They believe (i) that 
 competition in the public services is impracticable; (2) that 
 municipal ownership will pay, either in cash savings to the 
 taxpayer or in cheaper and better service; (3) that municipal 
 ownership is a political necessity, and will remove the main 
 and most threatening source of political corruption. 
 
 Competition in Public-Service Industries is Impracticable. 
 There is a fundamental difference between a corner grocery, 
 for instance, which can spring up anywhere, and an industry like 
 a gas company, whose very existence depends on a grant from 
 government, and whose first nourishment is the right to use the 
 property of the community, the public streets. 
 
 In Baltimore, ^Maryland, the native city of the writer, there 
 was for a time so-called competition in every public-service 
 industry; the result was some temporary benefit, perhaps, in re- 
 duced rates or improved service ; but in the end came con- 
 solidation, with a capitalization bearing interest on two fran- 
 chises instead of one, and a not inequitable plea on the part of 
 the combined company to the effect that "you, the people, have 
 forced us to this condition of over-capitalization, and must help 
 us bear the burden." 
 
 This has resulted in confusion worse confounded both to the 
 corporations themselves and to the public mind, which has failed 
 
68 SELECTED ARTICLES 
 
 to grasp the real nature of the problem. So-called competition 
 in public-service industries is not competition at all, — it is war. 
 The stronger company either buys out the weaker at once without 
 further parley, or it divides the territory with the weaker, if the 
 territory is big enough to divide, and agrees on rates ; or it 
 temporarily lowers the rates below the point of profit until the 
 weaker succumbs. As a matter of fact, with the exception of the 
 telephone service, industrial public-service war has had but one 
 universal result, consolidation. Not a single instance to the con- 
 trary can be cited. The tendency to consolidation has become 
 so strong that lighting companies furnishing different kinds of 
 lights, like gas and electricity, are now combining, although they 
 largely supply a different field and class of customers. No in- 
 genuity of the most skilled lawyers can prevent consolidation. 
 On the other hand, when a few consolidations here and there 
 have been found illegal, a new method has always been invented 
 to keep the separate interests together, or to reunite them in fact 
 if not in name. 
 
 Granted that a public service must be a monopoly, the people 
 will not long tolerate a monopoly in private hands. They will 
 perhaps try regulation first ; they will sooner or later insist that, 
 if a monopoly, it must be a government monopoly, operated 
 solely for the public benefit, instead of a private monopoly, op- 
 erated primarily for the purpose of private gain, and only in- 
 cidentally for the service of the people. 
 
 Municipal Ownership Will Pay 
 
 V^/ 
 
 One item is almost universally neglected in considering the 
 financial success or failure of city ownership, and that is the 
 capitalized value of the right to do the particular service through 
 the use of the public property in the streets. Let us assume, for 
 illustration, two companies in cities of the same size with their 
 two tramway services, or electric-lighting services, costing the 
 same sum for instalment and with the same rates and an equally 
 efficient management — two business enterprises, that is to say, 
 earning exactly the same amount of money, and identical in their 
 conditions, except that one is public and the other private. 
 
MUNICIPAL OWNERSHIP 69 
 
 Let us suppose that the value of the actual material property 
 of each, bought and constructed, is $50,000,000, and that the 
 private concern pays interest and dividends on a capitalization of 
 $100,000,000, the other $50,000,000 being the intangible value 
 created by the permit held by the private concern from govern- 
 ment to use its combined material properties in connection with 
 the public streets for the required public service. 
 
 Thus we have the interest on $50,000,000 saved for our equally 
 efficient city service. That is the saving to the city, or the margin 
 of efficiency, which our supposed public concern effects as com- 
 pared with the equally well-managed private company. Now, in 
 Baltimore, for instance, the attempted easement assessments, un- 
 der a plan similar to the New York franchise-tax law, amounted 
 to $23,000,000, and they were moderate, because they did not 
 attempt to reach all the intangible value, but only so much of it 
 as came directly from the use of the city streets. Yet this is half 
 the city debt ; and, if the same ideal condition had existed in 
 Baltimore as is supposed in our illustration, the effect of public 
 management would have been like cutting the debt in two. 
 
 To return to our illustration. Fifty million dollars is paid by 
 the first city to the private company for rendering a govern- 
 mental function, whereas the other city saved that amount by 
 performing that function itself ; or, to state it in a different way, 
 the public concern would have to be only half as efficient as the 
 private company to produce the same result to the city. 
 
 It is absurd to attenipt to settle finally the right or wrong of 
 the policy of municipal ownership by reference to the results of 
 any specific instance, just as it would be ridiculous to conclude 
 that individual failures or successes in the banking business 
 demonstrated the folly or wisdom of following that business as 
 a calling. Yet Philadelphia, the stock example of the opponents 
 of municipal ownership, is always so quoted, without regard to 
 the question what Philadelphia gained in the increment of fran- 
 chise value while it held on to its public service. Compare the 
 advantages which Philadelphia gets out of its present lease of the 
 gas-works with the condition of Baltimore with a company op- 
 erating under a perpetual franchise. Now, Philadelphia's present 
 advantage is due to the fact that, at the time of making the lease, 
 
70 SELECTED ARTICLES 
 
 it had a large accrued franchise value to dispose of, and who can 
 say offhand that its long-continued policy of holding on and 
 operating was worse, on the score of past extravagance and de- 
 bauchery, or better, on the score of present advantages derived 
 incidentally from that very policy? 
 
 The writer believes it is a recognition of the value of the cap- 
 italized franchise that makes us hold on to the one public service 
 that is generalh' municipalized, namely, our water-supplies. Log- 
 ically, our reactionaries should advocate the turning over of our 
 water-supplies to private enterprise. Why not, if municipal own- 
 ership is so bad? 
 
 Whatever the reason, we seem to have finally reached the con- 
 clusion to hold tight to what we have. For, even in the most 
 reactionary communities, any proposition to give up a municipal 
 water system to private management would be immediately 
 laughed out of court. The veriest tryo can see that now he pays 
 for water the actual cost, namely, the low rates of interest on city 
 capital expended for plant plus the actual running expenses of 
 the department, and that any balance goes to a lowering of his. 
 tax rate, while, were it farmed out, he would at once begin to pay 
 in addition interest upon the watered flotation of a private com- 
 pany capitalized on its franchise value. Even if he thinks the 
 private company could- hire men for lower wages, save money 
 on its supplies and in many other ways, he knows that the new 
 item would largely exceed any such savings ; and he also in- 
 stinctively feels that, as that franchise value grows with increase 
 of population, the capitalization on which he must give a fair 
 return will grow with equal pace. 
 
 To show still further that we are conscious of this same idea 
 concerning the franchise value to be given away, it is worthy of 
 note that, in considering the establishment of some new service, 
 such as a subway for underground wires, or a sewerage system, 
 we invariably favor municipal ownership, entirely without respect 
 to making it pay as a business proposition. 
 
 In the fight to put the wires underground in Baltimore, it was 
 clearly recognized that the way to do so was by a municipal sub- 
 way. And here the idea of municipal profit on the transaction 
 was eliminated, the plan being simply to charge enough rental 
 
MUNICIPAL OWNERSHIP 71 
 
 to pay interest and sinking-fund, and thus give the use of the 
 subways to the private companies for cost, simply and solely to 
 get the streets clear of obstructions. 
 
 Not charging for the franchise value would probably be the 
 result of the plan proposed as an alternative to municipal owner- 
 ship and operation ; that is, public ownership with private opera- 
 tion. This method would be much preferable to private owner- 
 ship, because the franchise itself would be reserved, and some day 
 might be utilized without extra cost by the city itself. 
 
 Again, in the matter of sewerage in Baltimore, only once was 
 it seriously proposed to farm out the system to a private com- 
 pany. The proposition to grant a franchise was coupled with fair 
 promises of the benevolence the company would show to the city 
 — how it would relieve the city from an enormous municipal debt 
 and charge fair and reasonable rates ; but immediately, with loud 
 and universal public condemnation, the proposal was buried out 
 of sight. Its opponents called it a scheme for "graft," a "gi- 
 gantic steal," etc. Why graft? Why a steal? What was there 
 to steal except the franchise value, which, of course, would have 
 been abundantly capitalized? A distinct popular recognition of 
 the point I am trying to make. 
 
 The margin of efficiency saved by the reservation of the fran- 
 chise value, coupled with the lower interest rate on municipal, 
 as compared with private, loans (with the promoters' and bank- 
 ers' commissions on the latter), must be more than used up by 
 higher wages, political debauchery and extravagance before pub- 
 lic operation can become more expensive than private ownership. 
 
 Besides, there is no inherent reason why the mob of voters 
 should not obtain as good and successful management as the mob 
 of stockholders. 
 
 Again, the increment of franchise value to come from future 
 increase of population is going to be enormous. We all believe 
 in great increases in population in the future in and about our 
 great cities. The franchise or right to serve a city of a million 
 souls will be worth more than twice as much as the franchise to 
 serve half a million. If we buy now from the private owners, 
 including present franchise value, we will save all future incre- 
 ment, with every prospect that the proportionate improvement in 
 

 72 SELFXTED ARTICLES 
 
 the governmental service will be greater every year in the line 
 of increased efficiency. The increase, up to the present time, in 
 the value of public-service capitalizations, has been almost be- 
 yond the dreams of avarice. From the moment of municipali- 
 zation, this will become the property of the people, and accrue 
 to them as reduced rates, better service or lowered tax rates. 
 
 Municipal Ownership is a Political Necessity. 
 
 Public-utility corporations are the chief bulwark and support 
 of the machine, and interest in the questions afifecting vested 
 privilege means for the individual showing such interest that he 
 puts himself outside the party pale. Give the "boss" his fran- 
 chises and the vested interests behind them, and you have the im- 
 mense modern campaign fund which alone makes the machine 
 possible. 
 
 What is the testimony of those who have had practical ex- 
 perience in this matter? Ask La Follette, ask Mark Fagan, ask 
 Tom Johnson, ask Folk, ask Weaver, and they will answer, with 
 one accord, that their breach with their party organizations came 
 when they attempted to remedy some abuse which the masters 
 of vested privilege, the franchise-holders, were committing, or to 
 punish the perpetrators thereof. They will testify that it was not 
 the free choice of subordinates, or the suppression of petty and 
 minor graft, that aligned the party "boss" against them. These 
 were sins, but forgivable sins. The one unpardonable sin was to 
 touch with a fearless hand the public-service monopoly question, 
 or to punish those who assist the machine in carrying out its 
 alliance with business privilege. 
 
 No one now, conservative or radical, stands for unregulated 
 monopoly, while all thinkers and writers on the subject recognize 
 public services as necessary and natural monopolies ; and it is 
 generally admitted that existing political evils are primarily 
 caused by the presence in politics of the public-service corpora- 
 tions, and this admission involves the recognition of the necessity 
 for some remedy. Certain opponents of municipal ownership 
 propose "regulation" and "punishment for the wrong-doer." 
 Now, in the first place, "regulation" means what looks very like 
 
MUNICIPAL OWNERSHIP yi, 
 
 a political impossibility. It means that the servant must regulate 
 his master ; that the party man, who has been elected as such, 
 must put himself outside the breastworks of the organization by 
 regulating the party's best and ever-faithful friend, the cam- 
 paign contributor. This is not in human nature. This is why 
 you will so often find the business man in office, honest as the 
 day is long in his private business, but in office particularly care- 
 ful to carry out his reforms in places where they do not conflict 
 with big business privilege. 
 
 The advocates of regulation overlook one point, which, in my 
 opinion, is vital. Regulation of rates or service is always resisted 
 by the owners ; and the advocate of regulation is compelled to put 
 himself in constant antagonism with his business associates and 
 social friends, who happen to be owners or managers of the par- 
 ticular service involved. To do this, to interfere with the busi- 
 ness interests of those with whom one enjoys the most pleasant 
 personal relations in one's daily walk, is a disagreeable and often 
 dangerous thing for any man to do. 
 
 Yet the public official must needs do this, over a long and ag- 
 gravating period of years, throughout his w^ole political exist- 
 ence, if he is to carry out a policy of regulation, or even attempt 
 to compel the public-service corporations to obey their legal obli- 
 gations. A battle for municipal ownership would be a compara- 
 tively short conflict, and there would be nothing to disturb per- 
 sonal relations, as soon as it became an accomplished fact. 
 
 This social and business association, combined with the fear 
 of wrath to come in the shape of a contribution which will set 
 their party machine against them, explains the failure of execu- 
 tive officers, otherwise honest and efficient, to take up, on their 
 own initiative, cases of plain violation of public obligations on the 
 part of these companies. This is what the organizations and the 
 companies mean by a "safe" man. Every nomination for import- 
 ant office is scrutinized from their own point of view by the rep- 
 resentatives of these vested interests. Fagan, La Follette, and 
 Johnson are not considered "safe." because they have touched the 
 vital pocket-nerve. To obtain their renominations, they have each 
 been compelled to capture their party, over the heads of its old 
 organization, and practically to construct a new party of their 
 
74 SELECTED ARTICLES 
 
 own, and fight the combined power of the public-service corpora- 
 tions, which immediately rallied around the banner of the oppos- 
 ing party. The fact that they have succeeded shows that the 
 people have learned to protect their government, and indicates 
 strongly that they will be responsive to the necessities which 
 municipal ownership brings of a more certain tenure of office in 
 the public service and a greater governmental efficiency. 
 
 In every case where "regulation" has seriously been attempted, 
 long and tedious litigation has been the result. Witness Roose- 
 velt's Ford Law which, though passed in 1899, has never yet been 
 enforced. Witness La Follette's rate legislation and Johnson's 
 efforts for three-cent fares. If the litigation is successful, it in- 
 volves the election of successive administrations, who are firm 
 believers in the same policy, to keep the "regulation" going ; and 
 this, in turn, means a continuous political warfare, fraught with 
 all these necessary antagonisms and involving a steady incentive 
 to political corruption, without the definite results municipal 
 ownership would secure. 
 
 Municipal ownership is only beginning to be tried in this coun- 
 try, although a start is being made in the electric-lighting service, 
 some 800 plants, large and small, having been established, accord- 
 ing to Mr. McCarthy, the legislative statistician of Wisconsin. 
 But time enough has not rolled by to make history and show suc- 
 cess or failure. Private ownership, on the other hand, has ex- 
 isted for a long time, and yet no important instance can be cited 
 of successful "regulation" in any city. In the cities where it 
 has been attempted, like Chicago, Cleveland, New York and 
 Detroit, the sentiment for municipal ownership is strongest. It 
 is not too much to say that, for political reasons, "regulation" 
 either has not been attempted, or where attempted has failed. 
 
 If we are to measure efficiency by something more than dollars 
 and cents, if elements like comfort and convenience and con- 
 science and political freedom are to count for anything, we must 
 by cooperation, through the medium of our city governments, 
 furnish the people with those necessities which, from the nature 
 of the situation, ordinary competitive business cannot furnish, 
 and as to which they must either be protected by government or 
 taxed to make a watered franchise pay. 
 
MUNICIPAL OWNERSHIP 75 
 
 These are real functions of government according to the true 
 doctrine of "'laissez-faire." The philosophers of that school did 
 not hesitate to provide a police force to prevent private exploita- 
 tion, to establish a tax-collecting department instead of farming 
 out the taxing power. But we have handed over the public prop- 
 erty in the streets to private corporations, and given them a 
 power, monopolistic in its nature, to furnish public necessities ; 
 and within limits the owners have the power to charge or tax the 
 people for this service. 
 
 We who believe in public ownership believe in radical reform 
 as we believe in democracy. We want to make democracy free 
 and able to handle the big propositions for popular benefit, as well 
 as the small ones. We hold that, if we merely get good men in 
 office who will look after and trample upon the small grafters, 
 we accomplish something; but to give real justice to the people, 
 we must stop the big leaks involving millions, as well as the small 
 leaks involving hundreds and thousands. To fight the "boss" 
 successfully, you must cut off his supplies, his campaign con- 
 tributions. You must take away the special privilege of the man 
 behind the '"boss," the public-utility captain, and turn him from 
 a natural enemy of government into an ordinary unprivileged 
 citizen and the friend of progress. 
 
 Annals of the American Academy. 27: 37-65. January, 1906. 
 
 Municipal Ownership and Operation of Street Railways in Ger- 
 many. Leo S. Rowe. 
 
 Any attempt to determine the success or failure of municipal 
 management of street railways in Germany must be based upon a 
 comparison of public with private management. A careful review 
 of the experience of German cities will show that private control 
 has been singularly unprogressive. This has been due, in part at 
 least, to the onerous conditions under which the original franchise 
 grants were made. The companies did not feel justified in incur- 
 ring the risks involved in making improvements on a large scale 
 or in extending the service into the outlying districts of the city. 
 Impressed with the lessons of this experience we find the more 
 recent franchise grants specifying minutely the streets over which 
 the service must be extended. 
 
76 
 
 SELECTED ARTICLES 
 
 The relation between city and street railway corporations in 
 Germany seems to be exactly the reverse of that in the United 
 States. Here the companies are constantly seeking the right to 
 extend their lines into new districts, whereas in Germany the 
 municipal authorities are engaged in a constant struggle to secure 
 from the companies an extension of the service. This difference 
 in the attitude of the companies toward the extension of the 
 service is due in part to the broader spirit of enterprise of Ameri- 
 can corp'irations, but the main reason is to be found in the fact 
 that the German companies were aware that every new grant 
 from the city would be accompanied by a demand for such a per- 
 centage of gross receipts as would considerably diminish their 
 dividends. It is not surprising, therefore, that the German com- 
 panies have shown a conservatism which is usually interpreted 
 as lack of enterprise and inability to discount the future. 
 
 We have seen that the movement toward municipalization 
 was largely determined by the antagonism between the cities and 
 the street railway companies, growing out of the desire of the 
 city to secure a more rapid extension of the service. If at the 
 time they applied for the right to substitute electricity for horse 
 power, the companies had more fully appreciated the value of 
 the privilege, it is likely that they would have been more willing 
 to accede to the wishes of the city authorities. 
 
 The process of municipalization was greatly facilitated by the 
 fact that under the German law the accounts of public service 
 corporations are subjected to careful public control. The amount 
 expended by each company for the construction and equipment 
 of the lines is easily ascertainable. Every dollar of capital repre- 
 sents actual investment. The total capitalization of the companies, 
 whose lines have been recently municipalized is as follows : 
 
 Total 
 
 Length of line, 
 including dou 
 
 capitalization ble track r'l'ys 
 
 Cologne Street Railway Co.. 
 Nurnberg Street Railway Co. 
 Munich 
 
 $1,368,625 
 1.570,000 
 1.500,000 
 
 50.5 
 
 29 
 
 63 
 
 Capitalization 
 per mile of road 
 
 $27,101.48 
 54.138.28 
 23,809.52 
 
MUNICIPAL OWNERSHIP -jj 
 
 The net capital liabilities per mile of track of the electric sur- 
 face railways of the United States is $92,114. In the cities with a 
 population of 500,000 and over, the net capitalization per mile of 
 track reaches the enormous sum of $182,775. In New York City 
 the capitalization per mile of track is $259,542; in Chicago, 
 $109,537; in Philadelphia, $165,085; in St. Louis, $198,647; in 
 Boston, $97,353; in Washington, $186,416; in Pittsburgh, $185,170, 
 and in San Francisco, $140,985. 
 
 The influence of this wide difference in capitalization on the 
 expense account of street railway lines under American and 
 European conditions is readily apparent. The percentage of total 
 income expended by American companies for interest and liqui- 
 dation charges and for the payment of guaranteed dividends to 
 subsidiary companies is considerably larger than those of the 
 German companies. The following table presents some data re- 
 lating to Frankfort, Cologne and Munich. Accurate figures for 
 the larger American companies are not obtainable : 
 
 Interest and liqui- Percentage of total 
 
 dation charges. expenditure. 
 
 Frankfort 
 Cologne ... 
 Nurnberg. 
 
 $112,065.04 
 204,000.00 
 138,063.00 
 
 10.6 
 17.0 
 
 28.7 
 
 Any attempt to review the results of municipal ownership 
 would be incomplete without some reference to the effect on the 
 civic life of the communities under consideration. The introduc- 
 tion of electricity as a motive power greatly increased the possi- 
 bilities of profit, and led the companies to exert the strongest 
 possible pressure to secure a renewal of their franchises combined 
 with the right to use electrical power. In the struggle to secure 
 these new rights one can detect the first traces of the insidious 
 forms of corruption w^hich have done so much to undermine the 
 civic life of American communities. In a number of instances, 
 members of the council were retained as attorneys for street rail- 
 way companies, and in one case an influential member of the 
 "Magistrat" of one of the larger cities was made a director of a 
 
78 SELECTED ARTICLES 
 
 street railway company at a time when the company was seeking 
 important privileges. 
 
 On the other hand, in those cities which have municipalized 
 their street railway system, there is no indication of corruption 
 traceable to the large increase in the number of city employees. 
 The civil service system is so highly organized that the danger of 
 political influence is reduced to a minimum. 
 
 Viewing the situation broadly, it may fairly be said that the 
 municipalization of the street railways has protected these cities 
 from the dangers involved in the desire of private corporations to 
 secure control of local administration for the purpose of securing 
 special privileges. In 1890 but a few of the companies were de- 
 claring large dividends. In fact, the large return which they were 
 compelled to make for the franchises under which they were op- 
 erating grants made it necessary to exercise the greatest economy 
 in order to make a fair profit on the capital actually invested. 
 The new franchises, in offering to the companies far larger pos- 
 sibilities of profit, correspondingly increased the temptation to 
 secure control of local policy. It is too early to predict whether 
 the cities in which the street railways are still in the hands of 
 private companies will be able to withstand the temptations which 
 now beset them. 
 
 Are these lessons of German experience of any real value to 
 our American municipalities? The answer to this question is a 
 matter of far more than theoretical importance. Partly because 
 of the feeling of irritation aroused by the corrupting influence 
 of public service corporations on the civic life of American com- 
 munities, but mainly owing to a general awakening to the possi- 
 bihties of improved service in urban transportation and in gas 
 and electric light service, the public mind is anxiously turning 
 to municipal ownership and operation as a possible solution. In 
 fact, indications are not lacking that we are drifting toward a 
 fetichism of municipal operation which is likely to work great 
 harm. One of the safeguards against this danger will be a proper 
 estimate of the value of foreign experience. 
 
 The success of municipal operation in Germany means that the 
 people are enjoying better service than under private manage- 
 ment. The causes of the failure of private operation to meet 
 
MUNICIPAL OWNERSHIP , 79 
 
 modern requirements are readily ascertainable, and as we have 
 seen these causes do not exist in the United States. In other 
 words, the conditions for successful private management are far 
 more favorable in the United States than in Germany. 
 
 Furthermore, as regards urban transportation, the require- 
 ments of public opinion as to the standard of service are im- 
 measurably higher in the United States than in Germany. Not- 
 withstanding our prodigality of public franchises, the American 
 public has always set a relatively high standard as regards the 
 character of the transportation service. We have been willing 
 to pay a high, at times an exorbitant price, but there has been a 
 corresponding demand for good service. No American commun- 
 ity of any size would to-day tolerate the conditions of urban trans- 
 it that obtain in most German municipalities. The present unrest 
 of American public opinion is due to the fact that the require- 
 ments as to the standard of service are being raised with such 
 rapidity that the over-capitalized corporations are unable to main- 
 tain the pace to which they have been forced during recent years. 
 Although the arguments in favor of municipal operation are 
 being grouped about the possibility of large financial returns to 
 the city treasury, it is not likely that this argument will stir the 
 American people to any drastic measures. To secure united ac- 
 tion, appeal must be made to the desire for improved service. 
 The fact that municipal operation has given improved service in 
 Germany does not necessarily mean that it will produce the same 
 results in the United States. Whatever may be said against 
 American street railway corporations, no one will deny that they 
 have given far better service than the German companies. It is 
 true that they have been given greater freedom in the develop- 
 ment of the service and that the public demands, especially as 
 regards rapidity of service, have been considerably higher than 
 in Germany. Be this as it may, it is important to bear in mind 
 that municipal operation in the United States would have to bear 
 comparison with a higher standard of service than in Germany. 
 Any attempt to apply the lessons of German experience which 
 does not keep these differences in mind, is certain to be mislead- 
 ing rather than helpful. 
 
<So SELECTED ARTICLES 
 
 Outlook. 80: 431-5. June 17, 1905. 
 Municipal Ownership of Street Railways in Glasgow. 
 
 Robert Donald. 
 
 Glasgow, the commercial metropolis of Scotland, was the first 
 city to adopt municipal ownership of street railways on a large 
 scale and to carry it to a logical conclusion by operating as well 
 as owning its roads. The success of this pioneer enterprise has 
 stimulated progress all over the world. It is not surprising that 
 Chicago should seek the advice of Mr. Dalrymple, the manager 
 of the Glasgow Tramways, when about to make the first experi- 
 ment in the municipal ownership of street railways in America. 
 The chief officers of the Glasgow Tramways have been fre- 
 quently called in to advise other municipalities, and have been 
 tempted away to occupy other positions. When Mr. Yerkes 
 wanted a man to direct his vast railroad enterprises in London — 
 electric suburban roads and deep-level subways — to remodel an 
 old system and inaugurate a new one, he found him in Mr. John 
 Young, the organizer and first manager of the Glasgow Tram- 
 ways. No better testimonial to the efficiency of municipal owner- 
 ship could be found than this appointment. Glasgow has been 
 a training-ground for street railway administrators, as its former 
 officers are managing tramway systems in Leeds, Madrid, and 
 other cities. 
 
 The ownership of tramways in Glasgow was the necessary 
 outcome of the city's municipal policy. The city has always held 
 a leading position for the extent of its municipal institutions as 
 well as for efficiency of management. From the romantic Lake 
 Katrine in the Trossachs, associated with memories of Scott's 
 masterpieces, the city draws its municipal water supply. Since 
 1869 it has owned its gas-works, and lowered the price until now 
 it is fifty-three cents per thousand cubic feet. Its municipal 
 electricity is also supplied at the extremely low rate of five and 
 one-half cents per kilowatt hour. Private slaughter-houses were 
 abolished in the middle of the last century, and three municipal 
 establishments serve the city. All the markets are municipal pos- 
 sessions. Forty years ago the center of Glasgow was congested 
 
MUNICIPAL OWNERSHIP 8i 
 
 and overcrowded. Dens of rookeries were packed round narrow 
 courts. They were nurseries of crime breeding-grounds of dis- 
 ease. A radical remedy was adopted. Nearly a hundred acres 
 of slumland, with a population of 51,000, were bought by the city, 
 which carried out a bold reconstruction and rehousing scheme. 
 Over $12,000,000 has been expended in the improvement scheme. 
 The municipality has built thirty new streets, widened as many 
 more, and provided new tenements and lodging-houses for the 
 displaced population. It burdened itself with a heavy annual 
 charge to start with in support of the improvement ; but the 
 scheme, instead of now being a burden, has become a financial as 
 well as a social benefit to the community. It was the persistency 
 of Glasgow that broke down the private telephone monopoly in 
 Great Britain, encouraged other municipalities to establish their 
 own system, and has now led to the complete nationalization of 
 the whole service. 
 
 Among the other municipal possessions of Glasgow may be 
 mentioned a series of hospitals, homes for inebriates, art galleries, 
 museums, numerous parks, libraries, baths, winter gardens, 
 botanic gardens, public schools, art schools, technical institutes, 
 free concerts, pleasure grounds, facilities for golf and other 
 games, gymnasia and playgrounds for children, etc. Its solicitude 
 for the poor has induced it to establish a family home for chil- 
 dren of widows and widowers, and depots for the supply of 
 sterilized milk to poor children. It was due to civic enterprise 
 that the Clyde was converted into a navigable river and Glasgow 
 made one of the leading ports in the world. 
 
 Connected with Glasgow's greater municipal organizations are 
 many subsidiary developments of special interest. The Cleansing 
 Department, for instance, which deals with city refuse, has de- 
 veloped large estates, maintains farms, and works stone quarries, 
 from which the municipality obtains part of its supply for street 
 paving. The Water Department supplies hydraulic power. In 
 fact, Glasgow municipality looks after the welfare of its citizens 
 on a most comprehensive scale, by providing them with all com- 
 mon services of public utility — with one exception. Having done 
 so much to promote the health and welfare of the community, it 
 has not considered it necessary to make provision for the disposal 
 
82 SELECTED ARTICLES 
 
 of the dead, by municipalizing the cemeteries. All its numerous 
 services, institutions, works, municipal industries, are carried on, 
 not for the purpose of accumulating large profits to be trans- 
 ferred to accounts for the relief of local taxation, but on the 
 principle of supplying the cheapest and best services, so as to 
 spread the benefits over the greatest number of the citizens. The 
 dividends which the city reaps are in the form of civic betterment, 
 lower death rate, and improvement in social conditions. Its 
 progress in civic affairs has never been tarnished by the taint of 
 politics. The ward "boss" is unknown. Citizens' committees 
 take his place. Civic patriotism runs strong, and the differences 
 among the members of the City Council are not so much on the 
 principles of progress as on the pace at which they should go for- 
 ward. 
 
 Bearing in mind the history of Glasgow, its experience in 
 municipal administration, it was the most natural thing in the 
 world that, given the opportunity, it should municipalize its tram- 
 ways ; and it would have been going back on its record if it had 
 not made the system a success. Like most British cities outside 
 London, Glasgow had always municipal ownership of its tram- 
 ways. Several years after tramways were introduced into Ameri- 
 can cities, experimental lines were tried in England. Parliament 
 scented the nucleus of a new monopoly. Cities feared that they 
 would lose control of their streets ; so a law was passed, though 
 not until 1871, laying down the principles of municipal ownership, 
 with short franchises — an undesirable condition, as time showed. 
 The cities could build the roads and grant franchises to com- 
 panies for twenty-one years, or could leave the companies the 
 right to build, with or without conditions. In either case, the 
 tenure of the private corporations expired automatically after the 
 lapse of twenty-one years from the opening of the track. At that 
 time the House of Commons foresaw, the possibility of municipal 
 operation, but was fearful of the result, and passed a Standing 
 Order, to prevent it. The city which owned the roads was under 
 no obligation to buy the operating company's rolling stock, 
 depots, etc., but the city which did not begin with municipal own- 
 ership was called upon to buy the company's undertaking at its 
 "then value ;" that is, after twenty-one years' use, making allow- 
 
MUNICIPAL OWNERSHIP 83 
 
 ance for depreciation but none for compensation in respect of 
 good will and future profits. Both methods undoubtedly retarded 
 progress. When the franchise period was drawing to a close, 
 there was no desire for improvement, no attempt to introduce 
 electric traction ; roads were not extended ; rolling stock was 
 allowed to become dilapidated as well as obsolete. 
 
 The legislative barrier to prevent municipal operation was 
 not disposed of until 1896. Several towns, notably Huddersfield 
 and Plymouth, had before that date operated lines only on suffer- 
 ance, because no company had made a reasonable offer. Glasgow 
 discovered that, in taking over the powers which established the 
 company, it had also taken the right to work the tramways, so 
 that it was outside the scope of the Parliamentary prohibition. 
 
 It had given a company the franchise for twenty-three years — 
 two years beyond the minimum period — on the following condi- 
 tions : 
 
 1. The company paid all promoting expenses and interest on 
 the money which the city borrowed in making the roads. 
 
 2. It paid into a redemption fund three per cent, on the 
 capital expenditure. 
 
 3. It paid four per cent, on the cost of construction to form 
 a fund for renewals carried out by itself under supervision of 
 the municipality. 
 
 4. It paid $750 per mile for the use of the streets. 
 
 These were stringent conditions, but they did not preverft the 
 tramway company from paying fair dividends, and they enabled 
 the city to pay back the whole of the capital expenditure when 
 the franchise expired, and to receive in the form of mileage dues 
 $378,120. 
 
 The franchise expired in June, 1894. The situation was sim- 
 ilar to the position in Chicago. War was declared between the 
 company interests and the municipality. Municipal elections were 
 fought on the future of the tramways. A spontaneous outburst 
 of civic enthusiasm led to a citizens' victory ; municipal ownership 
 was adopted. Defeated in the election field, the company inter- 
 ests then declined to sell their worn-out cars, their old horses, 
 and their depots at a reasonable price. The city's reply was to 
 build new depots, buy new cars, engage and train a new staff. 
 
84 SELECTED ARTICLES 
 
 Without the use of the track it could not adopt electricity, but 
 had to begin with horse traction. There was a dramatic change. 
 At midnight the company's cars disappeared from the streets ; 
 a few hours later the municipal cars were running. The success 
 was immediate and has been permanent. 
 
 It will be interesting to state the effect of municipal owner- 
 ship, and to explain the policy which guided the City Council. 
 The company — as all private enterprise must do — kept mainly in 
 view immediate profits. Like most British companies, it pur- 
 sued a narrow policy. The keynote of the municipal system was 
 service, giving the best possible to the citizens. The municipality 
 operated the roads in the interest of all. It greatly lowered the 
 fares, banished all advertisements from the cars, made the names 
 of the routes and destinations conspicious, opened up new routes 
 and linked up new districts. It also considered its employees. 
 Without a contented staff there cannot be a perfect service. So 
 the drivers and conductors were dressed in new uniforms, their 
 wages were increased, their hours reduced. The citizens had the 
 feeling of personal possession when they patronized the cars, 
 which display the city's arms and its motto — "Let Glasgow 
 Flourish." Civic patriotism asserted itself later on, when the 
 displaced franchise-holders started a competing service of omni- 
 buses, which failed to get support and soon disappeared. 
 
 The City Corporation had no sooner completed its horse-car 
 service than it set about investigating electric traction. It sent 
 deputations to America and to Continental Europe. To the dis- 
 appointment of many, it adopted the overhead instead of the 
 underground trolley. 
 
 In reconsfriicting its system, the City Corporation adopted the 
 system carried out in other departments. It dispensed with con- 
 tractors as much as possible. It built the new depots and the elec- 
 tricity-generating station, laid down the extensions, and, after 
 the first set of cars, built all others in the department's work- 
 shops. The Glasgow tramways extend beyond the city boundaries 
 by agreement with suburban municipalities, and serve a popula- 
 tion of a million. Since the tramways were municipalized, the 
 roads have increased from sixty-four to one hundred and fifty 
 miles. This extent of road is small in comparison with the Chi- 
 
MUNICIPAL OWNERSHIP 85 
 
 cago street railways, or of the systems in less populous American 
 cities. The area of Glasgow is small — 12,688 acres — for a city 
 of its population, 790,000. Many streets are too narrow for tram- 
 ways. Suburban districts still maintain a lingering but dying 
 prejudice against the democratic street-car. Glasgow is a busy 
 center for a British city,. but its bustle cannot be compared with 
 the feverish activity of Chicago. There is far greater mobility 
 among the people in American than in British cities. 
 
 There are interesting differences in the methods of operating 
 the car service. There are no transfers in Glasgow, as in Ameri- 
 can and Continental cities. The city is divided into routes, and 
 fares are regulated according to distance. The policy is to carry 
 the greatest possible number of people at the lowest possible 
 rate, and to make every route independent and self-supporting, 
 except in the case of new roads which are being developed. 
 British people have not yet acquired the traveling habit to the 
 same extent as Americans. A larger number of people want to 
 travel a mile than to go five miles ; but, unless the fares were low 
 for short distances, British people would not take the cars. 
 
 The fares in Glasgow are one cent for a stage of a little over 
 half a mile, and over 30 per cent, of the passengers travel this 
 short distance, and bring in nearly 17 per cent, of the receipts. 
 For an average of two and a third miles the fares are two cents, 
 and close on 61 per cent, of the passengers travel this distance 
 and contribute 665<2 per cent, of the receipts, so that 91 per cent, 
 of the total number carried pay two-cent or one-cent fares. Only 
 6.31 per cent, travel for three cents, bringing 10.38 per cent, of 
 the receipts; 1.62 pay four cents, and bring 3.54 per cent, of the 
 receipts. Less than one per cent, of the 189,000,000 passengers 
 last year paid five cents or more. It is obvious that the long-dis- 
 tance passengers contribute an undue share of the profits, while 
 in American cities the policy is to overcharge the short-distance 
 traveler, 
 
 Glasgow tramways differ in other respects from the American 
 cars. The conductor, instead of ringing up the fare, gives pas- 
 sengers tickets which they punch, and the discs punched out of 
 the tickets are the means of checking the receipts. Then the cars 
 are double-deckers. Leaving out of account overcrowding, which 
 
86 SELECTED ARTICLES 
 
 is not permitted in Glasgow, the double-decker will carry nearly 
 double the number of passengers of the ordinary American car. 
 Stoppages are more frequent, however, and fares are more diffi- 
 cult to collect. There are regular stopping places, about the 
 width of a block apart, for taking up and setting down passengers. 
 
 The Glasgow tramways are managed by a Committee of the 
 City Corporation, which holds frequent meetings and reports 
 regularly to the City Council. It consists of twenty-eight mem- 
 bers, who appoint sub-committees for supervising different de- 
 partments. It obtains the sanction of the Council for its actions. 
 The Council might be regarded as the legislative authority, and 
 the Committee as the executive. 
 
 From a financial point of view the Glasgow undertaking has 
 been remarkably successful. A cautious policy has been adopted. 
 As I have pointed out, the original capital for constructing the 
 roads was paid off when the municipality obtained possession. 
 More capital was borrowed, on the credit of the city, to start the 
 horse traction system, and the city has been continually borrowing 
 to meet additional capital expenditure, until the capital now 
 stands at over $12,000,000. The Council pays a little over three 
 per cent, interest on the capital, which is borrowed for a period 
 of thirty years. It has adopted the policy of practically renewing 
 the permanent way out of revenue, depreciating heavily, and 
 building up revenues in order to keep down capital expenditure. 
 Unlike other British cities. Glasgow does not use its surplus 
 profits for the relief of local taxation. It pays a mileage rate on 
 the same basis as the old company did into what is known as the 
 Common Good Fund of the City — a general fund which can be 
 applied to any purpose for increasing the amenities of the city 
 and the welfare of the people. This mileage rate amounts to 
 $125,000 a year. The result of pursuing this cautious policy as to 
 capital expenditure, and carrying out repairs and renewals from 
 revenue, was that, by the time the whole system was converted 
 to electric traction, the whole capital incurred four or five years 
 previously for equipping the horse system had been entirely ex- 
 tinguished. 
 
 Last year's accounts indicate the healthy financial condition 
 of the tramways. The total receipts, for instance, amounted to 
 
 
MUNICIPAL OWNERSHIP 87 
 
 £724,857 ($3,624,255), the operating expenses to £356,820 
 ($1,684,100) — 49 per cent, of the revenue. The net receipts 
 showed a gross return on the capital outlay of 17.46 per cent. 
 The interest and franchise charges to other municipalities 
 amounted to £64,376 ($321,880). The payment into a sinking 
 fund for redemption of capital at the rate of two per cent, was 
 ^45.553 ($227,765). There still remained the huge surplus of 
 £258,102 ($1,290,510), which was allocated to depreciation and 
 reserve fund, and the payment of $125,000 in mileage dues to the 
 Common Good Fund. The ordinary depreciation on equipment, 
 power stations, cars, etc., amounted to $393,095. There was a 
 special depreciation for cables, overhead wires, buildings, etc., 
 of $310,000. There was carried to a general reserve fund $93,950, 
 and to a permanent way renewal fund $300,135. This fund now 
 stands at $965,025. The tramways undertaking makes the same 
 contribution to local taxation as if it were under private enter- 
 prise. The amount which it paid in taxes in the last financial 
 year was $174,580. The accounts of the department are examined 
 and audited by independent professional accountants. The ac- 
 counts are published with elaborate detail, showing the smallest 
 item of expenditure worked out to percentages and comparisons 
 with previous years. 
 
 The Tramway Department, as I have indicated, generates 
 its own electric power, the total cost of which is less than one 
 cent per kilowatt hour. 
 
 The Tramways Committee delegates considerable power to its 
 general manager, who is responsible for the staff who form part 
 of the permanent civil service in the city. Politics does not in- 
 fluence appointments, and promotion is by merit. 
 
 In conclusion, I would like to point out that the Glasgow tram- 
 ways system has not by any means reached its high-water mark 
 of efficiency. With its cautious financial policy, the Tramways 
 Department could in a few years accumulate reserves which 
 would enable it to introduce the underground trolley without 
 adding greatly to its capital, and further swell its earning powers. 
 With liberal depreciation and reserve funds to meet renewals 
 and obsolescence, with a redemption fund which liquidates the 
 original capital of the undertaking in thirty years, which is at the 
 
88 SELECTED ARTICLES 
 
 same time maintained in an efficient condition out of revenue, the 
 City Corporation is more than doing its duty to the next genera- 
 tion. Lower fares for long distances should be easily possible 
 in the near future, and there is a prospect that the average fare 
 will come down to one cent. A universal one-cent fare ir- 
 respective of distance could then be adopted. 
 
 City Hall. 2: 225-7. January, 1910. 
 
 Argument for the Municipal Ownership of a Street " Railway 
 
 Company. 
 
 Nearly all the arguments commonly advanced by persons 
 urging the operation of street railway companies by the municipal 
 government are contained in the minority report of a sub-com- 
 mittee of a citizens' committee of Detroit, ]\Iich., filed in De- 
 cember. Detroit being a typical American city, the application of 
 the ideas of the municipal ownership enthusiasts in this instance 
 is of great interest to all those who are impartially studying the 
 question, and THE CLfY HALL prints the report practically in 
 full, following the outline chosen by the sub-committee : 
 
 1. Is municipal ownership financially practicable? 
 
 2. Can it be made economically possible? 
 
 3. Is it morally right? 
 
 4. Can it free us from political corruption? 
 Is it the best as well as the only reasonable and feasible 
 
 5 
 plan? 
 
 Is it Financially Practicable f 
 
 "Our investigation shows that a municipally owned and op- 
 erated street railway system cannot financially fail in this city 
 for the reason that it will always be within the power of the city 
 to make the expenses of transportation cover the cost of opera- 
 tion, just as we do now with our water works and other munici- 
 pal institutions. Just what the cost per passenger would actually 
 be it has not been possible for us to exactly figure out. But this 
 is plain : with municipally owned lines, based upon the actual cost 
 of construction and operation, we can greatly reduce the present 
 
MUNICIPAL OWNERSHIP 89 
 
 rate of fare. This is self-evident when we consider the condi- 
 tions of the old company and their expenses. It is burdened 
 with a debt much greater than the actual valuation of the property. 
 If we consult the company's own reports, we can see what an 
 enormous reduction could be made in the way of reduced fares 
 if the lines were owned and operated by the municipality. 
 
 "The Detroit United Railway, in its report to the American 
 Street Railway Investment for the year ending December 31, 
 1908, states that it operated in the city of Detroit, during that 
 year, 23,977,814 car miles, that its earnings per car mile for each 
 mile operated were 23.05, or a fraction over 23 cents per mile. 
 It states that its net earnings, after paying taxes and all legiti- 
 mate operating expenses, were 8.53, or a fraction over Syz cents 
 on each and every car mile so operated. This, taking its own fig- 
 ures, left it a net profit, after paying all legitimate operating 
 expenses and taxes, over the sum of $2,045,000. This gives us 
 some idea as to what can be done in the way of lowering the 
 fares if the system is operated by the municipality in the interest 
 of the people. 
 
 "The money to finance such a proposition can easily be raised. 
 Controller Doremus proved this only a few evenings ago in a 
 public address. If you were to grant the present company a 
 franchise for 30 years, based upon 6 or 7 tickets for a quarter, 
 the directors would go into the money market and borrow millions 
 with nothing back of it but the franchise. Has not the city this 
 same opportunity? We not alone have the franchise, but we have 
 the property on which to issue these bonds. The bonds will al- 
 ways be secure. Money can be borrowed by the city at a lower 
 rate than by the D. U. R. There will never be any danger of a 
 foreclosure, for the city has within itself the power to regulate 
 the fares to meet the liabilities that may from time to time occur. 
 Therefore, there can be no more chance of the system failing un- 
 der municipal ownership and operation than there is for the city 
 of Detroit to disband its municipal organization. 
 
 Can It be Made Economically Possible f 
 
 "To say that a municipality cannot operate its street railway as 
 economically as a private company is to declare the judgment of 
 
90 SELECTED ARTICLES 
 
 the 400,000 people of Detroit unequal to the wisdom and judgment 
 of the 6 or 7 foreign directors of a private company. Can not the 
 city hire men of brains? Can it not hire the same experts and 
 the same men with equal skill to operate the cars that the present 
 company employs? Most assuredly it can, and it will. There is 
 no great mystery or hidden secret about the successful operation 
 of a street railway. There are not even the complications to 
 contend with that surround the average business concern. The 
 street railway does a cash business. It receives its money in ad- 
 vance. In this way it has the advantage even over our other public 
 utilities. The expenses per car mile are easily figured, and the 
 rate or rates of fare to make it successful are also easily estab- 
 lished. 
 
 "Great Britain alone has close to 2,000 municipal undertakings. 
 The incomes from these enterprises total each year in round 
 numbers, $150,000,000, and, as stated by Prof. Frederic C. Howe, 
 who made a critical examination of the conditions of these enter- 
 prises for the National Bureau of Commerce and Labor at Wash- 
 ington, it is equivalent to 22% per cent of the total revenues 
 collected from all sources in England and Wales, and to 39 per 
 cent of the total revenues of Scotland. 
 
 "One hundred and forty-two of these municipal undertakings 
 are street railway systems, and Mr. Howe adds that the gross 
 profits to the municipalities from this source is close to $10,000,- 
 000 a year, besides a generous amount paid in taxes. The capital 
 used in the street railway enterprises is about $200,000,000, all 
 raised on the faith of the public in these undertakings, and there 
 has yet to be an instance in which those loaning money to 
 municipalities for this purpose have lost a single cent. Many 
 of these enterprises are not run to make money, however ; they 
 are run to give the cities service at cost, or as near cost as is safe. 
 
 Js It Morally Right? 
 
 "There are some who contend that it is not morally right for 
 the city to enter into a business that can be conducted by private 
 individuals. It is always morally right to protect our interests, 
 either individually or collectively. It is not only a moral right to 
 protect ourselves from monopolies, but it is a legal right, and 
 
MUNICIPAL OWNERSHIP gr 
 
 therefore becomes a personal duty. As to the operation of street 
 railways in a municipality, it is not a competitive industry. The 
 history of the entire world demonstrates this fact. It is yet 
 fresh within our memory how ex-Maj'or Pingree encouraged the 
 Detroit Electric Railway, known as the three-cent line, with the 
 understanding that it would be a competitor, competing with the 
 other roads within the city; but how long did that competition 
 last? A consolidation soon took place, and the roads were owned 
 and operated by one company and it has held an absolute 
 monopoly over the city. Thus the question naturally comes as 
 to whether it is morally right to protect ourselves against this 
 condition, and the effect of this combination upon our civic life. 
 The fundamental test of any institution, method or service must 
 be its effect upon the public good, its relation to morals, manhood, 
 government, civilization and progress, as w^ell as its financial 
 side. In applying the vital test, the principal emphasis must not 
 be placed alone upon the financial results, but the human results 
 must be considered as well. The character products and the 
 social products of our institutions are of as great, if not greater, 
 moment than the money products. 
 
 "There is too much interest, too much affecting society and 
 its future welfare to trust and place these street railroads again 
 in the hands of private parties, whose only object and aim is to 
 secure the almighty dollar. In order to establish the proper 
 standard of morality in civic life it is necessary that the munic- 
 ipality own and operate its own street railways, give service at 
 cost, and eliminate the element of allowing a private company 
 to do the public's business for profit. 
 
 Can It be Free From Political Corruption? 
 
 "In considering the political question as it affects this problem, 
 let us be absolutely honest and sincere. Is it not bad politics to 
 urge us to commit municipal functions to private control? Is 
 there not ten times more bad politics in private than there is in 
 municipal control? There is less opportunity for bad politics in 
 municipal control than there is in private control. There is less 
 incentive for the city to employ those of bad politics than there is 
 for a corporation to employ those of bad politics. Where have bad 
 
92 SELECTED ARTICLES 
 
 politics been discovered? Who have been responsible for its em- 
 ployment? Where bribery and treachery in municipal affairs have 
 come to light, who have been the guilty ones? Were they among 
 those endeavoring to retain to their municipalities their full func- 
 tions and rights, or were they those who resisted and sought to de- 
 feat municipal ownership and the city's rights? An honest answer 
 to each of these questions is in favor of the municipal ownership 
 of pubHc utilities. Once these utilities are municipalized and in the 
 hands of the people, the cause for bribery and political corruption 
 will disappear. An investigation of the institutions even of our 
 own city that are now in the hands of the municipality shows that 
 the political corruption surrounding these institutions has been 
 lessened — yes, almost destroyed. 
 
 Is It the Best as Well as the Only Feasible Way? 
 
 "Let the municipality arrange so that the people can elect or 
 select an honest commission of five members free from any 
 partisan or political interference. Let the commission be the 
 choice of the citizens of this city, and place in their hands the 
 complete management and direction of the street railways. Pay 
 each member an adequate salary, and let each be subject to recall 
 by popular election on petition of 25 per cent of the electorates. 
 There is no question but what you will then see graft absolutely 
 removed and the city free from much of the corruption that has 
 come from these sources of corruption and that have menaced our 
 civic life in the past. 
 
 "To establish the conditions for which we were told this com- 
 mittee was appointed, municipal ownership is the only way in 
 which it can be done. The history of private corporations the 
 world over has but one page. They are operated in the financial 
 interest of the few, with little consideration for the people, either 
 for those who are patrons or for those who operate the cars and 
 do the work. Their private interests are paramount and must be 
 first served. Investigation throughout all the world shows that 
 the municipalities everywhere are taking over these institutions. 
 Water works were first taken over because water is closely re- 
 lated to the health of the comimunity. Then came gas and elec- 
 tricity. Next comes the operation of street railways, and 
 
MUNICIPAL OWNERSHIP 93 
 
 wherever the}- have been taken over, they have been a success, 
 all things considered. The results have been higher wages and 
 shorter hours to the employes, and better service and lower rates 
 of fare to the people. There is no question but what municipal 
 operation of street cars is the best and most feasible way offering 
 itself to Detroit at this time. 
 
 "Nor is there any menace to the community in increasing the 
 number of city's servants through the operation of profitable 
 enterprises. Detroit today has between 3,500 and 5,000 employes, 
 and the number can easily be increased by 2,500 to 3,000 without 
 any danger. Glasgow has 15,000 city employes, or 10 per cent of 
 its voting population. Altogether British cities employ between 
 150,000 and 200,000 men. Yet in no instance is it claimed that 
 this political power is manipulated in favor of any political 
 organization. But when public service corporations are privately 
 owned, the contrary is the fact. Pressure is always brought to 
 bear on employes of private corporations doing public business to 
 vote as their employers desire them to, regardless of their own per- 
 sonal preferences, or of the effect it may have on public interests. 
 
 Recommendations to the Comtnon Council. 
 
 "We therefore recommend to the common council : 
 
 "First. That they grant no more franchises for the purpose 
 of operating privately owned street railways to any person, 
 corporation or company. 
 
 "Second. That the council make arrangements to at once 
 inaugurate and establish a thorough system of municipality owned 
 street railways covering the entire city. 
 
 "In order to establish and properly operate such a system, we 
 recommend that they first arrange and have elected by a special 
 election a non-partisan commission who shall have the direction 
 and control of the inaugurating and the operation of the munici- 
 pally owned street railways. We advise that in establishing the 
 roads they first take over such streets and lines on which the 
 present franchises have expired, and that then the commission 
 shall make arrangements for the purchase from the old com- 
 panies, at actual physical value, such lines as these companies 
 
94 SELECTED ARTICLES 
 
 still retain the franchises on, providing the company will dispose 
 of them to the municipality at actual physical value. 
 
 "In case of refusal, the commission shall proceed to establish 
 lines that vi^ill give the people a complete service, and, if neces- 
 sary, parallel such lines as have franchises, or by placing tempo- 
 rary tracks in and upon the same streets if necessary-, until the 
 entire city is completely covered by such municipally owned and 
 operated street car system. 
 
 "To adopt any other method than municipal ownership to 
 settle for once and all the problem of street car transportation 
 at cost, is to continue the friction and wrangling between the 
 city and the corporation during the life of any franchise that may 
 be given. A municipality of 400,000 people never yet had the 
 wisdom to legislate most wisely for a municipality which will 
 soon have a population of a million. Human intelligence is too 
 finite to know what will be the cost of transportation when a few 
 more miles of trackage is going to accommodate twice the present 
 traffic, with only a small percentage increase in the cost of doing 
 the service. 
 
 "To the time-tried axiom of a 'corporation has no soul,' and 
 particularly a corporation with a franchise from a populous city, 
 may be added another, 'Privilege knows no honor.' A corpora- 
 tion with a franchise can invent a hundred ways to squeeze profits 
 from the public through unsatisfactory and inadequate service, 
 low wages and long hours for employes and high fares. No great 
 city will seriously blunder so long as it keeps control of all its 
 public utilities. And only in this way can cost and service be 
 harmonized." 
 
 North American Review. 172: 445-55. March, 1901. 
 
 Municipal Ownership of Natural Monopolies. Richard T. Ely. 
 
 The question under discussion relates to the ownership and 
 management of those local businesses which furnish what are 
 called public utilities. The principal classes of these public util- 
 ities are water, light and transportation. They are called monop- 
 olies because, as we know from experience, we cannot have in 
 their case effective and permanent competition. 
 
MUNICIPAL OWNERSHIP 95 
 
 It is often said that we do not want to decide the question of 
 municipal ownership in accordance with general principles, but 
 that each case should be decided as it arises. If New York City 
 desires public ownership of water-works, it is urged, let New 
 York City by all means try the experiment. But let New Haven, 
 if the people of that city so desire, continue private ownership of 
 water-works. Still others say, let us adhere to private ownership 
 until we find that we have made a serious mistake in so doing. 
 Both these attitudes imply the renunciation of science, or a denial 
 of the possibility of a scientific solution of the problem. Imagine 
 such an attitude in engineering as applied, let us say, to bridge- 
 building. The result would surely be disaster. The outcome of 
 this attitude in what we may call applied economics or social 
 engineering has likewise been disastrous. ^Mistakes have been 
 made which it has not been possible to correct, or which have 
 been corrected with great loss. The private ownership of water- 
 works in London, which still persists, although recognized to be 
 an evil many years ago, affords an illustration. If at length this 
 evil is corrected, it v^rill cost the taxpayers many millions of dol- 
 lars which might have been saved. Innumerable illustrations 
 could be afforded, did space permit. What must be desired by 
 any one who has an appreciation of the nature of modern science, 
 is the establishment of general principles whereby mistakes may 
 be avoided and loss prevented. The practical man will naturally 
 take into account the actual, concrete condition in his application 
 of general principles. The social engineer must, in this partic- 
 ular, follow the practice of the mechanical engineer. 
 
 When we approach the question of public ownership versus 
 private ownership of such great industries as those connected 
 with artificial light and transportation, our attention is attracted 
 by the municipal corruption which exists, particularly in our own 
 country. The fact of this municipal corruption, and also the 
 further fact of the very general incompetency in the management 
 of municipal affairs, are not called in question, and they are not 
 under discussion. The corruption and incompetency may not 
 everywhere be so bad as many pessimists imagine, and it may, 
 furthermore, be true that, in both respects, we have in many 
 cities witnessed gratifying improvement. Yet, when we have 
 
96 SELECTED ARTICLES 
 
 made these admissions, the true state of the case is bad enough. 
 The civic conscience with us is slow of development. The satis- 
 factory performance of public duties implies, in some particulars, 
 a higher civilization than we have reached. It requires some de- 
 velopment of the imagination to see the harm and suffering 
 brought to countless individuals by lapses in civic virtue. Fur- 
 thermore, it implies a higher development of conscience than that 
 found in primitive man, to reach that state in which there is a 
 conscious desire to abstain from all acts which may hurt people 
 who are not seen. Many a man will give to a poor widow, whom 
 he sees, money to relieve her distress, but, at the same time, will 
 not hesitate to increase the burdens of poor widows whom he 
 does not see, by fraudulent evasion of taxation. 
 
 The sort of men now in our municipal councils are not the 
 kind of men to whom we would gladly turn over vast business in- 
 terests. The very thought repels us. Whether or not they are 
 morally better or worse than the men who in many cases are said 
 to corrupt them, and who now exercise an important influence in 
 the management of privately owned public utilities, it is freely 
 conceded that they are less fit for the conduct of important busi- 
 nesses. We w^ant street railways managed by men who under- 
 stand the street-railway business, gas-works managed by men who 
 understand the gas business, and neither class of enterprises man- 
 aged by men whose gifts are most conspicuous in the partisan 
 manipulation of ward politics. It is important that it shoulti be 
 understood that the advocates of municipal ownership do not call 
 in question the fact of municipal corruption and inefficiency in 
 the management of public business, and that they have no desire 
 to turn over the management of public utilities to a class of men 
 who must still be considered typical in the municipal council of 
 the great American city. 
 
 But when we have admitted freely corruption and inefficiency 
 in municipal government, it still remains to examine into the 
 causes of these conditions, for there is a very widespread suspi- 
 cion that a large share of the responsibility therefor must be laid 
 at the door of private ownership. A real, vital question is this : 
 would we have the same class of men in our common councils 
 which we now find there, should public ownership replace private 
 
MUNICIPAL OWNERSHIP 97 
 
 ownership? Is it true that private ownership places in office and 
 keeps in office some of our worst municipal wrong-doers? It is 
 important that the reader should understand the real nature of 
 the problem under discussion, and it is believed that these ques- 
 tions which have just been asked bring before us a large part of 
 that problem. This important problem, the solution of which is 
 ■of national significance, should be approached with no partisan 
 bias, and no angry recriminations or denunciations should be 
 tolerated. The spirit of the injunction, "Come, let us reason to- 
 gether," should be the spirit of approach. 
 
 We must clearly and sharply fasten in our minds the indis- 
 putable fact that, with respect to public utilities of the sort under 
 discussion, we are confined to one of two alternatives. These 
 alternatives are public control of private corporations, and public 
 ownership with the public control which naturally springs from 
 ownership. The experience of the entire civilized world has 
 established the fact that we are restricted to these alternatives. 
 We may have private street-railways, private gas-works, private 
 water-works, etc., but in that case it is invariably and in the 
 very nature of the case necessary to exercise public control over 
 their operations. Charges must be regulated, general conditions 
 of service must be prescribed, and regulation must be found for 
 a thousand and one cases in which public and private interests 
 touch each other. This is because, on the one hand, the nature 
 of the service rendered is in such a peculiar degree a public 
 service, and also because the effective control of full and free 
 competition is absent. We may, on the other hand, choose public 
 ownership and management. We could, of course, separate public 
 ownership from public management, and consider each one. In 
 other words, we could have a publicly owned urban transportation 
 system with private operation. Generally, public ownership and 
 public management go together, and in the limited space at our 
 disposal we will not undertake to separate them. 
 
 It is freely granted that either one of our two alternatives 
 presents immense difficulties. This is a further point concerning 
 which there can be no controversy among those who really under- 
 stand the nature of the case. The evolution of industrial society 
 has again brought us problems most difficult of solution. If we 
 
98 ' SELECTED ARTICLES 
 
 may use the language of design, history teaches us that Provi- 
 dence does not intend that men organized in society should have 
 what we are always looking for in the future, namely, an easy- 
 going time. Every age has its problems. In one age they may be 
 brought by the inroads of barbarians, in another age by famine 
 and pestilence, in another age by international wars. We have 
 been dreaming of a coming time when ho social problems should 
 vex society ; but, if history teaches us anything, it shows us that 
 in such dreaming we are indulging in Utopian aspirations. Every 
 civilization has been tested heretofore, and every civilization must 
 have its test in the future, our own included. One of the tests of 
 our civilization is the ability to solve the problem under discussion. 
 
 The question which confronts us is this : Which one of the 
 two alternatives promises in the long run the best results? 
 
 Those who talk glibly about public control of those private 
 corporations owning and operating public utilities frequently ex- 
 hibit a sad ignorance of what their proposed remedy for existing 
 evils means. They think in generalities, and do not reflect upon 
 what control means in details. We have to. observe, first of all, that 
 public control of private corporations furnishing public utilities 
 so-called means a necessary antagonism of interests in the civic 
 household. Human nature is such that those who are to be con- 
 trolled cannot be satisfied with the control exercised. However 
 righteous the control may be, those who are controlled will fre- 
 quently feel themselves aggrieved and wronged, and will try to 
 escape the control. It is, furthermore, a necessary outcome of 
 human nature that those persons who are to be controlled should 
 enter politics in order that they may either escape the control, or 
 shape it to their own ends. Again, we must remember what vast 
 aggregations of men and capital it is proposed to control. The 
 men owning and operating the corporations which furnish public 
 utilities are numerous, and they maintain large armies of em- 
 ployees of all social grades, from the gifted and highly trained 
 attorney to the unskilled laborer. The amount of capital involved 
 in a great city is counted by tens of millions. The very nature 
 of the case brings it about that there should be persistent, never- 
 ceasing activity on the part of those to be controlled. The effort 
 to escape from this control, or to shade it, is a part of the efforts 
 
MUNICIPAL OWNERSHIP 99 
 
 by which men earn their livelihood, and their activity is as regu- 
 lar as their hunger. The efforts of patriotic and high-minded citi- 
 zens, in their self-sacrificing neglect of their private affairs to 
 « look after public concerns, may grow weary, but not so the activ- 
 ity of the corporations to be controlled. Can a task of greater 
 difficulty be well suggested? It is not said that the problem here 
 presented is one which it is impossible for modern civilization to 
 solve ; but it is well that the general public should know precisely 
 what it means. Some of us are to control others of us, and to do 
 so against their will. But who are those whom we are asked 
 to control? They are very frequently our friends and neighbors. 
 I am asked to resist what is esteemed the extortion of a gas 
 company ; but one of the gas magnates may be my neighbor and 
 friend, and occupy a pew next to mine in church. Perhaps the 
 gas magnate is my employer. Perhaps he has just contributed, 
 and with the best intent in the world, one hundred dollars to an 
 object which I have greatly at heart. Perhaps I am a college 
 professor, and the street-car magnate whose rapacity I am called 
 upon to help hold in check has endowed the chair which I occupy. 
 Imaginary illustrations can be continued indefinitely, and those 
 who desire to do so can in any city make them sufficiently con- 
 crete. Is it strange that many of us who are called upon to con- 
 trol others of us should simply refuse to do it? 
 
 In so brief an article as this must be, it is possible to do little 
 more than to throw out suggestions. It is noteworthy that in 
 Massachusetts public control of corporations furnishing public 
 utilities has been tried more persistently than anywhere else, and 
 that in that State there is a stronger sentiment than anywhere 
 else in the Union in favor of public ownership and public man- 
 agement. Serious charges have been brought against the Board 
 of Gas and Electric Lighting Commissioners, which has to exer- 
 cise control over gas and electric-lighting plants. Even a paper 
 of the standing of the Springfield Republican has felt called upon 
 to rebuke the board severely for keeping secret information which 
 it has gathered. The attitude of the board is characterized as 
 "extraordinary." "If the board," says the Springfield Repub- 
 lican, "is empowered to keep secret what information it is pleased 
 to, how are the people to know that they may not become a mere 
 
100 SELECTED ARTICLES 
 
 agency of the monopolies to cover up and justify their possible 
 undue exactions ?" Insinuations of this kind are frequently heard 
 in Massachusetts. Dismissing all charges of corruption and bad 
 intention, we have as a net result a strong movement in Massa- 
 chusetts, away from private ownership of public utilities, to public 
 ownership. 
 
 The writer has followed this subject, and the trend of opinion 
 with respect to it, for fifteen years with some care. In his own 
 judgment the trend in favor of public ownership is marked and 
 surprising. He has seen one investigator after another start with 
 prepossessions in favor of public control of private corporations, 
 and turn away from that position as a hopeless one, and take up a 
 position in favor of public ownership as the only practicable solu- 
 tion under our American conditions. There lies before the writer 
 a letter recently received from an attorney, a member of a well- 
 known firm in one of our great cities. This lawyer has been 
 forced by experience to abandon the position in favor of private 
 ownership. He says, as the result of long-continued and self- 
 sacrificing efforts to improve politics in his own city: 
 
 "The alleged benefits of regulation are practically as impossible 
 as an attempt to regulate the laws of gravitation, for our legis- 
 lative councils are nominated, elected and controlled by forces too 
 subtle and insidious to be attacked, and even to be known. * * * 
 A community cannot regulate against millions of dollars organized 
 to prevent it. This temptation disappears, however, when the 
 municipality becomes the owner." 
 
 The difficulties of public ownership are not to be denied. They 
 lie on the surface. The problem in the case of public ownership 
 is to secure men of talent and experience to conduct these enter- 
 prises, and keep them in office during good behavior ; to engage 
 men for all positions on the basis of merit, and, while retaining 
 vast armies of employees, to enact such legislation and ad- 
 ministrative reforms as will prevent employees of the city, en- 
 gaged in furnishing public utilities, from either using their 
 political power for their own selfish ends, or from being used for 
 partisan purposes. This implies, on the part of society, an appre- 
 ciation of excellence of service, and a thorough-going reform of 
 municipal civil service. Politicians of the baser sort, and all those 
 who have selfish ends to be gained by political corruption, will 
 work against such reform. On the other hand, public ownership 
 
» • i • 
 
 
 MUNICIPAL OWNERSHIP loi 
 
 with public operation presents the issues in a comparatively 
 simple form. The clarification of issues is, indeed, one of the 
 strong arguments in favor of municipal ownership. Who knows 
 to what extent employees on the street railways of Baltim.ore, 
 Philadelphia, New York and Chicago are appointed through the 
 influence of politicians? It is known, however, that many appoint- 
 ments are made through the influence of politicians of precisely 
 the worst sort. It is furthermore known that these corporations 
 are now generally in politics. But because the corporations 
 furnishing these public utilities are owners of private property, 
 and because they conduct a business which is only quasi-public, 
 the political corruption with which they are connected is hidden 
 and obscure, and voters are confused and perplexed. Public own- 
 ership carries home to every one the importance of good govern- 
 ment, and arrays on the side of good government the strong 
 classes in a community now so often indifferent. Frequently men 
 who are powerful in a community, in working for good govern- 
 ment, work against, rather than for, their own private interests. 
 It is, indeed, gratifying to see men of wealth, as frequently as 
 they do, turn aside from selfish considerations to promote meas- 
 ures calculated to advance the general welfare. But can we ex- 
 pect this kind of conduct persistently from the great majority? 
 Have we any right to expect it? A personal allusion is sufficiently 
 instructive to warrant reference to it. When the writer had in- 
 vested what was for him a considerable sum in gas stock, he tried 
 to answer for himself this question : As an owner of gas stock, 
 exactly what kind of a municipal government do I want? The 
 government of the city in which was located the gas-works in 
 which the writer was interested was a stench in the nostrils of 
 reformers throughout the country; but he could not persuade 
 himself that as an owner of gas stock any very considerable 
 change was for his interest. The city government, as it then was, 
 was a "safe" one, and the result of a change could not be foretold. 
 Is not this, as a matter of fact, the solution of the problem 
 which owners of stock in street railways, gas-works and similar 
 enterprises generally reach when they look at municipal reform 
 solely from the point of view of self-interest? And can we, 
 then, be surprised at a certain apathy and indifference on the 
 
102 SELECTED ARTICLES 
 
 part of what are called the "better classes" in a community? 
 Men of great wealth have been known to work directly against 
 their own narrow interests for the public weal, but has an entire 
 class of men ever been known to do this? 
 
 A further result of municipal ownership would be a better 
 balance between private and public interests, and this better bal- 
 ance would strengthen the existing order against the attacks of 
 socialists and anarchists, on the one hand, and unscrupulous 
 plutocrats, on the other. A balance between private and public 
 enterprise is what is fundamental in our present social order, and 
 a disturbance of this balance consequently threatens this order. 
 This balance is favorable to liberty, which is threatened when it 
 is disturbed either in the one direction or the other. Any one 
 who follows passing events with care cannot fail to see that it is 
 menaced by socialism, on the one hand, and by plutocracy, on the 
 other. A man of high standing in Philadelphia, himself a man 
 of large wealth, when presiding at a public meeting recently, 
 stated, practically in so many words, that a professor in a school 
 of some note had lost his position on account of a monograph 
 which he wrote in relation to the street railways of that city. 
 This monograph was temperate in tone, and its scholarly char- 
 acter elicited commendation on all sides. We need not go into the 
 merits of this particular case, but we cannot fail to notice dis- 
 quieting rumors in regard to the attacks upon freedom of speech, 
 which are an outcome of private ownership of public utilities. 
 There is a widespread apprehension that the utterance of opinion 
 upon one side promotes one's interest, and that the utterance of 
 opinion upon the other side may prove damaging. Mathematical 
 proof cannot be well adduced, but readers can, by careful observa- 
 tion, reach a conclusion as to the question whether or not our in- 
 dustrial order is menaced by plutocracy, always bearing in mind 
 that plutocracy does not mean honestly gotten and honestly ad- 
 ministered wealth. There are good rich men, and bad rich men, 
 as there are good poor men, and bad poor men. Does private 
 ownership of public utilities, on the one hand, tempt rich men to 
 wrong courses of action, and does it, on the other hand, place 
 great power in the hands of unscrupulous wealth? 
 
 In an article restricted as the present is, it is impossible to go 
 
MUNICIPAL OWNERSHIP 103 
 
 statistically into experience. The question may be raised, how- 
 ever, Has any one ever noticed an improvement in municipal 
 government from a lessening of the functions of municipal gov- 
 ernment ? Can any one point to a municipal government 
 which has improved because its duties have been diminished, 
 and the number of its employees lessened? If we turn away 
 from local government, do we find that it is through 
 the lessening of the function of government in general that an 
 improvement is achieved? At one time, the Italian government 
 operated the Italian railways. Later, it leased the railways to a 
 private corporation. Has this retirement of Italy from the opera- 
 tion of the railways produced a regeneration in public life? As 
 we travel over this country, and observe the course of local gov- 
 ernment, do we not, on the contrary, find that, on the whole, it 
 has improved as its functions have increased, and as it appeals 
 directly and effectively to larger and larger numbers? The case 
 of England is a very clear one. If we go back fifty years, we 
 shall probably find that the government of English cities was quite 
 as bad as ours is now. During the past fifty years, there has been 
 a continuous improvement, and this has accompanied continual 
 expansion of municipal activity, while at the same time, through 
 an extension of the suffrage, English municipal government has 
 become increasingly democratic in character. We must hesitate 
 about establishing a casual connection between these two move- 
 ments, but is it unnatural to suppose that there may be such a con- 
 nection? When there is a great deal at stake, when the city has 
 much to do, good government of the cities appeals to all right- 
 minded persons ; and if there is no division of interests through 
 private ownership, we ought, in a civilized community, to expect 
 to find all honest and intelligent people working together for good 
 government. A tangible basis is afforded the masses for an ap- 
 peal for higher interests, and reliance is placed upon municipal 
 self-help. Instead of asking other people to do things for them — 
 namely, great private corporations — the people are told to help 
 themselves. 
 
 Mistakes and wrong-doing must be anticipated under either 
 one of our two possible systems. What about the relative serious- 
 ness of the mistakes and wrong-doing, however? We have a 
 
104 SELECTED ARTICLES 
 
 certain demoralization in each case, and a certain loss. While in 
 the case of public ownership we have an opportunity to recover 
 from mistaken action, in the case of private ownership mistaken 
 and wrong action is often irretrievable on its consequences. Take 
 the case of New York City as an illustration. Jacob Sharp 
 secured a franchise for the Broadway surface railway through 
 wholesale corruption, and was sent to the penitentiary. The fran- 
 chise, however, was retained by those into whose hands it fell, 
 and others have entered into the fruits of his theft. Under our 
 American system of government, in cases of this sort stolen goods 
 are retained. The franchises are retained, and the forgotten mil- 
 lions continue to suffer, because their rights have not been ade- 
 quately safeguarded. With the other policy, namely, that of 
 public ownership, how different would be the result? If the street 
 railways were mismanaged, or their earnings stolen, it would be 
 sufficient to turn out the municipal plunderers. Too many over- 
 look what is distinctively American in our problem ; namely, our 
 constitutional system, which protects franchise grants when once 
 made, and renders so irretrievable a mistaken policy, provided we 
 have the system of private ownership. 
 
 Let it be distinctly understood that the position is not taken 
 by the present writer in favor of municipal ownership at any and 
 all times, and everywhere, and under all circumstances. It must 
 come in the right way, it must come deliberately, and it must 
 come provided with adequate safeguards. It must come as a part 
 of other movements, especially of full civic service reform. But 
 it is calculated in itself to promote these other reforms, and in 
 some cases municipal ownership will be the first step in the direc- 
 tion of that full civil service reform which is so sadly needed. 
 In some cases civilization may be in too low a condition to permit 
 municipal ownership. The socialization of public sentiment 
 which must lie back of proper social action may not have gone 
 far enough. The question is : Have we the social man back of the 
 social action which we advocate? If we are talking about the 
 heart of Africa, with its individualistic blacks, unquestionably we 
 have not the social man which would make possible any consid- 
 erable amount of social action. Among barbarians and semi- 
 civilized people the few must do things for the many. Social 
 
MUNICIPAL OWNERSHIP 105 
 
 action must not be forced down from above, and it must not come 
 accidentally, if it is to be successful. It must come as the result 
 of full and free discussion, and of full and free expression on the 
 part of the people. It is on this account that the initiative and 
 referendum, in a country like ours, may properly accompany the 
 social action. Have we in our own country the social man to back 
 social action? If he does not everywhere exist, he is coming, and 
 coming rapidly, and the amount of social action which the social- 
 ization of sentiment makes possible and desirab4e increases in 
 proportion as he makes his appearance. The question of munic- 
 ipal ownership is a question of social psychology. It turns on the 
 nature of the social mind. 
 
NEGATIVE DISCUSSION 
 
 ' Quarterly Review. 205: 420-38. October, 1906. 
 
 Municipal Socialism. 
 
 Municipal Ownership Socialistic. 
 
 The British Philistine (B. Shaw) is, we have admitted, a 
 little bitten with the socia/Iist frenzy ; but this new political 
 arithmetic will occasionally appear to him somewhat topsy-turvy. 
 He will ask, still stupidly obsessed, as Mr. Shaw would say, by 
 irrelevant commercial ideals, what is now to replace the motive 
 of the private undertaker, and how is the capital for industry to 
 be provided? To this Mr. Shaw has his airy reply. xA.bility is a 
 commodity which can be hired in the market ; but, in a system 
 which contemplates the abolition of the market, surely this is 
 a hard saying. Economic production at a cost which will be 
 well covered by the available purchasing power of the community 
 is no longer an object. We are trading largely for the sake of 
 invisible profits ; and in matters of invisible profit the mere able 
 man of industry is as a child. The municipality, for instance, 
 is owner of gas-works. Its object is not to sell gas to those 
 who are willing to purchase it at a price which will give a profit 
 either to shareholders or ratepayers. Its oljject is to give per- 
 manent employment to a happy and contented staff of gas- 
 workers, to light the dark places of the town, to see that the 
 poor man's house is lighted as brilliantly as that of the rich, and 
 to take care somehow that no one, even remotely connected with, 
 the gas-works, is either a carouser or a debauchee. This is a 
 task not for ability but for collectivist faith-healing. Its organ- 
 iser, we suggest, should rather be the civic enthusiast who has 
 some skill in the management of public meetings, and who, when 
 his fellow-citizens want to have electric light, can urge them 
 with glowing eloquence to rest content with the inferior light for 
 
MUNICIPAL OWNERSHIP 107 
 
 the sake of the common property of the town, now sunk in a 
 gas-plant, and for the sake of the staff, who otherwise would 
 find their occupation gone if they would not consent to be cruelly 
 overworked in learning a new trade. This is a task for an 
 inspired political wire-puller, not for the mere able man of indus- 
 try. 
 
 It is not want of sympathy with socialist ideals, but abso- 
 lute scepticism as to the practicability of the proposed methods 
 of achieving them, that deters the liberal economist. He has a 
 tempered faith in the ameliorative processes of liberty. On the 
 whole, the free organisation of industry does give advantage to 
 diligence and trustworthiness, does discourage and ultimately 
 procure the correction of supersession of inefficient methods and 
 character, while it allows us to avail ourselves of the improve- 
 ments which the progress of science puts within our reach. This 
 A^iew promises no immediate millennium, but it explains our prog- 
 ress in the past, and seems to guarantee a similar advance in 
 the future. This very phenomenon of socialism — what is it. he 
 asks, but a sign of a righteous but over-sensitive social moral- 
 ity which has grown up under the very system which it seeks to 
 demolish? With this charter of progress, such as it is, the lib- 
 eral economist must be content. To him Mr. Shaw's idea that 
 industry can be carried on without being subjected to the test 
 of finance, and without the motive power arising frofti the ex- 
 pectation of profit, seems wildly fantastic, if not altogether un- 
 imaginable. 
 
 *»' 
 
 Municipal Ownership Expensive. 
 
 To an optimism like Mr. Shaw's, which settles so easily the 
 •question of management, the matter of capital oft'ers no diffi- 
 culty. The credit of the municipality is such, he argues, that 
 it can borrow more cheaply than the private trader. In passing, 
 we might remark that only the larger municipal bodies can now 
 borrow af a cheap rate : and some of them would find it difficult 
 to borrow at all. But. accepting Mr. Shaw's statement, we may 
 ask why it is that capital can be borrowed cheaply by munici- 
 palities. The answer, we presume, is. because the security is 
 good, because society acknowledges its indebtedness for all time, 
 
io8 SELECTED ARTICLES 
 
 and guarantees the principal and interest of the debt. The in- 
 definite extension of this system is an immense boon to the idle 
 capitalist class, or, at all events, to the richer section of it. But 
 the question surely remains : Is the system really cheap to the 
 community? Let us consider a concrete instance. 
 
 The estimated capital expenditure for the London County 
 Council's steamboat service is about 300,000/. Something presum- 
 ably must be added for working capital, if, as is inevitable, we 
 still talk in the discredited language of commercial accountancy. 
 The traffic is carried on at a loss of over 53,000/. per annum. The 
 53,000/, loss, in Mr. Shaw's audit, is compensated by invisible as- 
 sets, e.g. the contentment, etc., of 300 polite and skilled officials 
 who, being in municipal employment, are, we hope, as well satis- 
 fied with their wages and as free from sickness and the other 
 inconveniences of life as Mr. Shaw's picture leads us to expect. 
 The steamers, it is generally admitted, go too slowly and un- 
 punctually to suit passengers on business bent; but the account 
 must be credited with pleasant excursions enjoyed by many per- 
 sons of leisure at a nominal cost. It is difficult to reduce these 
 advantages to figures ; and, pending the arrival of the new pro- 
 fession of municipal accountancy, we must be content with the 
 Council's assurance that they more than balance the loss of 
 53,000/, per annum. 
 
 To continue, however, the question of the capital involved. A 
 steamboat service on the Thames is a very proper field for enter- 
 prise. It has been attempted by more than one set of private 
 capitalists ; for hope springs eternal in the commercial breast. 
 They ventured at their own risk ; the public had for a while its 
 service of boats ; but, as the ultimate result, most of the capital 
 is now resting quietly, a burden to no one, figuratively speaking,, 
 at the bottom of the Thames ; and no one except the capitalists 
 concerned is a whit the worse. The capital involved in the Coun- 
 ty Council experiment, on the other hand, remains a debt owed to- 
 the well-to-do people who have taken up County Council stock. It 
 will have to be paid, interest and principal, by the ratepayers and 
 taxpayers of the county, and so becomes a permanent burden on 
 the community. 
 
MUNICIPAL OWNERSHIP 109 
 
 Municipal Ownership Not Enterprising. 
 
 In considering the duration of the life of capital in other 
 walks of trade, we have first to remember that a very large 
 amount of capital never makes any return at all to the investor, 
 and that most of the investment which is productive only remains 
 so because it is constantly renewed and refreshed by fresh doses 
 of capital. The disadvantage of this seems to lie entirely with 
 those who adventure the capital, viz. that class of the public 
 which presumably is most able to bear the loss. The advantages 
 belong to the community at large, for whose sake invention is 
 stimulated and the improvement and supersession of antiquated 
 services encouraged. It is not to be supposed that the same spirit 
 of enterprise could or should characterise the work of a munici- 
 pality which is risking public funds which it cannot write off as 
 bad debts. The same principle is illustrated by the comparative 
 impotence, uselessness, and occasionally absolute harmfulness of 
 endowments. The permanent withdrawal of capital from the 
 control of the living, and its committal to the sterilising grasp 
 of the dead hand, are often not far removed from a public mis- 
 fortune. The same unavoidable danger seems to attend the 
 proposal to make capitalisation a municipal or national function. 
 
 The first step of the municipalising enthusiast, as we under- 
 stand it, is to warn the private adventurer off those fields of 
 enterprise which for their inception require legislatively con- 
 ferred way-leaves and franchises ; and it need hardly be pointed 
 out that these constitute a very large and increasing proportion 
 of the great industries of the civilised world. Investors who 
 otherwise might have ventured their money in such undertakings 
 are invited instead to take up municipal stock. The whole burden 
 of preserving intact the evanescent value of such investment 
 will be thrown on the rates and taxes. The old channel of 
 relief which lay through the writing-off of the bad debts of in- 
 dustry will no longer be available ; and public enterprise will 
 sooner or later have to face the alternative — of seeing progress 
 brought to a standstill by reason of the burden of indebtedness 
 in respect of improvements of which the value has expired, and 
 of having to decline new fields of enterprise in which the yearly 
 
no SELECTED ARTICLES 
 
 increment of the population might expect to find its profitable 
 employment ; or, on the other hand, of repudiating the debt, a 
 course logically demanded by those who regard with abhorrence 
 the existing capitalistic order." 
 
 Monopolistic Evils Exaggerated. 
 
 But the stronghold of the advocate of municipal trading and 
 the denouncer of profit is the alleged injury to the public when. 
 3. service is carried on by private enterprise under a complete 
 or partial monopoly. Monopol}^ of old was a usurpation granted 
 "by the Crown to an individual or a corporation, or for some 
 plausible reason assumed by the public authority itself ; and the 
 profit which is made under such conditions is in reality a tax. 
 It is only in comparatively modern times that monopoly has been 
 granted for the protection and advantage of the public. Mon- 
 opoly is an evil arising out of a natural limitation of supply, 
 and is only to be mitigated by a choice of evils. To give com- 
 pulsory powers, under conditions, to railways and telegraph com- 
 panies seemed preferable either to allowing them to tear up the 
 streets at their will, or to making the public wait for the advan- 
 tage of railways and telegraphy till the companies could agree 
 with private owners. Xo great principle seemed at stake. Gas, 
 water, and sewage were managed by companies or public author- 
 ities, as accident decided. Of old time the Government claimed 
 a monopoly in letter-carrying, and later insisted on adding to 
 it the telegraph and the telephone, which seemed formidable 
 competitors. It allows messenger companies, but exacts from 
 them a heavy royalty ; and as yet it has made no claim to a 
 monopoly of carrying parcels. The Government makes roads, 
 but not railroads ; it is partially responsible for harbours, but 
 not for railway stations. No one invariable principle has been 
 followed. 
 
 The difficulty of protecting the public in monopolised serv- 
 ices as adequately as it is protected in other services by competi- 
 tion is probably not wholly superable. If, as with the Post-office, 
 the Government constitutes itself sole contractor, it is impossible 
 to say what we may have lost in efficiency. Letters are carried 
 at a profit, but all other branches of post-office work are con- 
 
MUNICIPAL OWNERSHIP iii 
 
 ducted at a loss ; and by common consent we have the worst 
 telephone service in the civilised world. We have not even the 
 consolation that the postal staff is made thoroughly happy. 
 
 If next we consider the important service of railways, we 
 shall find that the protection of the public is more effectively 
 carried out by competition, which was supposed to be excluded, 
 than by the regulations of the Board of Trade, though these have 
 been carefully and wisely contrived. To begin with, there has 
 always been competition between one railway and another ; roads 
 and canals and sea-carriage are still available; but probably the 
 greatest incentive to diligence in the public service has been the 
 recognised disposition on the part of goods and people to stay 
 where they are unless movements are encouraged by cheap 
 and attractive conditions of travel. If we consider the fact that 
 there are, as a rule, alternative ways of doing what we want to 
 do, and that much that we want to do may very well be left 
 undone, it will appear that the evil of railway and, indeed, of 
 all monopoly is much exaggerated. Purveyors of service for our 
 luxuries, amusements and necessities compete more or less un- 
 consciously one against another. If fine cognac is dear, we 
 pretend to prefer Scotch whisky ; if a holiday by railway is un- 
 comfortable owing to overcrowding and expense, we take a 
 steamer to Cromer or to Norway. Even if a business journey 
 to Birmingham might seem desirable, the excessive cost of it 
 may decide us to make shift to manage by means of letter or 
 telegram. 
 
 Summing up this portion of our argument we may say that 
 the evil of monopoly is very much exaggerated ; that regulation 
 for the protection of the consumer is possible ; that a closer con- 
 sideration of the different methods of introducing regulations 
 might even warrant us in increasing the sphere of monopolised 
 industries served by private enterprise ; and lastly, that, even if 
 regulation is evaded and a considerable profit is made, the earn- 
 ing of profit is a legitimate incident in industry, and that the 
 existence of a guaranteed investment has a public and general 
 convenience. It is frequently argued, and with some plausibility, 
 that the existence of state and municipal debt has a great ad- 
 vantage as providing financial convenience to banks, insurance 
 
112 SELECTED ARTICLES 
 
 offices, provident societies, trustees, and persons responsible 
 for the custody of charitable and similar funds. Stocks repre- 
 senting partially monopolised undertakings offer a field for the 
 investment of such funds which is not open to the objection 
 urged against the municipal capitalisation of industry pure and 
 simple, namely, that municipal debts exist for the advantage 
 of the rentier class only, and that they withdraw capital from 
 the risks of competition to which, in the interest of the general 
 consumer, ordinary investment is properly liable. 
 
 Municipal Area Limits Industry. 
 
 The economical creation and distribution of electrical power 
 can only be carried out on a grand scale ; and for the inception 
 of such enterprise parliamentary powers are needed. The areas 
 of municipalities are admittedly too small to satisfy this condi- 
 tion. Local Government divisions generally have arbitrary 
 boundaries, and do not lend themselves to the advantageous 
 grouping of power-areas. The supply of electrical energy to the 
 mechanical industries of this country is an undertaking of un- 
 precedented magnitude. Not only, it is suggested, can the 
 present uses of steam and gas be largely superseded by the new 
 force, but industries and uses altogether new and unimagined 
 are waiting to be called into existence. Large fortunes will be 
 made, and large fortunes will be lost, in experiments. If we are 
 to feed and find employment for the increasing millions of this 
 country, and to hold our place in the van of nations, we have 
 need here of a lavish and reckless expenditure of money by the 
 captains of the industry. 
 
 It is painful, therefore, to be forced to the conclusion that 
 this movement is being strangled in its infancy by the miserable 
 jealousy and self-sufficiency of the municipal monopolist. 
 Municipalities, unabashed by the revelations of municipal in- 
 competence at Poplar and West Ham, are asking that they shall 
 be made the monopolists of a force on which the whole future 
 of British industry probably depends. The impotence of the 
 larger authority, the County Council, for such a task is hardly 
 less marked. The leading spendthrifts of Poplar are influential 
 members of the London County Council. They have overborne 
 
MUNICIPAL OWNERSHIP 113 
 
 the opinion of competent financiers like Lord Welby, the chair- 
 man of their own finance committee, and are determined to 
 obtain a monopoly for the supply of electrical energy. Hitherto 
 this dire calamity, which would probably condemn London to 
 gradual but certain industrial decay, has been averted; but, 
 wuth one or two exceptions, notably at Newcastle, the agitation 
 has succeeded in its dog-in-the-manger policy of defeating all 
 applications from private companies for leave to speculate in 
 this vast field of industry. Meantime we are being overtaken 
 and relegated to an inferior rank among industrial nations by 
 countries which have found means to evade the rapacity and 
 stupidity of these obstructive tactics. It is not now a question 
 of protecting the helpless consumer ; that disguise will no longer 
 serve ; the managers of the industrial enterprise of this country 
 do not ask to be protected from the monopoly of private ad- 
 venturers, but from the incompetence and inadequacy of munici- 
 pal management. 
 
 We have followed the example of Mr. Shaw and have dis- 
 cussed the question in its larger aspects. We agree that refer- 
 ence to figures is probably irrelevant when addressed to those 
 who are forcing on this movement. The strength of the party 
 of municipal monopoly is pure fanaticism. Its adherents re- 
 pudiate accountancy and rely on arguments which hardly seem 
 to touch the ground of common-sense. In Major Darwin's work 
 the reader who desires a more detailed consideration will find 
 a most dispassionate discussion of the merits and demerits of 
 each argument. Like Mr. Shaw, he recognises that the appeal 
 to balance-sheets is futile. He suppresses, however, any in- 
 clination he may feel to decide the question by reference to a 
 general principle, and considers each allegation on its merits. 
 This procedure will be found most useful for those who are 
 disposed to regard the subject as an open question; but, as we 
 have argued, the whole controversy is overshadowed by the 
 larger issue of whether we are prepared to make a great ex- 
 periment in collectivism. If we are not prepared for this, 
 municipal trading stands condemned; it can only be logically 
 acceptable to those who regard it as a starting-point for a far- 
 reaching economic revolution w^hich they earnestly desire. 
 
114 SELECTED ARTICLES 
 
 World To-Day. 12: 374-9. April, 1907. 
 
 Municipal Ownership of Electric Light Plants. James R. 
 
 Cravath. 
 
 Does it pay a city to go into the electric light business?' 
 Should it own its street-lighting plant or should it let the con- 
 tract to a private compan}^? These are questions which have 
 perplexed the voters in many towns. The average citizen who 
 pays the taxes needs only to have the evidence on both sides laid 
 fully before him to decide and vote in the way most favorable to 
 his pocketbook. His difficulty usually is to get the evidence. 
 On the one hand, if the most radical advocates of municipal own- 
 ership are to be believed, the electric-lighting companies of the 
 country are earning enormous profits, which under municipal 
 ownership would stay with the taxpayers and consumers. On 
 the other hand, according to some of those opposed to munici- 
 pal ownership, such ownership has a record of dismal failures,, 
 mismanagement and graft. The majority of thoughtful citizens 
 who belong to neither of these two radical classes are looking 
 for the truth, which (as usual in such arguments) lies some- 
 where between the two extremes. I will aim to present in an 
 unprejudiced way some of the essential facts on both sides, as 
 observed during many years' work and familiarity with the 
 electric light and power industry of the country, both as carried 
 on by cities and by private corporations. 
 
 In the case of a large number of the electric light plants 
 owned by municipalities in the United States, the question of 
 city versus private ownership was never an issue, for the reason 
 that the towns are so small and the profits so uncertain that if 
 the city did not build the plant no one else would. These we 
 must evidently leave out of account in our discussion. What, 
 then, are the objects sought by a city which establishes its own 
 electric light plant if private capital has embarked, or is willing 
 to embark in the enterprise? Evidently to save money for the 
 taxpayers or to get better service. 
 
 The Question of Profits. 
 
 The common argument, of course, for the establishment of a 
 municipal plant is that the city will gain the profits which 
 
MUNICIPAL OWNERSHIP 115 
 
 ordinarily go to a private company undertaking a street-lighting 
 contract. But what are the profits actually earned by electric 
 light and power companies through the country? 
 
 Whether an electric light plant is built by the city or by a 
 company, interest should be paid on the investment. If we as- 
 sume that a large part of the cost of construction is paid by issu- 
 ing bonds, it is undoubtedly true as claimed by municipal own- 
 ership advocates that a city can sell bonds bearing a lower rate 
 of interest than could a private corporation doing the same 
 business. It will be evident, however, that a difference of one 
 or two per cent in bond interest on a plant may easily be counter- 
 balanced by other factors, such as the rate of wages paid and 
 the efficiency of the management. 
 
 It is of first importance to determine in this connection the 
 actual profits being made by electric light and power companies 
 over and above the common rates of interest paid on municipal 
 bonds. If such profits or dividends are considerably above in- 
 terest rates on municipal bonds, we have at once a strong in- 
 centive for municipalities to enter into electric lighting business 
 themselves. Otherwise one great argument for municipalization 
 disappears. 
 
 Unfortunately there are no figures available on the financial 
 condition of electric lighting companies the country over, and 
 we must fall back upon our general knowledge of the business 
 and the statistics of a few localities. The State of j\Iassa- 
 chusetts for twenty years past has had an excellent system of 
 regulating electric light companies and municipal plants and 
 safeguarding the interests of both stockholders and public. 
 Yearly reports are made to a board of gas and electric light 
 commissioners, both by private companies and municipal plants. 
 We have therefore from Massachusetts more complete infor- 
 mation as to the state of the industry than from any other state or 
 locality. We can place more confidence in the reports of this 
 commission than in most of the other statistics cited in connec- 
 tion with municipal ownership controversies, for the reason that 
 the methods of classifying accounts and making reports as well 
 as the issuance of stock and bonds are controlled by the com- 
 mission according to certain uniform regulations, and have been 
 
ii6 SELECTED ARTICLES 
 
 for many years. Companies and municipalities not required to 
 report according to such fixed rules, if they issue reports of 
 their financial conditions at all, issue them in such various 
 shapes that no one but an expert can analyze them in a way to 
 afford a true comparison, and frequently even an expert can 
 not make such comparison without actual further examination 
 of the books. 
 
 In Massachusetts, according to the 1905 report of the com- 
 missioners, of the fifty-six purely electric light and power com- 
 panies in the state, twenty-four paid no dividends ; one paid a 
 dividend of two per cent; one a dividend of four per cent; one 
 a dividend of 4.5 per cent; four a dividend of five per cent; 
 eleven a dividend of six per cent; three a dividend of seven per 
 cent; eight a dividend of eight per cent; one a dividend of nine 
 per cent, and two paid dividends of ten per cent. In some states 
 with some kinds of corporations these statistics on dividends 
 would give little indication of the per cent of earnings on the 
 actual investment, because of the common practice of issuing 
 watered stock for which but a small per cent of the face value 
 has been paid. In Massachusetts, however, where securities for 
 many years past have been issued only upon approval of the 
 commission, to pay for actual improvements in a plant, these 
 figures can safely be accepted as indicating very nearly the true 
 state of affairs. This statement as to dividends, of course, does 
 not show what earnings may be put back into the property in 
 the shape of new construction and extensions. In this latter 
 connection it is of interest to note that the combined balance 
 sheets of the Massachusetts companies show a surplus of 10.76 
 per cent on the entire capital stock, in the 1905 report, but this is 
 less than the surplus showed the year previous. 
 
 These figures simply demonstrate what is known to every 
 well-posted man in the business : namely, that electric light com- 
 panies, when well managed and if in sufficiently large towns, can 
 be reasonable expected to pay the usual prevailing rates of interest 
 on investment, and in some cases a little more than that, but that 
 there are plenty of companies which either for the lack of good 
 management or for some local reason are earning practically noth- 
 ing. There is certainly nothing in these figures to indicate that enor- 
 
MUNICIPAL OWNERSHIP 117 
 
 mous profits are to be pocketed by taxpayers as a result of a 
 municipal electric light plant. 
 
 Rates of Mu7iicipal and Private Companies. 
 
 But are the street lighting rates in the Massachusetts cities 
 served by private companies the same as those where there are 
 municipally-owned plants? Consulting the Massachusetts report 
 further to determine this point, we find that the rates per year 
 for arc lamps commonly rated as 1200 c. p. are from $104, the 
 highest rate, to $54.69, the lowest. In municipal plants the cost 
 of such lamps is given as from $133, the highest, to $53.34, the 
 lowest. In the Massachusetts figures, of course, interest on the 
 investment is included, as it should be in all such reports. Taken 
 altogether, the cost of street lighting by municipal plants in 
 Massachusetts is not strikingly different from that in cities 
 supplied by private companies, although the highest municipal 
 figures are considerably above the highest contract figures. 
 
 The reason that these Massachusetts figures on costs of 
 municipal lights do not correspond with some which we see 
 quoted by radical municipal ownership advocates on plants in 
 other states is that in Massachusetts the law requires that an 
 allowance of five per cent of the cost of the plant shall be made 
 yearly for depreciation. This allowance is certainly none too 
 much, and in some cases is too little, but it is frequently left out 
 of account altogether in figuring the cost of municipal lighting 
 on a plant owned by a city. 
 
 Another set of statistics which throw some light on the 
 amount of profit in electric lighting business in general is ob- 
 tainable from a report made by the secretary of the Iowa Elec- 
 trical Association to that body in 1906. The secretary obtained 
 reports from seventy-seven electric light companies in that state. 
 The average dividend was 2.95 per cent. 
 
 New York state also has had for a short time a gas and 
 electric light commission under laws similar to those in Massa- 
 chusetts. The returns made indicate in general a very similar 
 condition of affairs to that in Massachusetts. On the whole, 
 from my knowledge of the business the country over, I think 
 the Massachusetts figures would correspond closely to those in 
 
ii8 * SELECTED ARTICLES 
 
 the majority of other states, were the figures known, except 
 that a very limited number of companies may temporarily earn 
 a little better than ten per cent. 
 
 I have so far considered this question of financial returns 
 only in a general way, without taking up specific examples. For 
 those who wish to study such specific examples the published 
 reports of the Massachusetts and New York commissions are 
 open. As the former reports are made on uniform systems of 
 accounting, comparisons can fairly be made between the different 
 companies and municipalities reporting. Specific examples from 
 other states have been cited many times in municipal-ownership 
 controversies, but because of the great differences in methods of 
 accounting, as before explained, they are likely to be almost 
 worthless for purposes of comparison unless scrutinized closely 
 by experts. 
 
 Chicago and Muncie. 
 
 One of the most prominent examples of a municipally-owned 
 electric light plant is that of Chicago, about which there has 
 been considerable controversy. Chicago's municipal electric 
 light plant, unlike many others, was not built by the sale of 
 bonds, but has been paid for a little at a time out of the general 
 tax levy as the plant has been gradually enlarged. According to 
 the last published report of the city electrician, in which interest 
 on the money was figured in both cases, there has been a saving 
 to the city of something like ten per cent in the total cost of 
 street lighting for the entire period of eighteen years the city 
 plant has been in operation. This statement, however, assumes 
 that the cost per lamp under a private contract would have been 
 the same as the city has been paying a company for a few rented 
 lamps in widely scattered outlying districts where the city could 
 not operate as cheaply. As to whether Chicago would have 
 had to pay for a large number of electric street lamps as much 
 as it has been paying for a comparatively small n'umber of scat- 
 tered lamps on short and uncertain contracts; is, of course, 
 problematical. 
 
 According to Haskins & Sells, expert accountants, who went 
 through the Chicago lighting accounts about six years ago, the 
 
MUNICIPAL OWNERSHIP 119 
 
 operating cost of a municipal 450-\vatt arc lamp in the city of 
 Chicago in the year 1900 was $62.09; and the total cost, including 
 water, insurance, taxes, depreciation and interest charges was 
 $99.08. Allowing for certain items, over which there may be 
 controversy, it is safe to say that the cost per lamp was over $90, 
 including lixed charges, which is not far from the average paid 
 in other great cities. The rate paid for similar lamps in New 
 York city is $100, but coal and distribution investments are 
 higher in New York. 
 
 Chicago has what might be rated as one of the relatively 
 successful municipal plants. Among the decidedly unsuccessful 
 ones, a conspicuous example was that at Muncie, Indiana. This 
 city had a municipal street-lighting plant which cost $36,000. 
 In eleven years, under council committee management (or lack 
 of it), the operating cost per lamp nearly doubled. The superin- 
 tendent, in his annual report made before the final demise of the 
 enterprise, recommended that if the city could not find the 
 money with which to improve the plant, it had better sell to 
 private parties, or buy current from some private company. The 
 matter was brought to a head by the bursting of a fly-wheel in 
 the municipal plant and the wrecking of the station. A ten-year 
 contract was then made with the electric light company to 
 supply street lamps at a cost far below the operating cost shown 
 by the yearly reports of the municipal plant. The municipal 
 plant, upon which $36,000 had been expended in construction, 
 was valued by a board of appraisers at $15,000, or a depreciation 
 of $21,000, with no fund to provide for it. 
 
 Management the Vital Matter. 
 
 I might go on and cite numerous cases of disastrous munici- 
 pal electric-light plant ventures and I might also cite some 
 cases of Vv'ell managed and successful municipal plants. 
 
 If a proper depreciation account is not kept and a municipal 
 plant is not insured for its actual value, it is the whole body of 
 taxpayers who suffer when the plant is destroyed by accident. 
 When a company gives poor service or charges high rates, the 
 public at large will be much more benefited by taking measures 
 to secure adequate control of the offending company than they 
 
120 SELECTED ARTICLES 
 
 will by trying to take over the business of the company, the dif- 
 ficulty of whose operation is not known. 
 
 In the case of both private and municipal plants, the margin 
 of profit is small enough for good or bad management to throw 
 the balance one way or the other. But with this difference: If 
 the private plant is mismanaged it is no concern of the taxpayer ; 
 it concerns only stockholders. Under a contract with a private 
 company for street lighting at a reasonably low rate, the tax- 
 payer takec5 no risk save a possibility of paying a small per- 
 centage more for given services than he would pay if the city ran 
 the plant. If the city owns the plant, he may get his street 
 lighting for a little less than he would pay the private company, 
 but with the tolerable certainty that if there is grafting or in- 
 competency in the management of the plant, he will pay a 
 good deal more. In fact, it is a kind of one-sided speculation 
 except, of course, where reasonable rates can not be obtained 
 from a private company. The taxpayers of a city usually, there- 
 fore, should think several times before embarking in such 
 enterprises. 
 
 TJie Energy of Private Management. 
 
 As the management of municipal electric light plants is. 
 such an important factor in determining whether it is a losing 
 proposition or not, let us inquire into the possibilities for good 
 or bad management in connection with it. I am not one of 
 those who believe that municipal management is necessarily 
 and invariably incompetent. This is disproved by a number 
 of cases where municipal enterprises were well managed. But 
 there are certain things in American municipal affairs to 
 which we can not shut our eyes, however much we may hope 
 to change them within the next twenty-five years. The war 
 against graft in municipal politics has been making considerable 
 headway the past ten years, and we may hope to see it make 
 even better headway the coming ten years ; nevertheless graft 
 is a factor to be considered. 
 
 The fact is that at the present time it is as a rule difficult 
 to get the best class of men for the management of municipal 
 enterprises. Why? In the first place, a man of ability and 
 
MUNICIPAL OWNERSHIP 121 
 
 ambition will usually prefer to work for a private corpora- 
 tion where opportunities for advancement and appreciation 
 of ability are better than in municipal service, and where he 
 is more certain of his position. The man working for a mu- 
 nicipality is altogether uncertain as to his future or as to 
 the competency or incompetency of the council committees 
 to which he may be responsible. As he is working for the 
 public, he is subject to all sorts of criticisms to which an offi- 
 cer in a private corporation is not subject, and may even be sus- 
 pected of grafting because he is a city employee and for no 
 other reason. These things, no doubt, account for the fact 
 that comparatively few men of promise in the electric lighting 
 industry of the country are to be found in municipal plants. 
 In my personal experience on the editorial staff of a paper 
 devoted to the electric lighting industry and in traveling among 
 such plants, I almost invariably find that the up-to-date, pro- 
 gressive and aggressive management which contributes to the 
 general progress of the art is to be found in private rather than 
 municipal plants. 
 
 Graft and Public Ozunership. 
 
 The advocates of municipal ownership have laid considerable 
 stress on the possibility for corruption of city councils and 
 other officers in connection with the letting of the street-lighting 
 contracts or franchises to private companies. That there are 
 such possibilities, especially in the larger cities, no one will 
 deny. On the other hand, is it not likely that a city government 
 composed of rascals would find even more opportunity for rob- 
 bing the taxpayer under municipal ownership? In the case 
 of a private contract the amount is definitely known to every 
 one at the time the contract is made, and if there is anything 
 very unreasonable about the proposition, public sentiment will 
 enforce reasonable terms before the contract is signed. When 
 the public utility is municipally owned, it is a difficult matter 
 to locate and prevent graft both large and small. 
 
 Space is not available here to cite specific examples of suc- 
 cessful and unsuccessful municipal plants at any length, but I 
 may mention a few of the extremes. One of the most sue- 
 
122 SELECTED ARTICLES 
 
 cessful municipal plants I know of is that at Marquette, IMich- 
 igan, where the city developed a water-power. The property 
 is managed much like that of a private company. Considerable 
 power load is carried. S-o enterprising has been the management 
 that the gross earnings from operation, according to the annual 
 reports, are as high as $4.20 per capita of population. Most 
 private companies are not doing as well as to gross earnings. 
 The lighting department of the city is kept separate from all 
 others, jr.st as if it were a company, and it is paid $75 per year 
 for a 20O0-c.p. arc lamp. For the balance of the revenue the 
 management of the plant is dependent on its own enterprise. 
 Chicago's plant is mentioned elsewhere. Detroit's municipal 
 plant may also be rated among the more successful. While 
 lamp costs in Chicago and Detroit are nowhere near as low 
 as advertised by municipal ownership advocates in years past, 
 they are not far from prevailing contract rates. 
 
 Failures of Municipal Plants. 
 
 Among recent municipal ownership failures may be enu- 
 merated Muncie, Indiana, mentioned elsewhere, plant abandoned, 
 and bonds not paid off ; La Grange, Illinois, plant sold to a com- 
 pany ; Elgin, Illinois, municipal costs so high that contract was let 
 to company; Jonesboro, Indiana, plant turned over to bondhold- 
 ers ; Alexandria, Virginia, plant leased to a company for thirty 
 years ; Ashtabula, Ohio, $88,000 plant depreciated $50,000 in 
 fourteen years, advertised for sale ; Brunswick, Missouri, plant 
 sold for thirty-five cents on the dollar, city taking pay in light and 
 water; Casselton, North Dakota, plant sold for two-fifths cost; 
 Siloam Springs, Arkansas, $30,000 plant leased for $600 per 
 year; Peru, Indiana, council investigating committee found arc 
 lamps cost $207 per year and advised that the city abandon 
 the business and sell the plant : Linton. Indiana, plant leased for 
 five years ; Hamilton, Ohio, gas plant shut down and state exam- 
 iner reported deplorable financial conditions and abnormal costs 
 due to faulty construction in electric light plant; Bloomington, 
 Illinois, increase from $58 to $65 in yearly cos^of arc lamps 
 in ten years, although cost should have been less; Easton, Penn- 
 sylvania, mayor favors letting of private contract if city can 
 
MUNICIPAL OWNERSHIP 123 
 
 not maintain better service, and business men petition for such 
 a contract ; Lakewood, Ohio, expert accountant found cost 
 of arc lamps about double the price offered by a private com- 
 pany. 
 
 Conclusion. 
 
 What conditions will be twenty-five years from now, I do 
 not know, but I hope and believe that they will be more favor- 
 able for municipal enterprises. In the meantime I am willing 
 to let the private corporations take the risks and the profits 
 wherever they can and will give reasonable rates and good serv- 
 ice. 
 
 Quarterly Review. 209: 409-31. October, 1908. 
 
 ^^lunicipal Trade. Leonard Darwin. 
 
 IMr. Bernard Shaw, in his 'Common Sense of jMunicipal 
 Trading' (p. 3), tells us that 'the central commercial fact of 
 the whole question" is that cities can raise money at low rates 
 of interest, and that consequently the citizen, 'by municipal trad- 
 ing, can get his light for the current cost of production plus a 
 rate of interest which includes no insurance against the risk 
 of loss, because the security' is practically perfect. Prices in 
 municipal trade can therefore, so it is urged, be reduced below 
 the level of prices in private trade. This is. no doubt, a view 
 commonly held by sensible persons, and it may on that ground 
 be described as the common-sense of municipal trading. But 
 if it is widely accepted, it is so not because it is accurate, but 
 because the underlying fallacy is not easily exposed. Is it 
 right, it should in the first place be asked, that a municipality 
 should make 'no insurance against loss' out of the profits of 
 any industry it may manage? Every commercial venture is not 
 a success ; and losses are inevitable if a city enters extensively 
 into such enterprises. Out of the profits of successful ventures, 
 such as gas-works, an insurance fund ought therefore to be 
 created to cover losses in unsuccessful ventures, such as the 
 London steamboats ; for, if this is not done, these losses may 
 have to be met by additional taxation. No doubt most munic- 
 
124 SELECTED ARTICLES 
 
 ipal trades are monopolies, in which case the city has generally 
 the option of raising prices as an alternative method of meet- 
 ing a loss. 
 
 Taxes Increased. 
 
 It is obvious, therefore, that in order to estimate the imme- 
 diate increase of taxation likely to fall on the citizens of a city 
 municipalising any industry, the probable net loss in cash must 
 first be estimated ; and to this must be added an estimate of 
 the rent which would be drawn from the private proprietors of 
 the industry if it were not municipalised. In fact a careful study 
 of these returns indicates that an increase of taxation is the 
 probable immediate result of municipal trade, though it is a 
 result which the citizens concerned may never perceive. 
 
 Municipal Employment Costly. 
 
 To discuss in detail all the reasons why the direct employ- 
 ment of labour by municipalities is likely to be costly would 
 occupy many pages. But an analysis of these reasons indicates 
 that they are based on a few broad underlying considerations 
 which may be briefly stated here. In the hrst place, the mu- 
 nicipal workman often has a vote in the district in which his 
 work lies, and thus gains a voice in the selection and rejection 
 of his masters, the members of his town council — a privilege 
 not enjoyed by any private workman. This is, no doubt, the 
 basis of the socialistic claim that the civic employe is certain to 
 be well treated. But it also indicates the probability that work- 
 men in public employment will be paid wages above the mar- 
 ket level, that less w^ork will be demanded of them in a given 
 time, that discipline will be less efifectively maintained, and 
 that for these reasons the cost of production will be greater 
 in municipal than in private trade. In the second place, the 
 stimulus of personal gain is almost inoperative in municipal 
 trade, whilst that same stimulus animates private trade in ways 
 too numerous here to be mentioned, thus making private trade 
 more progressive than municipal trade — more progressive, 
 that is, in cases where financial success is probable. In a district 
 where the profitable working of a tramway is improbable, it may 
 
MUNICIPAL OWNERSHIP 125 
 
 be that it is more likely to be constructed by town councillors 
 than by company directors, because the local authorities are un- 
 restrained by that excellent commercial brake, the fear of person- 
 al loss. 
 
 Corruption. 
 
 It is perhaps unfortunate that the question whether munici- 
 pal trade pays or not necessarily forms such a large part of 
 this controversy, because no doubt in many matters other con- 
 siderations are more important than those concerning finance. 
 Cities may be right to face losses when those losses are in- 
 curred for the general good ; and the management by local au- 
 thorities of roads, waterworks, baths, slaughter-houses, ceme- 
 teries, harbours, etc., when these services are unremunerative, 
 may in many cases be justified on this plea. But to impose 
 additional taxation merely for the sake of encouraging the di- 
 rect employment of labour cannot thus be justified, for the result 
 would be to benefit a class and not the whole community. In 
 fact, as regards society generally, direct employment is the re- 
 verse of a benefit, because the germs of corruption undoubtedly 
 exist in our cities, and the probability of the disease spreading 
 is greatly increased if large numbers of employes are brought 
 under the direct authority of the civic authorities. This is by 
 far the strongest argument, not necessarily against municipal 
 ownership, but against the direct employment of labour by civic 
 authorities. On this subject the United States is often held up as 
 a warning in indicating the depths of corruption into which Eng- 
 lish-speaking cities may fall, and of the difficulty of extricating 
 them. 
 
 World To-Day. 1*2: 621-5. June, 1907. 
 
 Municipal Ownership of Public Utilities. John W. Hill. 
 
 All the arguments that can be made for municipal owner- 
 ship and operation of public utilities can be made against it, 
 with the additional argument that the very highest measure of 
 success in business management has been attained in private or 
 quasi-public enterprises ; and this will always be so, so long as 
 we live under a form of government subject to frequent elec- 
 
126 SELECTED ARTICLES 
 
 tions, spasmodic reforms and the lifting into office of many- 
 men, often unfitted to conduct with success the commonest af- 
 fairs of life. Municipal ownership means the conduct of pub- 
 lic utilities by men whose chief and sometimes only claim to 
 consideration is the fact that they received more votes than 
 their opponents at the last election. 
 
 Unless all men are capable of managing public utilities, mu- 
 nicipal ownership and operation in principle is bound to be a 
 failure, because any man may by the votes of his friends be sud- 
 denly thrust into an office which will require him to assume 
 the management of enterprises calling for technical skill and 
 experience ; and herein lies the danger to public interests, be- 
 cause the staff can not be any better "than its head, and under 
 the withering and degrading influence of partisan politics is often 
 worse than the head. 
 
 Political appointments are to be condemned, because they are 
 political appointments, and not because of inherent objection 
 to the man appointed, for no matter how great his talents, or 
 how evident his fitness for the work assigned, the knowledge 
 that his appointment is due to political influence rather than 
 to recognition of merit, will clog his efforts and weaken his am- 
 bition, and the constant feeling of insecurity connected with 
 public office will chill his ardor and shorten his reach. 
 
 All public utilities begin with plans and construction work. 
 and here arises the first economy in favor of private owner- 
 ship. In organizing the staff to design and build, merit and 
 efficiency alone are considered, political considerations do not 
 enter, and each man is selected and each move made to secure 
 the largest, quickest and safest return for the money expended. 
 In private enterprises promises for efficient service can be made 
 and the incentive to active and successful effort can be main- 
 tained. Civil service rules which are often a bar to high achieve- 
 ment and practical ability in municipal enterprises seldom find 
 place in private work. A competent official is recognized and 
 awarded even though his knowledge of Greek and grammar is 
 not of a high order, and the adjustment of the members of 
 the working staff to the positions of greatest usefulness is sure 
 and easy under private management. 
 
MUNICIPAL OWNERSHIP 127 
 
 The writer at one time had occasion to seek the services of 
 a competent transitman in tunnel work; several candidates 
 were highly recommended for the place by the City Civil Service 
 Commission, who, when put to work, succeeeded indifferently 
 well. Finall}^ a man of large practical experience in coal-mine 
 surveying, but with a poor record from the Civil Service ex- 
 amination, was employed for the duty, with marvelous results 
 in the speed and accuracy of his work. This man had grown 
 up in the coal mines, had learned to handle a transit and level as 
 a forester learns to handle an ax, with only the rudiments of 
 trigonometry at command and wholly unable to explain on paper 
 the usual adjustments of field instruments, but he was as sure 
 in his work under ground as if it was second nature. He made 
 good, notwithstanding his failure to show a satisfactory record 
 on Civil Service examination, but it was only by violating the 
 Civil Service rules with regard to appointments in the city 
 service that his talents became available." In a private enter- 
 prise his record of past experience and recommendations would 
 have secured a place for him. 
 
 Freedom of action in choosing one's assistants seldom pre- 
 vails in the conduct of municipal bureaus. Eminent talents are 
 rarely known and seldom sought for among the employees of 
 municipalities, because the term of office is short or uncertain 
 and the encouragement to lofty and persistent effort corres- 
 pondingly lacking. 
 
 In organizing a municipal staff, the first consideration is po- 
 litical service and availability for future political ends. A ward 
 captain will usually rank higher in the estimation of the appoint- 
 ing power than an experienced mechanic, engineer, clerk or ac- 
 countant, and utility and fitness for the task assigned is a sec- 
 ondary consideration, and too frequently not a consideration at 
 all. Under such conditions public service is perfunctory, dila- 
 tory and inefficient, the cost of service is enhanced, and the com- 
 fort and convenience of the pubHc impaired. 
 
 This is not necessarily due to inherent defects or incompe- 
 tency in the individual appointee, but to a pernicious feature of 
 American municipal government, which makes merit and fitness 
 for service take second place to influence and patronage. Under 
 
128 - SELECTED ARTICLES 
 
 -such conditions any part of a public service which depends upon 
 manual labor or human skill must be obtained at an increased 
 cost over the same service from a system which knows neither 
 influence nor patronage, and which marshals its employees ac- 
 cording to merit and fitness for the duty assigned. 
 
 In organizing a working staff for a private corporation, the 
 fewest men consistent with the work to be performed are se- 
 lected, and effort is always made to bind them by feelings of 
 self-interest to the enterprise, and retain them indefinitely, be- 
 cause their experience becomes a valuable working asset of the 
 corporation, which can not readily be replaced on short notice. 
 No such conditions can prevail in public affairs because the man 
 at the top is himself a creature of chance or caprice, and his 
 tenure is subject to the whims of the people who elevated him 
 to office. He can not guarantee a term to his subordinates be- 
 cause of political expediency and his own uncertain base, and 
 the fidelity of service which comes from respect for vested au- 
 thority, and the skill and command of his superior, can rarely be 
 inspired in employees on municipal work. 
 
 In the making of contracts and purchase of supplies for 
 public utilities the private corporations have a decided advantage. 
 The usual restrictions, hindrances, circumlocution and indirect- 
 ness of methods forced by law and ordinances in public con- 
 tracts and purchases of materials are swept aside in private en- 
 terprises, and the object, whatever it is, is sought by direct 
 methods guided by intelligence of purpose. 
 
 Contracts for public works are so hampered by "safeguards" 
 and by restrictions, that an experienced and conscientious con- 
 tractor is bound to protect his interests b}' demanding prices above 
 those he would ask for the same kind of work from individuals 
 and private corporations. 
 
 The exercise of judgment and sense of fair dealing which 
 prevails between men of honor and mental ability, can not 
 prevail with the municipal officers and the contractor. The mu- 
 nicipal contract is an inflexible instrument, open to only one 
 construction, and that the construction put upon it by the officer 
 himself. 
 
 Contracts made by private corporations go direct to the 
 
MUNICIPAL OWNERSHIP 129 
 
 three material points: i. — Kind and quality of work. 2. — Time 
 of performance. 3. — Price and terms of payment. 
 
 Contracts with private corporations are treated, as they 
 should be, as commercial transactions subject to their laws and 
 customs, and free from the taint of political or any sinister in- 
 fluence. Differences between the buyer and seller on quality 
 -and price of work are quickly and fairly compromised, and as 
 a rule work on the private contract is in progress before the 
 municipal contract has completed its travels around the offices 
 which by law are required to participate in its execution. The red 
 tape connected with the letting and award of public contracts in- 
 volves delay and expense which the bidder is bound to con- 
 sider in making his prices for the work. 
 
 Private inspection and measurement of work is usually exact, 
 without being captious, and the delay due to the list of officials 
 who must be seen before difficulties can be met and overcome in 
 public work are not encountered in private work, because some 
 one in whom his employers have confidence is vested with au- 
 thority to act, and his acts are by law the acts of his principals. 
 In public affairs it is often a matter for the courts to decide as 
 to who really has the authority to resolve disputed and trouble- 
 some conditions of municipal contracts. 
 
 Political and usually incompetent inspectors and inexperi- 
 enced managers are the rule on public contracts, while a private 
 corporation, from the necessity of conserving its capital, must 
 have competent men to manage its work and avoid losses due 
 to mistakes of judgment or errors of inexperience. Time and 
 cost alike are essential elements of private corporations, be- 
 cause returns are sought for at the earliest convenient date, while 
 public enterprises are usually conducted with small regard of 
 time and less regard of cost. 
 
 As a personal conviction, I think, the less the larger munic- 
 ipal corporations engage in lines of business which can be con- 
 ducted by private corporations, the better it will be for the pub- 
 lic at large. There is more need of coffee and sugar in a mu- 
 nicipality than there is of trolley cars and electric lighting. But 
 no one, not even our most aggressive demagogues, has pro- 
 posed to establish a municipally owned and operated grocery 
 
130 SELECTED ARTICLES 
 
 store, but it may come to this in time, when the men who purvey 
 our real necessities of life will be political partisans imbued with 
 the spirit of political success, rather than with the desire to cul- 
 tivate and secure the good will of their patrons. 
 
 It is proper that the bent of an enterprise or monarchy should 
 be paternal, because, as a sentiment at least, everything and all 
 avenues of progress start from a common center at the head 
 of the government. Paternalism, however, is neither desirable 
 nor possible in a republican form of government where the 
 officials from the President downward in the scale are chosen for 
 a brief time as executives of public will, and with an opportunity 
 too limited to admit of permanently fixing the stamp of indi- 
 vidual ideas on public affairs. 
 
 The best service is rendered when there is hope of reward, 
 and the best commodity produced where there is hope of profit. 
 Where reward and profit are lacking, service and commodity 
 depreciate in value. The rewards of political life are dubious 
 and ephemeral, and the profits are not forthcoming by honest 
 ways. All these things go to make municipal ownership of pub- 
 lic utilities an undesirable end. The losses due to extravagance 
 and misdirected efforts of municipal bodies will represent enor- 
 mous dividends on properly applied capital, and when it is con- 
 sidered that any municipal work can be built and operated at 
 less cost by private corporations than by public corporations, 
 it is a marvel how intelligent people can be hoodwinked into 
 the support of the popular and irresponsible clamor for the 
 conduct of public utilities by municipal officials. 
 
 A case in point on one of the impediments to an award of 
 municipal contracts is worth consideration. In a city contract 
 involving nearly eight hundred thousand dollars' worth of work 
 and materials, the lowest bidder, a thoroughly responsible party, 
 was somewhat ambiguous in stating his prices on certain items, 
 and to guard against error, he was asked to explain the intended 
 scope of the doubtful prices written in his proposal, and upon 
 reducing his explanation, which was satisfactory, to writing, his 
 proposal was accepted. 
 
 A disappointed competitor prayed for an order of court re- 
 straining the director of public works from executing the con- 
 
MUNICIPAL OWNERSHIP 131 
 
 tract because of irregularity in making the award. The prayer 
 was granted and the director ordered to reject all bids and re- 
 advertise the contract, causing several weeks' delay, during 
 which interval of time prices of materials were advanced and 
 the cost o[ the work accordingly increased. 
 
 The court, in this case, held that the director had no right, 
 prior to award of contracts, to confer with the lowest and ap- 
 parently best bidder upon the contents of his proposal, as to the 
 amount of labor and material embraced in the price of one or 
 two of the many items ; that it gave the bidder an unfair ad- 
 vantage over his competitors notwithstanding under the law 
 and customs of the department he was the lowest and best bidder. 
 The court held that the award of a public contract was not sub- 
 ject to the business and common-sense judgment of the director, 
 but was a simple problem of arithmetic which could be solved 
 by any clerk in the director's office. 
 
 The opinion of the court cost the city many thousands of 
 dollars and weeks of delay, and was thought by the director and 
 his advisers to be unsound in law and logic. But it was the 
 opinion of a court, and as such had to be respected. 
 
 No such foolishness could arise in disposing of a list of tend- 
 ers on a private contract, for only such people would be invited 
 to bid as could certainly comply with the requirements of the 
 contract. Personal interests would have no weight in making^ 
 the award. Quality of work, guarantees, and time of perform- 
 ance and price alone would be considered, and no reasonable 
 ground would be afforded for complaint on the part of the dis- 
 appointed bidders. The buyer would seek the best article at the 
 lowest price, unrestricted by the usual municipal conditions cal- 
 culated to hamper his decision and thwart his judgment. 
 
 The faults of municipal contracts are not due so much to mis- 
 management as to the multitude of conditions to be met before 
 a contract can be made, and the troublesome restrictions placed 
 upon its performance after it is made. It can not be gainsaid 
 that the private corporation can buy the same thing at a better 
 price and upon better terms, and can adjust disputed points of 
 performances more quickly and satisfactorily than can a munici- 
 pal corporation. The parties can go at once to the gist of the 
 
132 SELECTED ARTICLES 
 
 difficulties and adjust them according to the judgment of intelli- 
 gent and experienced arbitrators. 
 
 While private corporations are organized and operated for 
 profit, and always have profit in view, the service rendered 
 should be better and rates charged be more reasonable than the 
 service and rates of a municipal corporation which attempts to 
 perform the same work or furnish the same commodity. 
 
 If faults are found in the service or charges of private corpo- 
 rations, the cause should be looked for in the ordinances or laws 
 granting the franchises, rather than in the management or 
 operation of the private corporation. 
 
 The city of Philadelphia for years owned and operated a 
 municipal gas-works, which eventually became an asylum for 
 broken-down political heelers, and for some who were not 
 broken down. The evils of municipal control shown in the poor 
 quality of gas, indifferent and slovenly service, high prices, and 
 large annual losses in the operation of the works, became so 
 great that many of the people of this truly good (?) town, 
 prayed that some one might be permitted to take the city gas- 
 works from municipal control, even if they had to steal it, and 
 thus get rid of an incubus which poHtical inefficiency and greed 
 had fastened upon them. 
 
 In course of time, the gas-works w^ere leased to a great and 
 powerful company which shortly overcame all the difficulties 
 formerly surrounding the municipal gas-works, and gave to 
 the people better service at lower prices, in addition to making 
 an annual payment to the municipal sinking fund of several 
 hundred thousand dollars, increasing from year to year, which 
 was used to extinguish the overwhelming debt created by muni- 
 cipal control of the institution. 
 
 A certain city in the United States was about to construct 
 large and necessary improvements in its water-works, after plans 
 and estimates had been prepared by engineers not under munici- 
 pal control. A syndicate of capitalists agreed to construct the 
 works within the estimate of cost and time. It was found, how- 
 ever, that the law would not permit of the construction in this 
 way, and that the work must be carried out under the manage- 
 ment of the municipality, with the natural result that the cost 
 
MUNICIPAL OWNERSHIP 133 
 
 has been exceeded by nearly seventy per cent and the time ex- 
 ceeded by one hundred per cent, with the works unfinished to- 
 day. The parties who proposed to perform the work were men 
 , who had driven railroads over mountains, across broad rivers, 
 and through the trackless wilderness, who know the exact value 
 of materials and labor, and how to obtain the best results at the 
 lowest prices, and who could not afford to tolerate extravagance 
 or delay, because their profit depended upon quickness of action 
 and certainty of results. 
 
 Extortion by private corporations should not be tolerated, 
 and a reasonable appeal to the courts can be relied upon to pre- 
 vent or remedy this. Public utilities under private control should 
 be allowed an income which will represent a reasonable profit 
 on just capitalization and honest and efiicient management, and 
 more than this can not be obtained, if the people are alive to 
 their interests. It is always possible to compel satisfactory serv- 
 ice at reasonable prices from private interests, and no one ap- 
 preciating the value of his property can afiford to antagonize 
 the people upon whose good will and patronage his success de- 
 pends. 
 
 North American Review. 182: 853-6a June, 1906. 
 
 Arguments against Municipal Ownership. F. B. Thurber. 
 
 There are two sides to most questions, and municipal owner- 
 ship is no exception to this rule. There are situations in coun- 
 tries having a form of government different from ours, where 
 graft is not an epidemic disease, and where public ownership 
 and operation may be successful ; but even there opinions differ. 
 In Great Britain it has run its course, and there is a reaction in 
 public opinion against "municipal trading." as it is called there, 
 just at a time when many well-meaning persons in this country, 
 as well as professed Socialists and their organs, are advocating 
 it here. 
 
 In a country with universal suffrage, it is desirable to limit 
 the number of public officials to the smallest possible number, 
 for political reasons; and there are also economic reasons which 
 apply especially to lighting, traction and other public-service 
 
u- 
 
 134 SELECTED ARTICLES 
 
 corporations which are large buyers of materials, employ large 
 numbers of persons and require a high order of administrative 
 ability. Indeed, water, a natural product, which runs down-hill 
 and is distributed with a minimum of labor and expense, is about 
 the only public necessity justifying public ownership in this 
 country, and even in this there are exceptions. 
 
 Nothing can be truer, as a rule, than that "public-ownership 
 waste exceeds corporate profit" ; supplement this with the even 
 more important political considerations, and thoughtful citizens 
 may well hesitate to favor the present Socialistic fad of municipal 
 ownership. It advocates play upon public prejudice, and claim 
 economies for public ownership which do not exist. 
 
 Public officials where municipal plants have been established 
 are naturally interested in making a good showing and holding 
 their easy jobs ; in many instances, their bookkeeping omits 
 interest, taxes, depreciation. sinking>fund for renewals or im- 
 provements, and other item^ which a private corporation must 
 recognize. The taxpayer is a convenient beast of burden upon 
 which to unload deficits, and he in turn unloads on rentpayers 
 where he can. Under public ownership, new inventions, im- 
 provements and extensions are ignored. Under private owner- 
 ship, the best professional talent is employed at salaries unheard 
 of in public employment, and all these improvements are at 
 once utilized, giving the public an up-to-date service. 
 
 Individual initiative and energy, coupled with the cooperation 
 of many small partners in corporations, has made this country 
 great ; and I cannot believe that the municipal Socialistic propa- 
 ganda will largely prevail if the facts are properly presented 
 to the jury of American public opinion. 
 
 As illustrative of the above points, I cite a few opinions of 
 others, taking up first : 
 
 Political Objections. 
 
 "The Evening Post" (New York) of March 8th. 1905, in 
 an editorial on the strike in the Subway and on the Elevated 
 Railway, entitled "Some Lessons of the Strike," said : 
 
 "Nor can we omit to point the warning which the strike 
 furnishes against municipal ownership of a great transport sys- 
 tem. One thing which the infatuated strike-leaders have steadily- 
 counted upon is Mr. Belmont's political involvements. Thev have 
 
MUNICIPAL OWNERSHIP 135 
 
 repeatedly raided him in the confidence that he dared not antag- 
 onize 7,000 voters. Now, imagine the city itself — that is, a Mayor 
 standing for reelection — running all the transportation lines. 
 Fancy 12,000 or 20,000 motormen and conductors directly in the 
 pay of the municipality. What demands should we not see made, 
 what threats indulged in, what political appeals made and terror- 
 ism exerted! From what is going on ill the green tree of ownership 
 by a politician, we may infer what would be done in the dry tree 
 of ownership by an Administration dependent on universal suf- 
 frage. W^e had best look twice at that fire before jumping into it 
 out of our present frying-pan." 
 
 The "Chicago Evening Post'' of September 15th, 1905, in an 
 
 editorial entitled '"The Bridgetender's Rake-off." shows how 
 
 municipal ownership and operation work in Chicago. It said : 
 
 "As the taxpayer reads the facts and figures presented by the 
 'Evening Post' of yesterday regarding the salaries paid to the 
 city bridgetenders, he will be particularly impressed by the 'rake- 
 off' that goes to the occupants of these 'soft snaps' — the amount 
 of money drawn from the city treasury that is not earned. 
 
 "The taxpayer who knows little about practical politics will 
 wonder why a man should be paid $3,400 a year to look after a 
 bridge, pay out about half of this to have tlie work done, pocket 
 the other half and devote his time to running a saloon or some 
 other purely private matter. He will marvel that a bridgetender, 
 who at most is nothing but a motorman, should draw several 
 times a motorman's pay, yet do no part of a motorman's work. 
 
 "There is not a bridge in Chicago that should not be handled 
 at an outside cost of $3,000 a year — considering that three or 
 four months the work of attending to bridges is merely nominal. 
 It has been shown that one bridgetender is clearing $155 a month 
 out of his $2,700 salary: another is pocketing $1,840 a year out of 
 $3,400: still another is netting fully $1,000 annually out of his 
 $283.33 a month. 
 
 "This is a reckless way to play with the people's money. 
 Even the city authorities who are responsible for the salaries and 
 the selection of the men to whom they are paid show they are 
 ashamed of the whole 'grafting' business by their reluctance to let 
 the people scrutinize the bridgetenders' pay-roll. 
 
 "The shameful condition so fully exposed by the 'Evening 
 Post' should be changed without delay. The Mayor and City Coun- 
 cil ought to join hands in a bit of reform that would be im- 
 mediately to the benefit of the public treasury. The Mayor should 
 limit the number of bridgetenders to actual requirements, and 
 he should see that every man earns his pay. The Council should 
 limit the appropriation for this work, so as to leave no opportu- 
 nity for grafting. 
 
 "The bridgetender should be required to attend to bridges, 
 to look after them thoroughly. He should have no time for prac- 
 tical politics or for running a saloon. And for this work, faith- 
 fully done, he should receive a fair salary. 
 
 "Stop this bridgetender's graft. Cut out the practical politi- 
 cian's rake-off. Mayor Dunne, who proposes to bring the street 
 railroads under the same management as the city bridges, should 
 be particularly anxious first of all to reform this especially glaring 
 evidence of loose municipal operation." 
 
 As illustrating how persons who know only one side of a 
 
 question change their minds after seeing the other side, the 
 
136 SELECTED ARTICLES 
 
 following editorial, entitled "The Conversion of the Scot," from- 
 the "New York Times" of June 15th, 1905, is pertinent: 
 
 "Mr. James Dalrymple, Glasgow's managing expert of tram- 
 ways, hailed and imported by the 'Lord Mayor' of Chicago and the 
 Municipal Ownership League of New York as the high apostle of 
 municipal-run street railways, has experienced a conversion and 
 given his adorers a chill. His change of prospect from the fair 
 municipal landscape of Glasgow to the political bogs and quagmires 
 of Chicago is marked by the following two utterances, the first 
 delivered just after Mr. Dalrymple landed and was hugged by the 
 Leaguers in this city, the other on his way back on Tuesday via 
 Philadelphia; 
 
 BEFORE. 
 
 "I see no reason why Chicago, or any other city in this country, 
 should not be able to own its street railways, and to run them with 
 as much success as we have achieved at Glasgow. I admit that 
 the proposition at Chicago is a much larger one than the one we 
 had-to tackle, but at the bottom it is the same. 
 
 "The people of Glasgow would not go back to the old days of 
 private ownership for anything in the world. I am not saying that 
 a company would not do as well by the public. I know, in fact, 
 that it could, but it would be doing so with a somewhat different 
 end in view. For a company has always the shareholders to con- 
 sider. And I have to admit that you will find people in Glasgow 
 to-day — quite influential people, too — who say that the street-car 
 service is not profitable." 
 
 AFTER. 
 
 "To put street railroads, gas-works, telephone companies, etc., 
 under municipal ownership would be to create a political machine 
 in every large city that would be simply impregnable. These po- 
 litical machines are already strong enough with their control of 
 policemen, firemen, and other office-holders. 
 
 "If, in addition to this, they could control the thousands of men 
 employed in the great public-utility corporations, the political ma- 
 chines would have a power that could not be overthrown. I came 
 to this country a believer in public ownership. "What I have seen 
 here, and I have studied the situation carefully, makes me realize 
 that private ownership under proper conditions is far better for 
 the citizens of American cities." 
 
 Economic Considerations. 
 
 ' The experience of the City of Philadelphia with her gas- 
 works is interesting, because she has both operated and leased 
 them ; and the results have a bearing upon both the political and 
 economic phases of this subject. 
 
 For man}- years, the city owned and operated its gas-works, 
 with the result of high prices, poor service and the gradual de- 
 velopment of a political ring which robbed the city and prac- 
 tically -dominated its politics. This grew so intolerable that, 
 ten years ago, the works were leased to the United Gas Improve- 
 ment Company. Hays Robbins, in an article in the "World of 
 To-day," December, 1904, says: 
 
MUNICIPAL OWNERSHIP 137 
 
 "During the late seventies and early eighties, the waste and 
 mismanagement under this [municipal operation] system became 
 so scandalous that public-spirited citizens, notably the well-re- 
 membered Committee of One Hundred, dared the power of the gas 
 ring and fearlessly exposed its shameful record. Professor Bryce 
 says that this ring controlled no less than 20,000 votes, using them 
 most effectively to prolong its corrupt rule." 
 
 The result of the lease to the United Gas Improvement Com- 
 pany has been to improve the service, lower the price and give 
 the city a yearly revenue of $650,000, as against an average 
 yearly deficit under city management of $239,000. 
 
 The candle-power under city management averaged 19.17; 
 under the Company management it has averaged 22.88. Thou- 
 sands of service connections which w^ere worn out or inadequate 
 in size to supply sufficient gas have been renew^ed, convenient 
 stations for the payment of gas bills furnished, and the plant 
 brought up to the highest efficiency. 
 
 Btit, while accomplishing this great gain by taking the gas- 
 works out of politics, the city did not entirely escape the evils 
 of municipal ring rule which developed in other directions, and 
 has only recently been broken by another uprising of citizens. 
 Some people have inferred that the recent political revolution 
 in Philadelphia had something to do with the gas business, but 
 it was only in the sense that the political ring controlling the 
 city, needing more revenue to carry on extravagant and fraudu- 
 lent public improvements which they had inaugurated, approached 
 the United Gas Improvement Company with an offer to 
 extend their lease^ provided the Gas Company w-ould raise 
 $25,000,000 for the ring to carry on the city improvements which 
 were under way. After a long negotiation, the Gas Company 
 consented to a contract which good judges believe would (if 
 the money could have been honestly expended) have been 
 advantageous to the city as well as to the Gas Compan3^ But 
 the abuses of the municipal ring had become such a stench in 
 the nostrils of the community that the public revolted and the 
 ring was smashed. So far, however, as the relations of the Gas 
 Company to the city are concerned, they have been entirely satis- 
 factory, and it will be a sorry day for Philadelphia if the city 
 should resume municipal operation of its gas-works. Municipal 
 owmership is one thing, municipal operation another. 
 
 'The Times" (London) recently indicated the result of 
 
138 SELECTED ARTICLES 
 
 municipal ownership and operation in England, in a series of 
 articles under the title of "Municipal Socialism.'' from which 
 
 the following paragraph is quoted: 
 
 "Such was the fashion, however, in which the work was done 
 that it was aptly described by one alderman as 'the municipaliza- 
 tion of laziness.' There was little or no control over the men, with 
 whom it was essentially a case of 'go as you please.' One or two 
 members of the Council who had been builders went one day to see 
 how a certain work was progressing, and they found that two men 
 had been for three weeks on a job which one man ought to have fin- 
 ished in three days. In such circumstances as these, the cost of work 
 went u: necessarily. The work's manager estimated, for instance, 
 that certain renovations to be carried out in the Stratford Town Hall 
 by his department would cost nine hundred pounds sterling; but, 
 though nothing more was done than he had allowed for, the bill 
 came to two thousand pounds sterling." 
 
 It is natural for public officials to try to make a good showing 
 in their accounts in order to justify themselves, and therefore 
 many items which private corporations have to recognize are 
 often omitted. How it w^orks in England is shown by Mr. John 
 Holt Schooling, an eminent authority, in the "Windsor Maga- 
 zine," for January, 1905. The following is a summary : 
 
 Undertaking. No. Capital. Annual Result Claimed. Correct Result. 
 
 Gas 97 £24,030,000 Gain, £394,82-5 Loss, £1,647,725 
 
 Electricity 102 12,510,000 Gain, 11,707 Loss, 1,075,057 
 
 Trams 45 9,750,000 Gain, 99,318 Loss, 729,432 
 
 The department of Commerce and La1:)or of the United States 
 
 Government has issued an interesting report upon the relative 
 
 expenses of private and municipal electric light and power plants. 
 
 The year covered is 1902, and the .figures as follow : 
 
 Private Stations Municipal Stations 
 Per cent. Per cent. 
 
 Salary and wages 29.9 35.8 
 
 Supplies, material and fuel 32.6 46.2 
 
 Rent, taxes, insurance and miscellaneous... 18.2 8.4 
 
 Interest on bonds 19.3 9.6 
 
 Total 100 100 
 
 Watered Stock. 
 
 A principal grievance of the advocates of municipal owner- 
 ship is that private corporations water their stock; and that this 
 entails an additional burden upon the community. While this 
 may be true in some instances, it is not true as a rule. 
 
 The Hon. Chas. G. Dawes, formerly Comptroller of the Cur-' 
 rency. well summarizes the facts in the following words: 
 
 "Stock in the modern corporation represents, not only owner- 
 ship, but the location of control. The stockholders of a corporation 
 unanimously desire permanence of control in a certain set of men. 
 
MUNICIPAL OWNERSHIP 139 
 
 In which event they might find it impracticable to liave stock is- 
 sued only in an amount equal to the cash value of its property. 
 The notion that stock is always- watered to sell or to perpetrate 
 some fraud is erroneous. The public is not necessarily injured be- 
 cause stock at par does not always represent an equal amount of 
 cash or its equivalent. 
 
 "Varying values in corporation assets are reflected in the selling 
 or market value of the stock — not by constant alterations in the 
 stock issues themselves. Dishonest men may, and do to some ex- 
 tent, use watered stock to create impressions of value which does 
 not exist; but the abolishment of watered stock would not ma- 
 terially hinder them. Wrong impressions and overvaluations of 
 stock worth par or above par are created as easily as in the case 
 of watered stock worth less than par, and generally by similar 
 methods. Stock exchanges, through the improper manipulation of 
 operators, are frequently used to create wrong impressions of stock 
 values; but in such cases, and all cases, it is not the water in the 
 stock that causes the chief trouble among unwary investors. It is 
 the water in the prices they pay for it. And that kind of water 
 may be found at times irrigating with remarkable impartiality 
 purchase of stocks at all prices above and below par." 
 
 This is emphasized by the Hon. M. A. Knapp, Chairman of 
 
 the Interstate Commerce Commission, who, in a paper before 
 
 the American Association for the Advancement of Science, said : 
 
 "If common assertion is well founded, the body politic is af- 
 flicted with a grievous ailment which takes the name of 'trusts.' 
 Those who diagnose this malady — and nearly every one professes 
 ability to do so — declare that one of its worst and most aggravated 
 symptoms is over-capitalization, or 'watered stock.' For this and 
 other manifestations of the disorder the favorite specific just now 
 Is publicity. 
 
 "With all deference to those who advocate such publicity as a 
 preventive of stock-watering, I venture to doubt the correctness 
 of their contention. Indeed, my scepticism goes to the extent of 
 questioning whether over-capitalization, as such, is a matter of 
 real gravity, much less a portentous evil which demands an extra- 
 ordinary remedy. I hold it unproved that the excessive issue of 
 corporate securities is a source of such danger as to excite alarm, 
 and I am yet to be convinced that enforced publicity will not be a 
 harmful exercise of public authority. 
 
 "Leaving out the speculator, and taking into account only those 
 seeking honest investment, ten times more money, to say the least, 
 has been sunk in farm mortgages, suburban lots, patent rights, 
 buying and selling grain, cotton and other commodities, where no 
 corporate shares were dealt in or even existed, than was ever lost 
 on account of the fictitious or excessive issue of corporate se- 
 curities. If the State is to assume the function of keeping folly 
 and cupidity from paying twice or ten times what a thing is worth, 
 it surely would assume the guardianship of the largest numbers 
 and the heaviest losers." 
 
 The foregoing appHes to the interest of the investor as affected 
 
 by watered stock. As regards the interest of the consumer of 
 
 pubhc utilities, the watered railroad carries at the same price as 
 
 the unwatered, and the watered gas company sells its product 
 
 at the same price as the unwatered one. There is a thought in 
 
 this connection which may not have occurred to everybody, and 
 
140 SELECTED ARTICLES 
 
 that is that, even if watered stock is a medium through which 
 promoters do sometimes make profit in one way or another, are 
 they not entitled to a profit? Would our railroads and other 
 public utilities have been built if there had not been a profit to 
 promoters beyond six per cent, upon the actual investment? 
 Some men put their money, labor and time into transportation ; 
 some into real estate. Transportation made the real estate valu- 
 able. It saved time for the general public and promoted their 
 comfort ; yet the men who have grown rich through increased 
 values of real estate are honored, and those who have grown 
 rich through transportation are denounced as "franchise grab- 
 bers" and "public robbers." The same is true of lighting, 
 telephone and other corporations. It appears that to grow rich 
 through rendering the public a service is a crime, while to grow 
 rich without such service is honorable. How many of us ap- 
 preciate that "corporation" means "cooperation" and that the 
 captains of industry, backed by many small partners (stock- 
 holders), are doing a great work? 
 
 The advocates of municipal ownership and operation claim,, 
 first, that it would be a relief from present political corruption ; 
 second, that profits would be realized for the public which are now 
 absorbed by corporations. I believe that political corruption un- 
 der municipal ownership and operation would be infinitely greater 
 than at present, and the expected profits would turn out losses, 
 to be borne by taxpayers. I have stated facts and opinions in 
 support of this belief. I could add many others if space per- 
 mitted. 
 
 There is a large and growing class of citizens who believe in 
 "a square deal" for everybody ; that government should protect 
 life, property, health and education, but that in a country with 
 universal suffrage the number of political employees should not 
 be unduly increased ; that the line should be drawn between 
 public ownership and public administration, that' in a manufac- 
 turing or transportation business public administrativ-e waste ex- 
 ceeds corporate profit, and political dangers are greatly en- 
 hanced ; and that Individualism as distinguished from Socialism 
 should be encouraged. 
 
MUNICIPAL OWNERSHIP 141 
 
 Engineering Magazine. 34: 509-11. December, 1907. 
 
 Comparison of the Cost of Steam Power in Municipal and 
 Privately-Operated Plants. John W. Hill. 
 
 During the past few months I have had occasion to collect 
 statistics on the cost of steam power, and in support of the claim 
 of better management by private corporations, advanced in this 
 paper, it is found that even in the few cities having the highest 
 type of triple-expansion pumping engines, and accessories to 
 match, and in which the contract test and annual duties of the 
 machinery are the best ever attained, the cost of power per year 
 is greater than in the large well-managed steam power plants, 
 owned and operated by the private electric and manufacturing 
 corporations, and a comparison of statistics divided as to cost 
 of fuel, labor, repairs and stores, show the excess cost to be prin- 
 cipally in the item of labor. 
 
 In the following table, the figures represent the annual costs 
 per indicated horse-power of prime movers : Coal figured at 
 $2.50 per ton. excepting Hamilton, $2.20 per ton. City Water- 
 Works, and Philadelphia Power, 8,760 hours ; Pittsburg Power, 
 8,666 hours ; Hamilton, 8,000 hours. 
 
 Nature of power. Fuel. Labor. Repairs. Supplies. Total 
 
 City pumping works (1) $15.70 $24.62 $5.96 $2.74 $49.02 
 
 City pumping works (2) 17.44 25.19 5.25 2.58 51.48 
 
 City pumping works (3) 16.70 24.01 1.28 2.05 44.04 
 
 City pumping works (4) 16.75 21.90 1.85 1.88 42.38 
 
 City pumping works (5) 16.82 26.19 1.17 1.59 45.77 
 
 City pumping works (6) 21.39 15.64 9.62 1.24 47.90 
 
 City pumping works (7) 18.89 4.14 ... 50.03 
 
 City pumping works (8) 27.64 26.44 9.55 5.44 69.08 
 
 New York (9) 25.55 13.13 5.90 1.42 46.00 
 
 Philadelphia (10) 20.51 6.61 1.52 1.32 29.96 
 
 Pittsburg (11) 19.51 4.42 3.55 2.50 29.97 
 
 Hamilton (12) 16.90 5.18 0.88 0.64 23.62 
 
 It is interesting to note that the total cost of power by a 
 private corporation. No. 12 on the list, is less than the cost of 
 labor alone in the city water-works power, Nos. i. 2, 3, 5. and 8.' 
 The figures are from the last annual reports. The costs of labor, 
 repairs, and supplies are not known in detail for No. 7, but can 
 roughly be stated as $25 for labor, $4.14 for repairs and $2 for 
 supplies. 
 
 In each city pumping station, the engines considered are from 
 the best known and highest class builders, and the water-works 
 
142 SELECTED ARTICLES 
 
 profession is accustomed to point to the cities considered as ex- 
 amples of excellent water-works management. 
 
 The average cost of labor in the eight city power stations is 
 $23.62 per indicated horse-power per year for 8,760 hours, while 
 the average cost of labor in the private corporation stations is 
 ^7-33, or about one-third the cost in the municipally-owned and 
 operated stations, or to state the matter in different form, the 
 city uses three men to do one man's work. 
 
 Engineers generally recognize the modern high duty triple- 
 expansion pumping engine as the highest type of steam power, 
 and the service of pumping at constant speed, against a steady 
 head, to reservoirs, the 'optimum' condition for high running 
 duty. Moreover, the long runs of pumping engines, without in- 
 terruption for Sundays are calculated to favor the annual econ- 
 omy, when compared with steam engines working under a con- 
 stantly varying load, and, in all but traction and electric lighting 
 stations, stopped altogether for Sundays and holidays. 
 
 The duties obtained on the trials of Engines i to 6, inclusive, 
 are the highest in the history of pumping machinery, a fact 
 well attested by the annual charge for fuel ; indeed the fuel 
 costs, on the average, are as good for the city-managed works, as 
 for the private-managed works. But when ^-ou come to the labor 
 charge, there is where the politician comes to the front in great 
 shape. There could be no political advantage in being wasteful 
 of fuel, but there is a decided advantage in future elections in 
 being wasteful of labor. Two men can cast two ballots, and 
 three can do better, while the coal burned in the furnace can- 
 not vote, and there is therefore no advantage in being prodigal 
 with it. 
 
 After allowing for the favorable conditions of modern water- 
 works steam pumping service, even then the cost of power in 
 the best private w^orks is less than in the best water-works under 
 municipal management. 
 
 Instances can be multiplied of povirer costs under municipal 
 and private control which will verify the low cost for labor for 
 private control and the high cost for municipal control. And if 
 compared on the volume of business transacted, it can be demon- 
 strated in almost anv if not all cities that the cost per unit of 
 
MUNICIPAL OWNERSHIP 143. 
 
 work performed or business conducted is much greater for 
 public than for private business. 
 
 The least objectionable of public works which can be con- 
 ducted by the public are the building and maintenance of sewers 
 and sewage disposal works, the cleaning of streets and the col- 
 lection and disposal of garbage, although in some large cities this 
 work is now the subject of annual contract. Water-works, elec- 
 tric and gas works, trolley lines, and steam and hot water heat- 
 ing systems, works employing large numbers of people, and 
 requiring skilled assistance, should be the subject of private 
 construction and control under contract or franchise which will 
 properly safeguard the interests of the public and prevent 
 extortion or poor service. 
 
 Cities have been and can be robbed by public service corpora- 
 tions, but only with the aid and connivance of public officials. 
 Standing alone, the public service corporations will be compelled 
 to meet the obligations imposed on them by their franchises, 
 and give the public the required service at fair rates. The 
 legislature can pass laws and the city councils can pass ordi- 
 nances giving away public rights, and the public service corpora- 
 tions may be the beneficiaries thereby, but the officials chosen 
 by the people to represent them are the culpable parties in such 
 transactions. 
 
 Annals of the American Academy. 28: 371-84. N. '06. 
 
 American Municipal Services from the Standpoint of the En- 
 trepreneur. Chester Lloyd Jones. 
 
 The people of the L^nited States have been said to possess 
 great confidence in machinery. This is a characteristic quite as 
 much of our political as of our industrial life. An example of 
 the latter fact is the popular attitude toward public service corpo- 
 rations. The average man reads of monopolized industries, with 
 their manipulations of prices and arbitrary charges for equal 
 services, and at once looks to a new set of political machinery 
 to eliminate the evil. He concludes that public service corpora- 
 tions are monopolistic in character and that the only way to cure 
 
144 SELECTED ARTICLES 
 
 the abuses connected with them is to summarily abolish the order 
 of things that made the abuses possible. When the local services 
 are poorly managed he seizes upon accounts of the successful 
 management of similar enterprises by public officials in distant 
 countries and decides that the remedy is to adopt the same system 
 at home. This attitude of mind is brought about by drawing too 
 uncritical a contrast between what exists under widely different 
 conditions in a foreign country and the actual management of 
 the home services. The assumption is made that the same po- 
 litical machinery will work the same results at all times and in 
 all places. Instead it should be realized that the time and place 
 are ordinarily the elements immensely more important, and that 
 these being in an ideal condition the method of management be- 
 comes a comparatively unimportant matter. Given perfect con- 
 ditions, and the discussion of the superiority of public or private 
 management of the public services becomes purely academic, 
 but so long as perfect conditions do not exist there is an oppor- 
 tunity for an honest difference of opinion as to the relative ad- 
 vantages of the two methods. 
 
 In the minds of all the chief question in the management of 
 the public services is how to secure the greatest efficiency. Put- 
 ting aside, then, the purely academic question of whether public 
 or private capital should manage public services, it becomes 
 simply a problem of solving which of the two methods under the 
 condition surrounding the particular enterprise gives greater 
 promise of securing good results. Too much stress cannot be 
 placed upon the fact that in choosing between any systems of 
 managing the public services the community in which they are 
 placed is an inseparable element in the problem. 
 
 It is largely from this point of view that the public service 
 corporations in the United States claims that its administration of 
 the public services is superior to that by public officers. It is 
 asserted that under present conditions private management brings 
 better net results — the claim of greater efficiency. That the 
 government has a right to regulate the action of public service 
 corporations is no longer a subject of dispute in the law of the 
 United States. The right of the state to go even to the length 
 of appropriating the services to itself in return for just payment 
 to the owners or lessees is unquestioned, but if such action is 
 
MUNICIPAL OWNERSHIP 145 
 
 taken it should be dependent on the advantages to be gained 
 and not on the basis of sentiment or prejudice. 
 
 From the standpoint of the entrepreneur public services may- 
 be divided into two classes, according to the degree of profes- 
 sional skill necessary to their management: First, there are those 
 which, after the original construction is completed, require only- 
 ordinary manual labor and a fair degree of executive and clerical 
 ability to keep them in efficient condition. Such until recently 
 has been the character of the work of street cleaning in even our 
 large cities. In the management of services of this character but 
 little difference need exist between public and private operation. 
 A fairly able manager at the head and a fair devotion to duty 
 by the staff should produce passable results. At the other ex- 
 treme stand those branches which demand a high degree of 
 executive ability, good commerical judgment and a great tech- 
 nical skill to secure satisfactory results. Such are the gas and 
 electric lighting plants and the transportation systems w^hich have 
 come to play so important part in our municipal life. It is very 
 evident that the majority of our public services approach the 
 latter class much more than the former, and it is to the considera- 
 tion of such enterprises that we wall chiefly turn our attention. 
 
 The entrepreneur insists that under present conditions a 
 system of public management varies in success inversely as the 
 complexity of the organization necessary to render the service. 
 The chief points of superiority claimed for private management 
 are as follows : 
 
 First, the effect of the desire of gain upon the management. 
 It is all important to secure some force which will affect the 
 entire administration with a desire for efficiency. Any element 
 which fails to contribute to the sum of efficiency of the plant is 
 a dead weight, a hindrance to the earnings of the company and 
 lessens the quality of the service performed. The strongest stim- 
 ulating influence which can be easily brought to bear upon the 
 average man is the desire for gain. If this force can be enlisted 
 on the side of efficiency the battle is won. There are many rea- 
 sons why this is much easier of accomplishment under private 
 management than under public officials. 
 
 The continual shifting of political partie? and of the men in 
 
146 SELECTED ARTICLES 
 
 ■ 
 
 influence in the same party has prevented the development in 
 our cities of a corps of municipal employees who can feel con- 
 fident that faithful v^ork brings permanence of tenure, and that 
 greater ability insures more rapid advancement. The disintegrat- 
 ing effect of short terms and insecure tenure of office is evident 
 in all ranks of the service, from the heads of departments to 
 the day laborers. Since the tenure of office is but for a brief 
 period and political fences are constantly in need of repair, 
 there is every temptation on the part of the mayor and the heads 
 of departments under him to use the means in their hands for 
 their continuance in office. Manipulation of the municipal 
 patronage can be practiced without causing important protest. 
 Even if the public services suffer in no other way from this in- 
 fluence, their management is bound to be in more or less constant 
 flux from changes of party or changes within a party. 
 
 The lower officers and laborers, too, feeling that in any case 
 their term must be short, cannot but be susceptible to the 
 thought that while the opportunity lasts the best must be made of 
 it. A temptation to make the most of an easy job at good pay 
 is always present, and there is a strong possibility that the money 
 interests of the municipality will have to suffer as a consequence. 
 To say the least, the chance of advancement and permanent 
 tenure being removed the feeling comes to the laborer that the 
 position will last in any case as long as the term of office. The 
 next election brings him an even chance of getting his work 
 hack again, but long and faithful service gives him no claim to 
 preference. The security of his position depends rather upon 
 his loyalty and services to the party than to the city's interests. 
 His political activity becomes more important in his eyes than 
 his industrial duties, and this attitude inevitably leads to a 
 disposition to "sit down on his job." 
 
 Another disadvantage that the short term of offi.ce brings to 
 the publicly-elected manager of the city services is that, no matter 
 how anxious he may be to serve the municipality creditably, he 
 hardly has time to become familiar with his duites when he is 
 turned out of office. The branches of a large city service are 
 so many and intricate that it would take almost a whole term 
 for the new official to become truly acquainted with the depart- 
 ment it was his duty to manage. 
 
MUNICIPAL OWNERSHIP 147 
 
 As a general rule the man elected has much less experience 
 in management of work similar to that over which he is to 
 preside than would a man chosen to manage a private business 
 of the same size. Take, for example, the management of a big 
 city gas plant or street car system. What guarantee have we 
 that the popularly elected chief will have seen the service in the 
 lower positions in a similar enterprise which would be required 
 of one put in charge of a like concern privately managed? We 
 are not here concerned with the question of whether or not the 
 public can ever be impressed with the necessity of electing ex- 
 perienced men to manage their public services, but simply with 
 the fact that the histor}' of American municipal enterprises does 
 not prove that they regularly do so. while the history of 
 privately managed services shows the adoption of that practice. 
 
 The public officer has generally less technical training than the 
 one selected under private management. The very circum- 
 stances of American municipal politics at the present time, where 
 the salaries of the offices and the patronage connected with them 
 constitute the chief legitimate reward for political service, make 
 it highly improbable that the more important offices connected 
 with the publicly-managed enterprises will be given to men who 
 have not taken an active part in securing the success of the party in 
 power. This so narrows the number of men specially fitted by 
 education who are also apt to be selected for the offices by the 
 political party as to practically eliminate the class entirely. 
 Further, the reall}^ first-class man would not only be thus debar- 
 red, but as a rule would not accept the position if offered because 
 of the better opportunities obtainable in the field of private 
 enterprise. Under these conditions the public services must 
 operate at a disadvantage. It means that as a rule the man 
 who is at the head of the work is not a master of the technique 
 of operation in his department. He must rely upon his sub- 
 ordinates for advice and information which he should himself be 
 in a position to give. He cannot see so clearly what should be done, 
 and adopt a firm and consistent policy to carry it out. 
 
 These are the disadvantages of public management when the 
 heads of departments are chosen directly by the people. Ap- 
 pointment by their political representative, the mayor, or election 
 by councils or by a combination of these methods, has much 
 
148 SELECTED ARTICLES 
 
 the same effect. A greater independence of selection may some- 
 times be obtained, but the controlHng influence is more apt to 
 be politics than efficiency. Even if the appointed officer wishes to 
 maintain an independent attitude, to carry on the operations of 
 his department on strictly business principles and to keep his 
 selection of employees free from any but industrial considera- 
 tions, he can hardly expect to carry out these plans. Council- 
 men will unfailingly urge upon him the employment of this man 
 and that, regardless of whether additional help is needed or not. 
 The temptation to create a position for such an applicant or to dis- 
 charge some one not possessed of political support is great. The 
 head of a department knows that his plans for keeping up a 
 high standard of efficiency are first and last dependent upon 
 receiving adequate appropriations from councils. To get out of 
 sympathy with the representatives would be to antagonize the 
 very body upon whom he must depend for his resources. He is 
 thus placed between two fires — he must choose between allowing 
 politics to enter into the management of his labor account or he 
 must run the risk of creating hostility or at least lack of interest 
 on the part of councils. As a rule the head of a department 
 chooses what he considers the lesser of the two evils and' sur- 
 renders his labor account to exploitation. The door once opened, 
 it is almost impossible to check the advance of politics, and the 
 w'ould-be impartial director finds himself forced into the active 
 campaign. This picture is not an exaggeration, as is proven by the 
 experience of many cities. In practice we find that the appointive 
 head, though he may often have the advantage of experience over 
 the officer directly elected works under no less a disadvantage 
 than he. The management of the Philadelphia gas works illustrates 
 the case. Though the chief was appointed and at first made 
 a show of independence, his forced reliance on councils soon re- 
 duced the department of gas to a mere wheel in the machine. 
 Providing that the management of city services is under the 
 charge of boards elected for so long a term as to constitute 
 practically permanent bodies a greater independence of action 
 may reasonably be expected from the members, but the appoint- 
 ments are still bound to be sought by and as a rule, given to the 
 men who have rendered yeoman service to the party rather than 
 to those who have the best experience and technical training. 
 
MUNICIPAL OWNERSHIP 149 
 
 The limited possibilites in the way of salary remain the same as 
 where the officers are elected. Even granting that the officers 
 are well qualified when elected or appointed to the permanent 
 board they have not the same incentive as when working for a 
 personal employer. The loyalty to the municipality is not, with 
 notable exceptions, as keen as the loyalty to the private employer. 
 The officer is almost sure to hold his position for the full term 
 even if no great efforts for improvement are made, and that 
 fact — all unconsciously, perhaps, but none the less surely — les- 
 sens his efficiency as corhpared to the man who realizes that 
 his position and advancement depend upon his best efforts every 
 day and his being up with the times in his plans for extension 
 and improvement. 
 
 Even when the head offices are filled by the members of a per- 
 manent board there still may remain the management of the 
 employment list on the spoils principle. This of course means 
 that the larger portion of the service is left under the same dis- 
 advantages as before described. These, in brief, are the condi- 
 tions which put the personel of a publicly managed city service 
 under a disadvantage as compared to private enterprise. In order 
 to bring the two more sharply into contrast, let us review the 
 similar points as shown in an average private corporation. Here, 
 again, the comparison is not between what should be and what 
 is but is based on present conditions in the United States. 
 
 Those at the head of the private company are responsible to 
 the stockholders much more directly in fact, however it may be in 
 theory, than are our public servants to the people. They have 
 greater reason to believe that their offices are permanent during 
 good behavior. Efficiency is the chief claim to permanence of 
 position and exceptional ability is rewarded by rapid advance- 
 ment. • No time is wasted in non-industrial pursuits, such as 
 caring for the party fortune in the employee's own ward. 
 
 Secondly. Experience and technical training are at a premium 
 and are definitely sought after from first to last. The salaries are 
 higher than in public enterprises where the officer's responsibility 
 is the same. 
 
 Thirdly. There is continuity of policy. The company cannot be 
 carried along on any but sound business principles. The con- 
 sciousness of the permanence of the interests involved makes the 
 
150 . SELECTED ARTICLES 
 
 directors less prone to adopt a policy which would temporarily 
 bridge over a difficulty at the cost of increased expenditure later 
 on. There is no temptation to conceal the state of affairs "until 
 after election," as must often be the case where party interests 
 clash with those of the public industries. 
 
 Besides the disadvantages connected with the personel of man- 
 agement and operation there are other limitations of municipal 
 administration. In the management of the finances of the public 
 services the city is distinctly handicapped. The administration 
 of any large corporation is subject to occasional demands for 
 large amounts of money which cannot always be foreseen. Such 
 are the unusual expenditures caused by accidents or the necessity 
 of making an important addition to the plant at once. To meet 
 such a condition is difficult for most of our cities. An emergency 
 fund large enough to cover such demands would prove too easy 
 a source of income to be placed in the hands of the ordinary 
 authorities. Such a practice would soon lead to appropriations 
 for "extraordinary" purposes wdiich would come to be counted 
 upon as a regular source of income for the department. 
 
 To make the appropriation rest on special action of councils 
 also would be a possibility, but would not be entirely satisfactory. 
 Councils are not always easily convinced of the advisability of an 
 expenditure even when it would appear an imperative necessity 
 to even the casual observer. Reluctance to incur the criticism 
 through running up the tax rate or desire to spend the available 
 money on some more brilliant but less necessary project has de- 
 feated many excellent and imperative improvements and exten- 
 sions in publicly managed city services. Even if councils realize 
 the advantage or need of certain changes it may be impossible 
 for them to grant the money, though they wish to do so. Many 
 of our cities also have already reached the statutory limit of in- 
 debtedness and it would be impossible for them to raise the money 
 needed to meet any largely increased demands upon their treasur- 
 ies. Thus the improvement, though it might be all important to have 
 it made at once, would have to be postponed until the legislature 
 could, by special act, allow the city to increase its indebtedness. 
 Whatever method of solution is adopted it seems clear that the 
 city is at a distinct disadvantage in meeting unusual demands 
 
MUNICIPAL OWNERSHIP 151 
 
 which may be made upon it for maintaining its public services at 
 their highest efficiency. 
 
 A private company in a similar position experiences no 
 such hindrance. A good financial risk can easily secure im- 
 mediate command of capital, and does not have to go before a 
 local or state legislature where conflicting interests may delay if 
 not defeat the needed appropriation. The financial interests of 
 those managing the company also prompt them to be on a keener 
 lookout for any unusual demand which may be made upon them. 
 They hold a better chance of foreseeing the necessity for exten- 
 sions, alterations or improvements, and have better facilities for 
 meeting the situation when it comes. 
 
 ^luch of the writing denunciatory of private management of 
 public services is based on the evil effects of the influence of cor- 
 porations in politics. Many would be willing to concede the 
 superior efficiency of private management in general, but insist 
 that all the advantages gained through such administration are 
 much over-balanced by the corrupt practices due to intrigues in 
 the local legislative bodies. The evils connected with attemped 
 franchise grabbing are so great, it is asserted, that the only way to 
 abolish these influences is to effectively take the services out of 
 politics by putting them under public management absolutely. Such 
 arguments are based on the assumption that political influences 
 are removed by delivering the services into public control. Politics 
 are to be removed by placing the management in the hands of 
 politicians. Thus stated, it becomes clear that the adoption of 
 control by the public does not necessarily mean all it seems to 
 indicate. As a matter of fact, under present American conditions, 
 politics are a permanent factor in the management of public serv- 
 ices whether under private or public operation. The patronage 
 wielded by public officers is no whit less an important factor in lo- 
 cal politics than that exerted by the franchise-holding companies. 
 Beyond a doubt such influence is baneful — and in the one case 
 quite as much as in the other. Whether we shall be able to 
 develop laws and a public opinion which will eliminate these 
 influences is still a question for the future. Our course of action 
 for, the present must be planned with a frank recognition of the 
 existence of such influence and the object of reducing it to a 
 minimum. No one who considers the situation carefully would 
 
152 SELECTED ARTICLES 
 
 assert the presence of political influence in the one case and deny 
 it in the other. The best interests of the community demand 
 that whatever system of management be chosen that politics be 
 eliminated. For the good of the corporations also it is beyond 
 doubt to be desired that they should confine themselves wholly 
 to industry. Under present conditions the temptation to enter 
 politics for the defense of their interests is in many cases almost 
 irresistable. Oftentimes these interests may be legitimate and 
 need defence only due to the general prejudice against the 
 management of businesses affected with a public interest by 
 private individuals. 
 
 This state of affairs is most unfortunate both for the public 
 and for the entrepreneur. On the one side it produces an acute 
 distrust of all companies making proposals to do public work. 
 Every proposition is attached as if it were an attempt to legalize 
 the stealing of public money. The representatives of the people 
 are often prejudiced and unable to consider the purely industrial 
 side of the enterprise in question. Listead of attempting to 
 attract capital while fully protecting municipal interests, they are 
 apt to approach the granting of a franchise in a hostile attitude. 
 and often insist on useless stipulations which are an expense to 
 the company and of no advantage to the community. As an 
 example of such specifications may be cited the requirement made 
 by one of our largest cities that service pipes for gas must be 
 put in every sixteen feet. When it is remembered that such 
 services often, as in this case, extend for long distances along 
 parks and undeveloped districts the regulation appears ridicu- 
 lous as well as useless. 
 
 The lack of sympathy between the public and its servants 
 has an equally bad effect upon the attitude of the latter. Re- 
 alizing that the spirit of many of those from whom they must 
 get their rights is one of hostility and unreasoning prejudice^ 
 they assume the stand that unfair measures may be used to over- 
 come unfair treatment. Once the field has been entered, there is 
 the temptation to extend the company's activities beyond the de- 
 fense of their legitimate interests to the securing of special 
 and questionable privileges. The influence used to prevent prej- 
 udiced or "hold-up" legislation may easily be continued to deaden 
 the convictions of would-be honest representatives. Examples; 
 
MUNICIPAL OWNERSHIP 153 
 
 of the use of corporate influence in this way fill all too many- 
 pages of the history of American municipal councils. The 
 general result of such a state of affairs is mutual distrust and 
 recrimination. 
 
 It must not be supposed, however, that by removing the pub- 
 lic services from private management all evils connected with 
 their administration will be at an end. Our American experience 
 demonstrates quite the contrary. The onl\- definite change which , 
 necessarily results is the transfer of the influence exerted by the 
 private companies into the hands of the local politicians, an 
 alternative by no means insuring improvement. It is not to be 
 expected that in a country where the rewards of office are the 
 most important object of political struggles, rather than any 
 honor or social position attached thereto, that the large patron- 
 age offered by the payrolls of the publicly managed municipal 
 services would not prove a prey to the ward politician. The 
 chance to secure ''jobs" with liberal pay at public expense for 
 the political and personal friends of the successful candidates is 
 too tempting to be resisted. It may, of course, be argued that an 
 efficient civil service would put all the positions of this character 
 out of the reach of the politicians. That is doubtless possible, 
 but the creation of an effective civil service law for the manage- 
 ment of the present public positions should be a prerequisite be- 
 fore the city should embark on new and expensive departures in 
 municipal industries. When the cities show the willingness and 
 the ability to create a truly efficient civil service the field may not 
 be so difficult for public administration of the public services, 
 but until such a move is not only advocated but carried out in 
 good faith, any increase in the activities of a city only opens 
 a longer payroll for exploitation by the "boss." 
 
 This fact is so patent in the history of American municipal 
 industries that it is worth while to illustrate it from one of the 
 most conspicuous examples — the notorious experience of Phil- 
 adelphia in the management of her own gas works. Hardly a 
 branch of this now famous experiment failed to show signs of 
 exploitation for political ends. 
 
 The first account to be attacked was, of course, that promis- 
 ing the greatest number of positions to clamoring political de- 
 pendents. This was the labor list in the manufacturing and 
 
154 SELECTED ARTICLES 
 
 distributing departments. High wages were paid — twenty-five 
 per cent over the price for labor on the open market. The chief 
 of the gas bureau was constantly besieged by the friends of 
 various councilmen in search of easy work at high prices. The 
 lists were padded with a number of laborers far beyond the actual 
 needs of the plant. So many were there indeed that it is asserted 
 that had all the employees been stood shoulder to shoulder, 
 room could not be found for all of them at one time on the 
 grounds of the plant. Naturally, under such conditions there 
 was shirking of work on all sides, and some favored ones 
 turned up at the works, it was said, only on pay day. The 
 amount of work each had to do varied in accordance with the 
 influence of his friends in councils. Receiving these easy jobs 
 from the political boss, the employees were in turn exploited by 
 him by means of semi-annual "voluntary contributions" to the 
 party in power. * 
 
 The purchasing and selling accounts were likewise abused. 
 Coal was bought from favored firms only, the residual tar and 
 ammonia always went to a single firm, though nominally sold to 
 the highest bidder. In practice there was but the one bidder. 
 When another bidder on one occasion put in a bid higher than 
 that of the regular contractor the award was not given him '"be- 
 cause he did not have the facilities for handling the product." The 
 coke was disposed of through a member of select council. The 
 charges entered under the blanket account of "miscellaneous" 
 exceeded $100,000 a year, and there were large amounts charged 
 against such accounts as "ice," "matches" and "drugs and horse 
 medicine." 
 
 The works were exploited indirectly also. Councils were anxious 
 to cut down all appropriations for improvements and extensions 
 in order to turn as large an amount as possible into the treasury 
 as "profits of the works." This would enable them to keep down 
 the general tax rate and have money for more favored plans, but 
 it had a disastrous effect upon the general condition of the plant. 
 Small and rotten mains and service pipes were left unrenewed, 
 thus causing a leakage in some years of as much as thirty per 
 cent of the gas manufactured. Antiquated machinery was kept 
 in use through the refusal of councils to put in modern ap- 
 pliances — a practice which cost the city in wasteful methods of 
 
MUNICIPAL OWNERSHIP 155 
 
 production far more than would have been the cost of new ap- 
 paratus. Councils even went so far as to cut down very mate- 
 rially the use of the gas for public lighting'. In the place of the 
 public gas lamps light was bought at high prices from gasoline 
 and electric lighting companies. These were private concerns in 
 which councilmen and others prominent in local politics were 
 interested. 
 
 In a w^ord, the management of almost every branch of the 
 public gas works was dictated by politics. Not only the heads 
 of departments, but every employee from the top to the bottom 
 of the labor account threw his whole intiuence into political af- 
 fairs. The tenure of the party in power marked the tenure of 
 office of the employees. Such was the experience of Philadelphia 
 in the management of a municipal industry. 
 
 It is not contended that this is in all respects a typical case 
 and that the same thing would occur in every detail in all our 
 American cities did they undertake similar services. That such 
 is not the case is proven by the experience of some of our cities 
 in similar enterprises. But the example is given to show what has 
 actually occurred in one of the most important experiments in 
 municipal ownership in America. The circumstances of other 
 American cities are not so different as to overthrow the pre- 
 sumption that the possibility of similar abuses exists there also, 
 though not perhaps in the same degree as in the above instance. 
 The example is given only to drive home the argument that 
 under present conditions it is entirely possible for politics to 
 play quite as large a part in the management of public services 
 when under public as when under private control. 
 
 This being the actual state of affairs, the important question to 
 be answered is : In which way can the connection of the pujjlic 
 services and politics be more easily minimized. If public owner- 
 ship is to be chosen radical measures must be adopted to remove 
 all control of the municipal industries from possibility of political 
 interference. To widely extend the functions of city government, 
 thereby increasing the temptation to abuse of patronage, seems in 
 itself to introduce an element making it increasingly difficult to 
 keep a civil service system on a strictly non-partisan basis. 
 
 The other alternative is to elect representatives of such char- 
 acter as to command public confidence and who will be able to 
 
156 SELECTED ARTICLES 
 
 guard the city's interests in making arrangements with con- 
 tracting companies. Each of these methods carries with it the- 
 possibility of honest management. On the point of integrity 
 there would be little to choose between the two, carried on under 
 ideal conditions. Improvement over present conditions must 
 in either case come through raising the character of the repre- 
 sentatives. A simple change from one set of machinery to the 
 other will accomplish nothing. 
 
 The jioint then is : Is it easier to elect men who will be 
 judges of a fair contract or men who will be able to run our 
 municipal industries at a standard of efficiency equal to the 
 average of private management. The former seems much more 
 easy of attainment than the latter. The chances of our getting^ 
 by popular vote a man with intelligence to determine the pro- 
 visions of our contracts seem much greater than our chances of 
 getting men specially suited by experience and education to carry- 
 on our municipal industries. The average man can choose work 
 for the carpenter to do and judge the work when done much 
 better than he can do the work himself. SimiIarl3^ the average 
 representative can choose the terms upon which the city will 
 have its work done and can judge w'hether it has been done ac- 
 cording to the agreement much easier than he can carry out the 
 plan himself. If the representatives of the people cannot be trust- 
 ed to make fair terms with a contracting company how can they 
 be trusted with the entire management of an industrial enterprise? 
 
 There is but one limit to the power of the public to regulate 
 the conditions upon which they will give the public services into 
 the hands of private companies — a fair return to capital. What 
 is a fair return is, again, largely settled by the conditions offered 
 in the contract. If the agreement is so strict as to make it 
 impossible to raise the earnings of the company above the average 
 of industrial undertakings in the community then it is clear that 
 the city must hold itself ready to guarantee that the earnings 
 shall reach that standard. Otherwise capital will of course re- 
 fuse to take up the project. In case the municipality, on the other 
 hand, does not care to assume the chance of loss by the company 
 it must be prepared to grant a larger possible rate of return in 
 exchange for its freedom from liability. 
 
MUNICIPAL OWNERSHIP 157 
 
 Within these Hmits the city may take all necessary measures 
 to protect its interests in its public services. The more clearly the 
 city evinces its desire to guard its own interests and at the same 
 time to grant to the private company a reasonable rate of in- 
 come and to protect it from unreasonable interference with that 
 income, the less will be the desire and the temptation of the 
 company to interfere with local political affairs. 
 
 Such an agreement would secure to the city all the advantages, 
 claimed by the advocates of municipal operation without the in- 
 ceased responsibility of direct management. A municipally- 
 operated plant would in any case withdraw from other branches 
 of industry the same amount of capital as would be employed in 
 the enterprise bj' a private corporation. The interest on that 
 capital must in the one case just as surely as in the other finally 
 be paid by the community at large. 
 
 The choice between the two methods of operating the munic- 
 ipal services must depend not on what may be accomplished under 
 ideal conditions, but upon the likelihood of efficiency under pres- 
 ent conditions. 
 
 Under American conditions to-day, then, the entrepreneur 
 would maintain that : 
 
 1. The direct responsibility present imder private manage- 
 ment makes it possible for a higher degree of efficienc}^ to be ob- 
 tained than under public operation. 
 
 2. The stimulus of gain can be made a more powerful element 
 working for efficiency in all branches of operation under private- 
 than under public control. 
 
 3. The influence of politics upon the public services can be 
 lessened more easily by having the representatives determine the 
 terms upon which the city services shall be let out under contract 
 than by turning the entire administration of the services over to 
 the representatives. 
 
 4. By the granting of contracts clearly safeguarding both the 
 interests of the city and the investor the management of the 
 public services may be brought to the highest degree of simplicity,, 
 economy and efficiency. 
 
158 SELECTED ARTICLES 
 
 Journal of Commerce. July i6, 1907. 
 
 Main Question in Municipal Ownership. 
 
 The chief motive of men in this age is that of self-interest 
 in one form or another. It is not only natural but indispensable 
 to success and progress and needs only to be guided by sound 
 principles. In the expenditure of capital and the exertion of 
 enterprise, skill and economy in any service to the community, 
 and all industry and business is in some sense a service to the 
 community, the main incentive is profit or compensation depen- 
 dent upon the efforts of those concerned. Men do not exert 
 themselves for nothing, or for their health, but for gain. In pro- 
 viding a direct service like that of furnishing light, electric power 
 or transit facilities which is in its nature a commercial business, 
 the main question is whether men will do it better with their 
 own capital and under their own management, with the incentive 
 of gain for themselves, or by the use of capital supplied from 
 the public treasury, under the direction of public officials with 
 fixed salaries for themselves. Will the public officials nominated 
 by political organizations and elected by popular vote be best 
 qualified to exercise control over the business, and will the men 
 employed by them and subject to their authority be those most 
 capable for the work? Under which condition here suggested are 
 men of special ability, of energy, of experience and mastery in 
 the business, more likely to be engaged in it? Under which is 
 there more likely to be alertness in extending the business to 
 meet every demand, in adopting improved methods, in economiz- 
 ing cost and increasing results? Reason and experience give the 
 same answer to these questions. 
 
 No doubt private self-interest in this service needs to be 
 under restraint and regulation and prevented from making illegit- 
 imate gains or rendering inadequate service, but its motives can- 
 not be dispensed with without paralyzing the main springs of ac- 
 tion in a business requiring expert ability, sustained effort and 
 vigilant direction, such as no political system with which we are 
 acquainted will afford. If the public is to furnish the capital and the 
 credit and take the risks of gain or loss, while the men in charge 
 of the service have no direct stake in it, are not chosen for their 
 
MUNICIPAL OWNERSHIP 159 
 
 experience or fitness and are paid without reference to results, it 
 stands to reason that the practical results will prove costly and 
 unsatisfactory, and experience has verified the dictates of reason 
 in this respect. There has been corruption in obtaining franchises 
 by men seeking the privilege of employing capital and energy in 
 providing these public utilities, but the opportunities and the 
 temptations for corruption would be vastly greater if that busi- 
 ness were made the object of political quest and political control. 
 The scandals of the franchise abuses would pale into insignificance 
 in comparison with those of municipal abuses with millions of 
 money and great forces of workmen at command, and the prac- 
 tical and financial results would be more deplorable and more 
 difficult to remedy than those we are already burdened with in 
 the administration of city affairs. No large city in this country 
 has yet gone far enough to demonstrate this, but every step has 
 tended that way. Private enterprise and the motives that give it 
 force need everywhere to be under the restraint of the law to se- 
 cure rights and prevent wrongs, but it is the most effective power 
 we have, and every effort to displace it with oflficialism and 
 socialism tends to degeneration. 
 
 Review of Reviews. 36: 594-8. November, 1907. 
 
 How Boston Solved the Gas Problem. Louis D. Brandeis. 
 
 While this investigation (National Civic Federation) was 
 proceeding, Massachusetts entered, in connection with the Boston 
 gas supply, upon an experiment, new in America, which may lead 
 to the best practical solution of the public-utilities problem. The 
 new Boston system creates substantially a partnership between 
 the public and the stockholders of the gas company, — a partner- 
 ship in which the public will secure an ever-increasing share of 
 the profits of the business. 
 
 Twenty Per Cent. Reduction in Two Years. 
 
 This system has already given to Boston 8o-cent gas, although 
 Boston is located many hundred miles from the mines which 
 supply its coal. Eighty cents is a lower price for gas than is 
 
i6o SELECTED ARTICLES 
 
 actually enjoyed by any other city in the United States, except 
 a few within the coal and oil region, like Cleveland or Wheeling, 
 and Redlands and Santa Ana, Cal. Ev^en in those cities the price 
 is not lower than 75 cents, — a price which Boston may reasonably 
 expect to attain soon. For, during the two years ending July i, 
 1907, four reductions in price each of 5 cents have been made. To 
 Tiave reduced the price of gas 20 per cent, during that period of 
 generally rising prices in labor and materials is certainly a notable 
 achievement. The most recent reductions in price were the 
 wholly voluntary acts of the company, made under wise laws 
 framed in the interest both of the public and of the stockholders. 
 The saving to the gas consumer by these reductions was in the 
 first year $265,404.55, in the second year $565,725.60, and will be 
 in the third (the current) year about $800,000. 
 
 Earnings Unimpaired ; A Comparison With New York. 
 
 That this saving to the consumer was not attained by a sac- 
 rifice of the interests of the stockholder may be inferred from the 
 market price of the stock of the association which controls the 
 gas company. In the two years following the legislation of 
 1905, a period in which most other stocks depreciated largely, the 
 common stock of the Massachusetts Gas Companies rose from 
 44/'2 to 57>2 ; and even in the severe stock depression of late 
 September. 1907, this stock was firm at 52. 
 
 Compare with the results of the Boston experiment the at- 
 tempt in New York City made at about the same time to reduce 
 the price of gas from $1 to 80 cents by legislative fiat and the 
 compulsory orders of the State commission. The Xew York 
 company contended that the law was unconstitutional ; the fed- 
 eral court issued an injunction; the consumer still pays out $1 
 for each 1000 feet of gas ; and the market price of the stock of 
 the Consolidated Gas Company of New York fell during the 
 same period of two years from 200 to 118, and in late September, 
 1907, to 9634. 
 
 But Boston has reaped from the sliding scale system as ap- 
 plied under President Richards' administration of the company 
 far more than cheaper gas and higher security values. It has 
 been proved that a public-service corporation may be managed 
 
MUNICIPAL OWNERSHIP i6i 
 
 ■with political honesty, and yet successfully, and that its head 
 may become a valuable public servant. The officers and em- 
 ployees of the gas company now devote themselves strictly to the 
 business of making and distributing gas, instead of dissipating 
 their abilities, as heretofore, in lobbying and political intrigue. 
 As a result, gas properties which throughout the greater part of 
 twenty years had been the subject of financial and political 
 scandals, developing ultimately bitter hostility on the part of the 
 people, are now conducted in a manner so honorable as to de- 
 serve and to secure the highest public commendation. 
 
 Moderate Capitali::ation. 
 
 The aggregate outstanding securities of the constituent com- 
 panies had a par value of only $15,124,121 (of which $9,309,600 
 was stock and $5,814,521 funded debt). But when, in 1904, ap- 
 plication was made under the act to fix the capital, the companies 
 claimed that the properties had recently cost the then owners over 
 ^24,000,000, that their replacement value was about the same 
 amount, and that the fair value for capitalization should be not 
 less than $20,609,989.99. The Public-Franchise League, on the 
 other hand, contended that substantially any excess in value over 
 the $15,124,121 represented not contributions by stockholders, 
 but accumulations from excessive payments exacted from gas 
 consumers ; that in the reorganization of the business such value 
 should not be capitalized ; and that the Consolidated Company's 
 capital stock should therefore be limited to the aggregate of the 
 capital of the constituent companies then outstanding, plus such 
 additional amount of stock as it might be necessary to issue at 
 its estimated market value (which was above the par value) to 
 provide funds for paying off all existing indebtedness. The 
 League deemed the retention of the original capital so augument- 
 ■ed of fundamental importance, mainly because the payment of a 
 high rate of dividend on a small capital issue would tend to keep 
 the public vigilant. 
 
 After a long and bitter struggle the gas companies, acting 
 imder the enlightened and able leadership of jMr. Richards, 
 agreed, in 1905, with the Public-Franchise League upon legisla- 
 tion which provided that the capital of the consolidated company 
 
i62 SELECTED ARTICLES 
 
 should be limited to the aggregate par value of the outstanding- 
 stock and funded indebtedness of the constituent companies, ta 
 wit: $15,124,000; that the maximum price of gas in Boston should 
 be reduced to 90 cents within twelve months after the consolida- 
 tion was affected ; and that the Governor should appoint a com- 
 mission to consider and report to the next Legislature whether 
 the adoption in Boston of the so-called London sliding-scale sys- 
 tem for "the automatic and interdependent adjustment of the 
 price of gas to consumers and the rate of dividends to stock- 
 holders of gas companies" was expedient. The favorable recom- 
 mendation of the minority of this commission, Messrs. James 
 E. Cotter and Charles P. Hall, was supported by the Public- 
 Franchise League and the gas company, and on Alay 26, 1906, 
 the Sliding-Scale act received Governor Guild's approval in spite 
 of the strenuous opposition of both conservatives and radicals. 
 
 TJie Principle of the Sliding Scale. 
 
 The Boston Sliding-Scale act, which embodies with some 
 modifications the main provisions of the system widely used in 
 England, provides as follows : 
 
 First: Ninety cents per 1000 feet of gas (that is, the maximum 
 price then actually charged by the Boston company) is made the 
 "standard price" of gas. 
 
 Second: Seven per cent, (that is, i per cent, less than the 
 dividend which was then being paid by the Boston company) is. 
 made the "standard dividend." 
 
 Third : The company is prohibited from paying more than 7 
 per cent, dividend unless and until one year after it shall have 
 reduced the price of gas below 90 cents, and then may increase 
 its dividend at the rate of i per cent, for every 5 cents reduction 
 in price of gas. 
 
 Fourth: New stock can be issued only with the consent of the 
 Gas and Electric Light Commissioners and must be sold at auc- 
 tion at such minimum price and under such other conditions as 
 the commissioners prescribe. 
 
 Fifth : Provision is made for determining annually, and pub- 
 lishing in detail in the newspapers, the cost of manufacturing- 
 and distributing gas. 
 
MUNICIPAL OWNERSHIP 163 
 
 Sixth : After the expiration of ten years, the Gas and Electric 
 Light Commissioners may upon petition ''lower or raise the 
 standard price per thousand feet to such extent as may justly be 
 required by reason of greater or less burden which may be im- 
 posed upon the company by reason of improved methods in the 
 art of manufacture, b}* reason of changes in prices of materials 
 and labor, or by reason of changes in other conditions affecting 
 the general cost of manufacture or distribution of gas." 
 
 Efficiency in Management Sought. 
 
 The League therefore urged that the possibility of a large re- 
 turn upon capital offered under the sliding-scale system should be 
 regarded merely as an -incentive to securing for the gas business 
 the kind of management most likely to produce and distribute 
 gas at the lowest possible cost, and thus supply an essential pre- 
 requisite to cheap gas. Protection against corporate abuses 
 demands for gas companies strict supervision and publicity. 
 Eairness demands that proper compensation be made in some 
 form for the use of our streets. But no self-sustaining system 
 of supplying gas can give to the people cheap gas unless it rests 
 upon high efficiency in management. 
 
 The gas business has many of the characteristics of both 
 manufacturing and merchandising. Like other manufacturing 
 businesses, it produces an article for sale. The cost of its product 
 is dependent largely upon the character and condition of the 
 plant; upon the extent to which labor and waste-saving devices 
 are adopted ; upon the skill with which raw materials and sup- 
 plies are purchased and waste or residual products are disposed 
 of ; and whether the plant is operated to its full capacit}-. 
 
 To an even greater extent than in most mercantile businesses, 
 the pro rata cost of distribution of gas is dependent upon large 
 volume. The distributing plant requires an exceptionally large 
 investment. But the mains or pipes are rarely used to their full ca- 
 pacity. The interest, depreciation, and maintenance charges are 
 the same whatever the volume of sales. The inspection of meter, 
 and many other charges, increase but slightly with the increase 
 of sales. The pro rata cost of distributing gas diminishes largely, 
 therefore, with the increase in the quantity sold. But, as in most 
 mercantile businesses, the quantity of gas which can be sold in 
 
i6a selected articles 
 
 any of our large cities is dependent mainly upon the skill, energy, 
 initiative, and intelligence with which the business is conducted. 
 The demand for gas is not a fixed quantity. There is, undoubt- 
 edly, a minimum quantity which will be used under almost any 
 conceivable circumstances. But limits can scarcely be set to the 
 possible increase of its use in our large cities. Xot only is there 
 an ever-growing demand for intense artificial lighting of public 
 places, stores, and residences, but there is an almost limitless 
 field now occupied by electric light, coal, and oil, of which gas is 
 the natural competitor. The limits of the use of gas in any city, 
 therefore, will be set mainly by the skill, energy, and initiative of 
 those who manage the business, and by the extent to which they 
 appreciate the fact that increased use of gas will result from re- 
 duction in price, bettering of appliances, and improving facilities. 
 A management possessing the requisite ability and skill for 
 such a business and which w^ould exerci-e the requisite vigilance 
 and energy may be best secured by following those lines upon 
 which the remarkable industrial advance of America has pro- 
 ceeded, the lines of intelligent self-interest. Those who manage 
 our gas companies and other public service corporations should 
 be permitted, subject to the limitations stated above, to conduct 
 the enterprise under the conditions which in ordinary business 
 have proved a sufficient incentive to attract men of large ability, 
 and to insure from them their utmost efforts for its advancement. 
 These essential conditions are : 
 
 A. The right to enjoy a fair share of the fruits of successful 
 effort. 
 
 B. The opportunity of devoting one's whole efforts to de- 
 veloping the business. 
 
 C. The probability of pursuing for a reasonable time with- 
 out interruption such business policy a? may be adopted. 
 
 Journal of Political Economy. 14: 257-314. May, 1906. 
 
 Municipal Ownership in Great Britain. Everett W. Burdett. 
 
 /. Is It Successful f 
 
 For the purposes of this article I shall assume that, in the 
 generation and supply of electricity for lighting, the municipalities 
 
MUNICIPAL ..OWNERSHIP 165 
 
 of England and Scotland have, upon the whole, been measur- 
 ably successful in furnishing a fair article at a fair price. Tak- 
 ing all the figures together, Mr. R. S. Hale, of Boston, a compe- 
 tent statistician and engineer, after careful consideration, con- 
 cludes that there has been a difference in favor of the consumer in 
 the results which have been obtained from the municipal, as con- 
 trasted with the private, supply of electricity for lighting — a 
 difference, however, which is not so large as not to be creditable 
 to the companies, in view of the handicaps under which they 
 have been obliged to operate, to which I shall presently allude. 
 Moreover, with the exception of metropolitan London, practically 
 all of the private plants are in very small cities, while the great 
 bulk of the municipal plants are in larger cities. 
 
 Another fact to be borne in mind in this connection is that, 
 in some important instances, the showing which municipal plants 
 have been able to make has been materially assisted by the 
 circumstance that the going plants and business of private 
 companies have been taken over by the municipalities, which 
 have thus reaped the benefits of individual initiative and devel- 
 opment. This is conspicuously true of Leeds (population 390,000 
 in 1896) and Liverpool (population 517,951 in 1896). 
 
 But the success of municipal undertakings in the supply of 
 ■electricity for light has been confined to the single feature above 
 named, and has resulted solely to the benefit of comparatively 
 few consumers, and not to that of the general public. It has 
 likewise been accompanied by failures in other directions, to be 
 presently mentioned, which more than counterbalance the single 
 favorable feature above referred to. 
 
 There is nothing to show, and there is no reason to assume, 
 that the electric supply in Great Britain could not have been 
 furnished by private companies as satisfactorily and as cheaply 
 as has been done by municipalities, if they had had the oppor- 
 tunity. Where (in a very few instances) they have had such 
 opportunity the results have been about the same or better ; and 
 if there are any differences against them, they are amply ac- 
 counted for by the difference? in conditions under which private 
 and public lighting enterprises are by law conducted in Great 
 Britain. 
 
i66 SELECTED ARTICLES 
 
 //. Detrimental Consequences of Municipal Ownership. 
 
 If it be assumed that the public supply of electricity has been 
 successful in the single particular above referred to, it has been 
 attended with other consequences of a most detrimental character. 
 
 I. HAMPERIXG AND RESTRICTION OF THE INDUSTRY. 
 
 The first, and perhaps the most serious, of these consequences 
 has been the undoubted hampering and restriction of the growth 
 and development of the electrical industry, as a whole, in Great 
 Britain — resulting, as I shall presently show, from the peculiar 
 manner in which the laws applicable to the subject have favored 
 the municipal and discouraged the private exploitation of the 
 industry. 
 
 The backwardness of the development of the electrical in- 
 dustry, as a whole, in Great Britain is, I think, practically ad- 
 mitted on all sides ; if not admitted, it is readily demonstrable. 
 So serious was this state of things that in 1902 the Council of 
 the Institution of Electrical Engineers of England appointed a 
 committee "to determine whether they can recommend the coun- 
 cil to take any action, and, if so, what action, that would assist 
 the industry." The inquiry was based upon facts set forth in a 
 paper written by Mr. W. L. Magden, published in the Journal of 
 the Institution of Electrical Engineers, 1900. The Institution 
 of Electrical Engineers was composed of men connected with 
 both public and private electrical enterprises, seeking only an en- 
 largement of the field, however that result might best be brought 
 about, including such eminent men in the profession as Professor 
 W. E. Ayrton, F. R. S., jMajor P. Cardew, R. E., Lieutenant- 
 Colonel R. E. Crompton, C. B., Air. S. Z. Eerranti, Professor 
 J. Perr}', F. R. S., ]\Ir. A. Siemens, Professor Silvanus P. 
 Thompson, F. R. S., and others. Their qualifications to pass 
 upon this subject amply appear from the proceedings of the com- 
 mittee, which were published by the Institution. 
 
 After taking the evidence of various people competent to 
 speak upon the subject, including both those in "favor of as well 
 as those opposed to the municipal operation of electric-lighting 
 
 and tramway plants, the committee reported : 
 
 That, while taking divers views of subsidiary questions, the 
 witnesses were practically unanimous in their conviction that elec- 
 trical enterprise has not attained the stage of industrial develop- 
 
MUNICIPAL OWNERSHIP 
 
 167 
 
 ment in this country which might fairly have been expected, hav- 
 ing regard to the many favorable natural conditions, and having 
 regard also to the achievements of British capital, labor, and in- 
 ventive genius in so many other branches of the mechanical arts. 
 
 And among the resolutions adopted by the committee (March 
 
 25, 1902) was the following: 
 
 That, notwithstanding that our countrymen have been among 
 the first in inventive genius in electrical science, its development in 
 the United Kingdom is in a backward condition, as compared with 
 other countries, in respect of practical application to the industrial 
 and social requirements of the nation. 
 
 These conclusions are amply borne out by the facts in evi- 
 dence, and others which are readily obtainable. The most strik- 
 ing and convincing figures were submitted by Mr. Philip Dawson, 
 E. E., found on p. 183 of the report. They included the fol- 
 lowing : 
 
 Comparative Approximate Figures as to Electric Lighting, Power, 
 
 AND Traction, 1901 
 
 
 71 
 
 en 
 
 -♦-» 
 ■^ 1- 
 
 a 
 
 
 'u 
 
 cal 
 city 
 
 ts 
 
 c >> 
 
 1 
 
 Country 
 
 Station Kilow 
 Available f < 
 Lighting an 
 Power 
 
 g Station Kilow 
 Available f 
 § Traction 
 
 Miles of Sin 
 
 Track Electric 
 
 Equipped 
 
 No. of Elect 
 Cars 
 Running 
 
 Total Electr 
 
 Station Capa 
 
 in Kilowat 
 
 
 Total Appro 
 
 mate Capit 
 
 Invested 
 
 Great Britain 
 
 200,000 
 
 900 
 
 2.600 
 
 250,000 
 
 40,000,000 
 
 $35,000,000 
 
 Continental Europe 
 
 400,000 
 
 154,600 
 
 5,000 
 
 9.800 
 
 550,000 
 
 350,000,000 
 
 85,000,000 
 
 U. S. of America. 
 
 1,200.000 
 
 800,000 
 
 21,000 
 
 68.000 
 
 2,000,000 
 
 70,000,000 
 
 200,000,000 
 
 Thus it is seen that the United States, with less than double 
 the population of Great Britain, has six times the amount of 
 apparatus installed for furnishing electric light and power, six- 
 teen times as much for electric traction, twenty-three times as 
 many miles of electric railway, twenty-six times as many motor 
 cars, and five and one-half times as much money invested in 
 such enterprises. 
 
 2. DISCOURAGEMENT OF PRIVATE INVESTMENT. 
 
 The limitation of the industry above described has resulted 
 not only in postponing, and in some instances, in excluding, a 
 supply of electricity for lighting and for traction in a large num- 
 ber of cities and towns, but also in the limitation of the investing 
 classes interested in the development of the industry, and in the 
 minimizing of the number and importance of the establishments 
 
i68 SELECTED ARTICLES 
 
 for the manufacture of the electrical machinery and apparatus 
 which would have been necessary in case of larger develop- 
 ment. The latter feature of the situation is strikingly illustrated 
 by contrasting it with the enormous size and importance of 
 such manufacturing establishments in the United States and 
 Germany. 
 
 An Englishman has well said : 
 
 The idea of thrift should be encouraged as far as possible. It is 
 of immerse national value. . . . The possibility of small invest- 
 ment, and thus an important inducement to thrift, is greatly 
 diminished by the municipality indulging in business which would 
 be carried on otherwise by associations of individuals who would 
 raise capital from the community generally by shares. 
 
 Without private capital and skill new industrial enterprises 
 do not receive that impetus and development which they other- 
 wise would. Public officials do not invent, exploit, or develop 
 new things, but leave the field of discovery, initiation, and devel- 
 opment to private persons actuated by the hope of large rewards. 
 
 Whatever may be the result of the prosecution by the public 
 or its representatives of an enterprise which has been founded 
 and put on its feet by individuals, it is doubtful if any case of 
 successful municipal initiation of such an enterprise can be cited. 
 Individual initiative is always necessary. Sir Richard Webster, 
 then attorney-general of England, called it "the absolute neces- 
 sity of inventive competition." Water supplies, gas supplies, 
 transportation, electricity, even in England, all owe their initia- 
 tive to private enterprise. Only twelve important towns in Eng- 
 land built their own water-works. Gas supply was in private 
 hands exclusively at first, and it was nearly or quite fifty years 
 before it went largely into the hands of municipalities. Most, if 
 not all, tramway undertakings which are controlled by munici- 
 palities today were originally established by private enterprise 
 and subsequently taken over by public authorities. 
 
 The same is true of electricity. The towns and cities with 
 gas plants on their hands were literally forced into the supply of 
 electricity to head off private enterprise. But, notwithstanding 
 this, private enterprise started electric companies in London, 
 Liverpool, Sheffield, Birmingham, Nottingham, Newcastle, and 
 other principal towns in England. 
 
 3. INADEQUATE DISTRIBUTION OF .SUPPLY. 
 
 The third particular in which municipal supply has worked 
 
AIUNICIPAL OWNERSHIP 
 
 169 
 
 badly in Great Britain is the inadequate distribution of the sup- 
 ply in places where supply has been undertaken. This has re- 
 sulted in the accommodation of the few at the expense of the 
 many. The non-consumer (who is legion) gets no benefit; the 
 consumers (who are comparatively few) get all the benefit. I 
 take it to be an indisputable economic proposition that the char- 
 acter of a public service is to be judged of by its extent quite as 
 much as by its cost. It is better service, for example, to supply 
 100,000 people wnth dollar gas than to supply 10,000 or 50,000 
 of the same people with 50 cent gas ; or to furnish railway facili- 
 ties to the larger number at 5 or 6 cents, than to the smaller num- 
 ber at 3 cents. Unless public service is available to the greatest 
 possible number, it fails to just the extent that it is not so avail- 
 able. This is strikingly show-n, with respect to electric-lighting 
 service, in the number of lamps installed and the number of cus- 
 tomers supplied in five characteristic cities in England and Scot- 
 land, as contrasted with three principal cities in the United 
 States, by the table on the following page. The figures given 
 are the nearest approximation possible from the available data. 
 The total installation in each case is converted into its equivalent 
 in sixteen-candle power lamps. 
 
 It thus appears that the private company in Boston alone has 
 almost as many lamps installed as the total number in the two 
 principal cities of Scotland and three of the principal cities of 
 
 City 
 
 Population 
 Supplied 
 
 No. of Lamps 
 Installed, 16 C. P. 
 
 No. of Customers 
 
 Glasgow . 
 
 Edinburgh 
 
 Manchester 
 
 Leeds 
 
 Birmingham 
 
 760 423 
 316,479 
 543,969 
 428,953 
 522,182 
 
 403,000 
 336,000 
 3(iO,000 
 154.000 
 113.000 
 
 9,324 
 7,129 
 5,171 
 3,988 
 2.374 
 
 
 Total... 
 
 2,572,006 
 
 1,306,000 
 
 27.986 
 
 Boston -. 
 
 New York 
 
 Chicago 
 
 573.574 
 2,050,600 
 1,698,575 
 
 1,114,000 
 2,846,700 
 1,500,000 
 
 15,136 
 50,000 plus 
 
 England, outside of London, put together; and is supplying 
 more than half as many customers as those five cities combined. 
 Indeed, the number of customers supplied in Boston is almost 
 
170 SELECTED ARTICLES 
 
 as large as the total number of customers of the public plants 
 in Edinburgh and Glasgow combined. With a population sup- 
 plied one-fourth smaller than that of Glasgow, Boston has 
 nearly three times as many lamps installed, and over 60 per 
 cent, more customers. As compared with Manchester, with 
 slightly more populatiori supplied. Boston has nearly four times 
 as many lamps installed, and nearly three times as many custom- 
 ers. Taking Edinburgh and Leeds together, with a combined 
 population nearly half as large again, Boston has nearly two 
 and one-half as miany lights and more than one-third more cus- 
 tomers. If a comparison is made between Boston and the two 
 cities of Glasgow and Birmingham, which are perhaps the most 
 conspicuous among the British municipal undertakings, we find 
 that while the combined population of those two cities is more 
 than double that of Boston, they have between them considerably 
 less than one-half the number of lamps installed, and only about 
 three-fourths as many customers. 
 
 If the comparison is made with Birmingham alone, that 
 birthplace of English municipalism, with a population supplied 
 nearly as large as that of- Boston, is found to have only the 
 beggarly number of 2,374 customers, with 113,000 lamps, as 
 against Boston's 15.136 customers and 1,114.000 lamps. The 
 ratio of customers is as one to six, and of lamps as one to ten. 
 
 Comparing Boston and corresponding English cities, taken 
 together, it will be found that three times as many people have 
 an electrical supply in the former as in the latter ; that is to say, 
 there are thirty takers of electricity in Boston for each i.ooo of 
 population, as against ten takers for an equal population in the 
 English cities. 
 
 A very striking illustration of the superior distribution of 
 electrical supply in England obtained by private business man- 
 agement, operating under reasonably favorable conditions, over 
 that prevailing in the public service, is furnished by the two 
 companies in Newcastle. Those companies represent the best 
 development which has been achieved in the United Kingdom, 
 either by private or public undertakings. The figures are as 
 follows : 
 
MUNICIPAL OWNERSHIP 
 
 171 
 
 Comparative Results of Private Ownership and Operation in Newcastle, 
 AND Public Ownership and Operation in Eight Other Important Cities 
 of the Same Class in Great Britain 
 
 Population \ 
 (Approxi 
 mare) 
 
 No. of 
 
 Private 
 
 Lights of 
 
 8C. P. 
 
 Private ^9- of 
 Motors,' '-on- 
 1^ p sumers 
 
 Average 
 
 Price to 
 
 Public, 
 
 Excluding 
 
 Trams and 
 
 Street 
 
 Lighting 
 
 Thousands 
 
 of 
 
 K. W. H. 
 
 Sold to 
 
 Public 
 
 Public plants:- 
 
 Dublin 
 
 West Ham 
 
 Dundee 
 
 Leicester 
 
 Salford 
 
 Aberdeen 
 
 Cardiff 
 
 Nottingham .. 
 
 Private plants- 
 Newcastle 
 
 289.000 
 267,000 
 163,000 
 220,000 
 220,000 
 165,000 
 164,000 
 239,000 
 
 217,000 
 
 82,000 
 
 84.000 
 
 72,000 
 
 156,000 
 
 122,000 
 
 107,000 
 
 62,000 
 
 206,000 
 
 288,000 
 
 220 
 
 850 
 
 I 670 
 
 1,004 
 
 715 
 
 1,030 
 
 167 
 
 2,240 
 
 2.865 
 
 1,000 
 
 1,871 
 
 1,321 
 
 607 
 
 1.079 
 
 1.913 
 
 2,704 
 
 6,650 
 
 4.160 
 
 3.58 
 3.13 
 3.52 
 3.83 
 2.62 
 3.65 
 3.27 
 2.08 
 
 ( 1.66 
 (2 50 
 
 857 
 1,827 
 1,073 
 1.719 
 2,051 
 1,581 
 1,736 
 7,937 
 
 11.684 
 
 (The figures in columns 2, 3, 4, and 5 are taken from the Electrician' s sheet 
 for 1904 — 5. The figures in columns 6 and 7 are taken from Garcke's 'Manual, 
 Vol. IX (1905). The figures as to Nottingham include sale of current to the city 
 tramways. 
 
 From the foregoing the following comparisons appear: 
 
 Average population served by public plants 215,875 
 
 Population served, by the private plants 217,000 
 
 Average number of customers of public plants 1,403 
 
 Number of customers of the private plants 4,160 
 
 Average number of lights supplied by public plants 111,375 
 
 JSTumber of lights supplied by the private plants 288,000 
 
 Average capacity in h.p. of motors supplied by public 
 
 plants 1.106 
 
 Capacity in h.p. of motors supplied by the private 
 
 plants 6,650 
 
 Average number of k.w.h. sold by public plants 2,347,625 
 
 Number of k.w.h. sold by private plants 11,684,000 
 
 Average price per k.w.h. paid by customers of public 
 
 plants 3.21 cents 
 
 Average price per k.w.h. paid by customers of private 
 
 plants 2.08 cents 
 
 Thus it appears that in Newcastle, with a population almost 
 exactly the same as the average population of the other eight 
 cities, the two private companies have nearly three times as 
 many customers as the average number of customers of the 
 public plants ; more than two and one-half times as many lights ; 
 generate more than six times as much power ; and sell nearly 
 
172 
 
 SELECTED ARTICLES 
 
 five times as much current for all uses : while their prices aver- 
 age more than 2314 per cent, lower. 
 
 These results have been accomplished in about four years by" 
 companies, one at least of which has operated under legal con- 
 ditions more nearly like those governing municipal undertakings, 
 than any others in England, while the municipalities with which 
 the comparisons are made have had a free hand ever since 1882 
 to accomplish the inferior results shown by their operation. 
 
 4. FINANCIAL RESULTS UNSATISFACTORY. 
 
 British municipal plants of the kind under discussion, as a. 
 whole, show an average loss. Lord Avebury, formerly Sir John 
 Lubbock, the second chairman of the London County Council, 
 in a recent communication to the London Standard has stated 
 that for the year ending March 31, 1903, sixty towns and cities, 
 in Great Britain showed a loss in operating their electrical under- 
 takings equivalent to nearly half a million dollars, notwithstand- 
 ing the fact that "the accounts do not show the full loss." 
 
 Official returns for the electric-lighting undertakings of the 
 kingdom to December 31, 1904, show the following results of 
 operation : 
 
 
 Municipal 
 
 Private 
 
 Number of returns 
 
 Undertakings showing profits 
 
 Undertakings showing losses 
 
 Total amount of profits 
 
 Total amount of losses 
 
 182 
 105 
 
 77 
 £217,000 
 83.000 
 
 66 
 61 
 
 5 
 £596,667 
 5,000 
 
 
 
 Balance of profits 
 
 £134,000 
 $770,000 
 
 £591,667 
 
 $2,958,335 
 
 Percentage of plants showing profit 
 
 Percentage of plants showing losses 
 
 Average profit per plant 
 
 58 . 
 42 
 $4,230 
 
 92 
 8 
 S45.126 
 
 And the showings made by municipal plants, as poor as they 
 are, have been made possible only by neglect of the items of 
 depreciation and reserve. Says Lord Avebur\^ : 
 
 In comparatively few places does any sufficient sum appear to 
 have been placed to depreciation or reserve during the year under 
 review. At Glasgow the loss was transferred to a suspense ac- 
 count, and in several other cases the loss was either charged to- 
 the general district or borough fund, or in part paid by this means 
 and the balance carried forward to next year's account. 
 
MUNICIPAL OWNERSHIP 173 
 
 Based upon Sir Henry Fowler's "Returns"' to the House of 
 Commons, it appears that, in recent years, the annual allow- 
 ances for depreciation, in the cases of 193 water-works, 97 gas- 
 works, 102 electric plants, and 29 tramways owned and operated 
 by municipalities in England and Wales, have averaged less 
 than two-tenths of i per cent, on the amount of capital origin- 
 ally invested, and barely over two-tenths of i per cent, on 
 the balance of capital indebtedness remaining after repayments 
 of capital out of earnings. 
 
 5. MONOPOLY OF MUNICIPAL CORPORATIONS. 
 
 It may be as well in this connection as in any other to say 
 something about the Association of Municipal Corporations and 
 its influence, particularly upon legislation. 
 
 According to a recent statement by its president, it embraces 
 in its membership no less than 294 of the municipal corporations 
 of the country, w'hich is w'ithin about thirty of the whole num- 
 ber. Only one municipality of more than 30,000 is outside its 
 membership, the others all being under 16,000. Its meetings 
 are largely attended by the mayors, town clerks, and other prin- 
 cipal officials, as well as by the members of the town and borough 
 councils. Matters of common interest are discussed, and the 
 association is committed for or against the various matters 
 touching municipal interests proposed or pending in Parliament. 
 It employs counsel, and otherwise takes an active part in shap- 
 ing or opposing legislation. As practically all matters of im- 
 portance, including all applications for rights to perform quasi- 
 public services, must come before Parliament, the importance of 
 the intervention of this association can in some degree be appre- 
 ciated. Its power is tremendous — some say practically invin- 
 cible. 
 
 6. OFFICE-HOLDING VOTERS. 
 
 The creation of a large and ever-increasing class of office- 
 holding voters is another very serious result of municipal owner- 
 ship in Great Britain. The objections to it are obvious to 
 Americans and are well recognized in England. 
 
 It was one of the principal features of the meeting of the 
 20th of July, 1905, already referred to, and the London Times, 
 in its editorial upon that meeting, not only emphasized this 
 
174 SELECTED ARTICLES 
 
 danger, but pointed out the fact that there is a yearly increase 
 in the number of non-office-holding persons who may be de- 
 pended upon to vote soHdly for municipal extravagance in ex- 
 penditure, being what the Times calls "expectant beneficiaries 
 of such extravagance." 
 
 Fully to realize the importance of this consideration, one has 
 but to reflect upon what the conditions would be in Boston, New 
 York, Philadelphia, or any other large American city, if all the 
 street-car operatives and electric, gas-lighting, and telephone 
 employees were added to the already sufficiently large municipal 
 pay-rolls. In the city of New York, for example, there are 
 about 50,000 such employees, exclusive of those in the telephone 
 service. There are already on the city pay-rolls fully 50,000 
 municipal employees. If the former should be added to the 
 latter, the combined force would constitute an army of fully 
 100,000 people, or one-sixth of the total voting population. If 
 united and aided by their friends and relatives, such a combina- 
 tion would be invincible. 
 
 Under such conditions, the existing local political "machines" 
 would become so strong as to be impregnable, and the private 
 citizen would finally realize all the burdens and inconveniences 
 which his practical disfranchisement would involve. He is now 
 urged to take some part in local politics ; it would then be of no 
 use to do so. The cohesive power of such a combination of 
 office-holding voters would control every local matter, particu- 
 larly those involving expenditures of money in which they might 
 have a personal interest, although they m.ight not be, and in a 
 majority of instances would not be, taxpayers themselves. 
 
 7. INCREASE IN MUNICIPAL DEBTS AND TAXES. 
 
 The last, although by no means the least important, circum- 
 stance which has attended, if not resulted from, the enlargement 
 of municipal functions in Great Britain, is a tremendous increase 
 in municipal indebtedness and taxes. 
 
 Take, for example, the recent statement of Lord Stalbridge, 
 chairman of the London & Northwestern Railway, that in the 
 twelve years between 1891 and 1003 the local rates and taxes, 
 exclusive of income tax or government duties, paid by British 
 railways increased from the equivalent of about eleven and a 
 
MUNICIPAL OWNERSHIP 175 
 
 quarter million dollars to nearly twenty-two and a half million 
 dollars, or 100 per cent, and continues to increase at the rate of 
 a million and a quarter yearly. 
 
 One of the leading citizens and most extensive manufacturers 
 of Glasgow, and at the same time one of the fairest men ii: his 
 attitude toward municipal ownership, ]\Ir. Arthur Kay, in a 
 paper read before the Glasgow Royal Philosophical Society, 
 March 25, 1903, reviewing the local statistics for the preceding 
 eleven years said : 
 
 The figures given show that the population of Glasgow has in 
 the past eleven years increased 16 per cent., the valuation 45 per 
 cent., the rates [i. e., local taxes] 112 per cent., and the debt 119 
 per cent. The ratio of assets to liabilities has gone up from 119. 0& 
 to 128.89. 
 
 That is to say : the valuations of property for taxation had 
 increased nearly three times as much as the population ; which, 
 of course, involves the possibility that the increase in the actual 
 wealth of the community had enormously outstripped the in- 
 crease of the population in eleven years, but more probably leads 
 to the conclusion that, in order to meet the demands of a rapidly 
 increasing municipal expenditure, the valuations of property for 
 purposes of taxation had been abnormally advanced ; also that 
 the individual ratepayer had seen his annual taxes more than 
 doubled in the period, and the municipal indebtedness for which, 
 as a citizen, he is in part responsible, increased in a still larger 
 ratio, while the excess of the municipal assets over liabilities 
 had increased only by a paltry 10 per cent. 
 
 ///. Causes of Unfavorable Results. 
 
 Assuming the foregoing to be a fair statement, in outline, of 
 the present condition of municipal electric lighting, railroading, 
 and telephoning in Great Britain, and that, upon the whole, it 
 would not be desirable, if practicable, to reproduce them in the 
 United States, and that it is wise, if possible, to avoid the causes 
 by which they have been produced, it is necessary to determine 
 those causes with as much accuracy as may be. 
 
 The principal and controlling cause of the results which have 
 been obtained in Great Britain is found in English legislation 
 and official regulation respecting the electric industry. 
 
176 SELECTED ARTICLES 
 
 Municipal ozvnership of gas-works. — xA-nother cause of the 
 unsatisfactory results above indicated is the municipal owner- 
 ship of existing gas-works. This fact has led the municipalities 
 owning them, with practical uniformity, to object to the ex- 
 ploitation of a new illuminant by private capital, and to pro- 
 cure rights for themselves, which have been in fact, if not in 
 law, exclusive. Under these rights they have either not estab- 
 lished electric-lighting plants at all, or have established them 
 after Img periods of delay, thus depriving the communities 
 which they have represented of the new and improved illuminant, 
 either permanently or for long periods of time after the progres- 
 sive communities of the United States had been supplied by 
 private companies. 
 
 Municipal inertia. — Another cause is lack of that individual 
 initiative and business energy and push, without which no indus- 
 try will develop. 
 
 In municipal management it often happens that the right 
 thing at the right moment cannot be done for lack of power. 
 Consent must be gotten from the local authorities ; and before 
 it comes, the opportunity is gone. At one time a popular revul- 
 sion against extravagance results in failure to make proper 
 necessary expenditures, and at another a determination to have 
 good service leads to waste or recklessness. Public business is 
 everybody's business. Everybody's business is nobody's business, 
 and things a little out of the routine, the little unexpected all- 
 important things which constantly appear, are found undone 
 under municipal management when it is too late to do them. 
 Private business has the enterprise and energy which municipal 
 business lacks. 
 
 Xone of these causes have been operative in the United 
 States, and, because of their absence, the industry has been vastly 
 better developed, and the extent of territory and the number 
 of persons served have been much larger. 
 
 /F. Duplication of British Results, so Far as Favorable, Im- 
 possible in America. 
 
 But if it should be assumed that the results of municipal 
 undertakings in Great Britain are, upon the whole, favorable to 
 
MUNICIPAL OWNERSHIP 177 
 
 the consumer and the public at large, and that it would be desira- 
 ble, if practicable, to duplicate them in the United States, this 
 could not be done, owing to the existence of radically different 
 conditions in the two countries. 
 
 Differences in political conditions. — If, and so far as, the 
 municipal ownership and operation of public-service utilities 
 in Great Britain have been successful, it has been because of the 
 character of the local civil service of that country. Politics, in 
 the American sense, is unknown in the administration of local 
 enterprises. Business principles are applied to the administra- 
 tion of public as well as private works. The rigid limitation of 
 the voting franchise, with other causes, has operated to put into 
 city and town councils and other local legislative bodies men 
 of a superior type, who regard public service as an honor, and 
 whose services are retained by the public practically as long as 
 they are willing to serve. In the choice of administrative 
 officials they exercise the same care as the directors of private 
 corporations do, and the tenure of such officials is as long and 
 as certain as that of those in similar capacities in private em- 
 ployment. 
 
 Laivs governing the voting franchise. — The qualified voters 
 for municipal officials are called '"burgesses." They are persons 
 of full age, w^ho. for at least one year, have occupied alone, or 
 with others, a house, shop, or other building in the borough, 
 and have resided in the borough or within seven miles thereof 
 for a full twelve months. 
 
 The most important limitation of this general qualification 
 of the burgess is that he must have paid, on or before July 20, 
 all rates, (i. e.. local taxes) which were payable by him up to 
 the preceding January 5. In Scotland this provision operates 
 very much to reduce the actual voting lists below the number 
 who are theoretically entitled to enrollment. It practically ex- 
 cludes from the franchise the entire body of irresponsible and 
 vicious electors. Albert Shaw, in his Municipal Government in 
 England, 1895. estimates that these provisions exclude at least 
 one-third of the theoretical voters at all parliamentary and mu- 
 nicipal elections in Scotland. 
 
 The "lodger," so called — that is, an unmarried man. paying 
 
178 SELECTED ARTICLES 
 
 at least $50 a year for lodgings — is theoretically entitled to 
 the franchise ; but inasmuch as he must procure his own enroll- 
 ment from year to year (whereas the ordinary ratepayer is 
 enrolled without any action on his part, because he is a rate- 
 payer), he practically loses his right to vote. Thus it is appar- 
 ent that all "floaters"' and other irresponsible unattached single 
 men are excluded from the franchise. Out of 20,000 Jews hud- 
 dled together in the tenements of the Cheetham districts of Man- 
 chester only 900 are on the municipal voting registers — undoubt- 
 edly chiefly because they do not meet the requirement as to 
 the rentable value cf the tenements occupied by them. But 
 this law sometimes excludes intelHgent citizens from the fran- 
 chise, simply because they are "lodgers," as, for example, in 
 the case of the ten reporters on the Manchester Evening Chron- 
 icle, not one of whom was a voter at local elections. In England 
 the lodger is excluded by law from the municipal franchise,. 
 although he may vote for members of Parliament, — except in 
 London, where a lodger in occupation and residence in one defi- 
 nite house within the borough for the preceding twelve months 
 is allowed to vote. 
 
 The exploitation of the slums and of the non-rent-paying 
 population for municipal political purposes is therefore practi- 
 cally impossible in Great Britain. 
 
 In addition to the provisions for the practical limitation of 
 the electoral franchise to the responsible and desirable rate- 
 payers, the purity and efficiency of municipal government in 
 Great Britain has also been protected and promoted by the great 
 stringency of the so-called Corrupt Practices Acts, applicable 
 throughout the kingdom. 
 
 Evidences of deterioration in local governments. — But, ex- 
 cellent as is their general character, I think it is beginning to 
 be understood and generally admitted that the local governing 
 boards of the larger British towns and cities are becoming less, 
 rather than more, efficient. This result naturally accompanies 
 the multiplication of the duties imposed upon those bodies. They 
 are becoming overburdened, and in some cases fairl}'^ swamped, 
 with the extent and variety of the public concerns which engage 
 their attention. In Glasgow, for example, it is said that a con- 
 scientious member of the council must devote about two days a 
 week to the discharge of his public duties. In Manchester the 
 
MUNICIPAL OWNERSHIP 179 
 
 chairman of the gas committee for ten years has spent at least 
 six hours a day in the discharge of the duties of that position. 
 While willing to give much of their time gratis to the public 
 service, business men are beginning to find that the draft upon 
 it is more than they can meet without absolute disregard of their 
 private affairs. ' The wonder is, that, notwithstanding this fact, 
 these bodies have thus far adhered as closely as they have to the 
 high standards of the past. 
 
 V. Summary. 
 
 First. The operation by British municipalities of public 
 utilities of the kind under consideration has been successful, 
 if at all, in the single particular of furnishing the service or 
 supply at a fair price to a comparatively few persons. Aside 
 from gas supply, it has not resulted in any considerable profit 
 to the municipalities, the losses in electric lighting, traction, and 
 telephone enterprises being frequent, while the profits when 
 realized are generally not more than 2 or 3 per cent, on the 
 investment — the net result to date being an average loss. 
 
 Second. It is by no means conceded, but, on the other hand, 
 is strenuously denied, even in England, that municipal trading 
 has, upon the whole, been successful, and British public senti- 
 ment is by no means settled upon that subject. 
 
 Third. The municipal supply of electricity for light, trac- 
 tion, and telephone service has been attended by certain serious 
 results, which more than offset the success, if any, which has 
 been obtained in the single resppect above referred to, viz : 
 
 (i) A most serious check upon the general development 
 of the electrical industry in Great Britain, and, in consequence, 
 upon the establishment of the manufacturing plants and facili- 
 ties which would otherwise have grown up. 
 
 (2) An extremely restricted supply in the cases where the 
 supply has been undertaken, resulting in the accommodation of 
 the few, to- wit, consumers, at the expense of the many, to wit, 
 rate-paying non-consumers. 
 
 (3) The abnormal enlargement of the functions of local 
 government, resulting in the discouragement of private enter- 
 prise, and the creation of a large and increasing body of office- 
 holding voters. 
 
i8o SELECTED ARTICLES 
 
 (4) A most serious enlargement of municipal indebtedness, 
 and the creation of a class of voters who can be relied upon to 
 support extravagant expenditures. 
 
 Fourth. The unfavorable results realized in the development 
 of the electric industry are primarily traceable to the character 
 of the legislation and official regulations governing the matter, 
 all of which, professedly and in reality, are framed for the en- 
 couragement of municipal, and the discouragement of private, 
 enterprise; and also to the inertia and lack of business enterprise 
 which are inseparable from municipal operation. 
 
 These laws and regulations, not having worked well in 
 Great Britain, should not be imitated or approximated in America. 
 
 Fifth. If a different view from that above expressed is taken 
 of the character of the results achieved, and it is deemed advisa- 
 ble, if practicable, to duplicate the financial and technical results 
 of British municipal undertakings in America, it will be im- 
 possible to do so, owing to the totally different political condi- 
 tions obtaining in the municipalities of the two countries, re- 
 spectively. Not only is the municipal civil service in Great Brit- 
 ain totally different from that in America, and dependent for its 
 character and tenure upon a wholly different system of laws 
 and administration, but the public sentiment and education of 
 the people of the two countries upon the subject is so opposed 
 that the conditions in either country could not be reproduced, 
 by legislation, or otherwise, in the other. 
 
 Sixth. In view of all the foregoing considerations, it is mani- 
 fest that the continued encouragement of the exploitation of 
 private business by private capital, rather than the entrusting 
 of business or quasi-business enterprises to municipal officials, 
 is the only sound course to be pursued in the United States. 
 
 American Journal of Sociology. 12: 328-40. November, 1906. 
 
 Public Ownership and Popular Government. 
 
 William Horace Brown. 
 
 The growing sentiment in favor of public ownership and op- 
 eration of industrial enterprises appears to be due mainly to two 
 
MUNICIPAL OWNERSHIP i8i 
 
 causes : first, dissatisfaction with the manner in which such 
 enterprises, or those of them conducted under pubHc franchises 
 or privileges, are operated under private ownership ; second, re- 
 sentiment against large aggregations of private capital, whether 
 its employment in such enterprises is advantageous to the public 
 or not. 
 
 The first cause appears to predominate in American munici- 
 palities. The second is no doubt the moving sentiment of the 
 majority of those in the United States who would have the fed- 
 eral government own and operate the railways and telegraphs, 
 although other reasons are commonly assigned. 
 
 The term "industrial enterprises" is used in the broadest 
 sense, with a knowledge of the distinction observed in the secur- 
 ities market between manufacturing and mercantile business 
 commonly termed industrial, and the transportation, lighting, 
 and other business usually carried on under public franchises. 
 Yet as a fact all are industries — departments of business employ- 
 ing capital and labor. The separation of those departments of 
 enterprise, or business, which are commonly conducted under 
 public franchises or subject to public regulation in certain re- 
 spects, from other departments as properly and naturally those 
 which should be owned and operated by government, either mu- 
 nicipal or federal, is purely arbitrary. When it is asserted by 
 advocates of public ownership and operation that there is such 
 a distinction which they desire government to observe, they at 
 once admit the doubtfulness of their proposition, and the neces- 
 sity of placing close bounds upon their innovation. In European 
 countries no such distinction is insisted on. Municipalities there 
 own abattoirs and distilleries, and engage in many other enter- 
 prises. Therefore, if it is a proper function of government, mu- 
 nicipal, state, or federal, to engage in the railroad or gas-mak- 
 ing business, it is likewise proper for it to go into many other 
 kinds of business. 
 
 The municipality exercises control over and grants special 
 privileges in greater or less degree to the omnibus carrying busi- 
 ness, house-wrecking, the building business, the advertising-sign 
 business, not to quote too long a list. It does not seem to be any 
 stretch of logic to analogize that, if a municipality may proper- 
 
l82 
 
 SELECTED ARTICLES 
 
 ly engage in the telephone business, because it permits the string- 
 ing of wires in alleys and under the streets, it may as properly 
 engage in the construction business, on the ground that in the 
 erecting of buildings contractors are specially permitted to mo- 
 nopolize half the street about the premises during such opera- 
 tions. Besides, building is under strict municipal regulation as 
 to materials used, sanitary appliances, etc., and is controlled by 
 the city inspectors. 
 
 If we are to admit it to be the logical function of government 
 to turn merchant, manufacturer, and speculator, with the money 
 of the taxpayers, it is of first importance to find out whether 
 we are to place any limitations upon it, and, if we are, for what 
 reason. If we are going to fix an arbitrary rule of limitation, 
 without sound reasons therefor, we may as well expect those who 
 follow after us to throw it over, So it would seem to be of first 
 importance to ascertain and bear in mind what the province of 
 the government under free institutions really is. Under an ab- 
 solutism the problem is exceedingly simple. The nearer we ar- 
 rive at popular freedom, the more disputed it becomes. 
 
 It is undeniable that in the United States from the earliest 
 times the people have been firm in the faith that government 
 was for the purpose of conducting purely public business, and 
 should interfere as little as possible with the occupations of the 
 citizens. In early years this feeling was so strong that it threat- 
 ened disruption of the government as organized under the fed- 
 eral constitution. People denied its authority to declare embar- 
 goes or to impose internal revenue taxes. The whole body of 
 the people wanted the least government necessary to preserve 
 order locally and to conduct interstate and foreign affairs, and 
 they wanted that at the least possible cost. This was the senti- 
 ment which Mr. Jefferson coined into his epigram: "That gov- 
 ernment is best which governs least." 
 
 The theory was, of course, that the people should be permit- 
 ted the widest latitude in conducting their commerce and in 
 regulating their private actions not inconsisent with the gen- 
 eral welfare. There should be no sumptuary laws ; no state inter- 
 ference with religion: no laws permitting monopolies; no fa- 
 voritism ; no recognition of class distinctions ; nothing, in fact. 
 
MUNICIPAL OWNERSHIP 183 
 
 that would in any way deny perfect equality or interfere with 
 the exercise of commercial and individual liberty; always, of 
 course, recognizing the universal code of morality. In general, 
 this has been admitted by every writer of recognized authority 
 on governmental science as the true basis of popular representa- 
 tive government, both in England and in America. From 
 Franklin and Jefferson and ^Madison, to Bryce and Lecky, it 
 will be found as a recognized principle, even among those writ- 
 ers who hold less faith in democracy than others. It is simply 
 a recognition that the day for anything like a paternal govern- 
 ment for an intelligent people is past. 
 
 A real democracy is adapted only to simple forms of gov- 
 ernment; for government, being an institution of business, can- 
 not be successfully conducted through many ramifications by 
 the popular will. The popular understanding is not equal to 
 coping with intricate business propositions. The more compli- 
 cated the government of a municipality becomes, the greater 
 the number of departments; and the more responsibilities in- 
 volved, the less is success likely to attend management by 
 boards of unskilled minds subject to popular influence or guided 
 by partisan interests. The more and weightier the business under- 
 taken, the greater the requirement for centralized authority and 
 specialized skill; and consequently the less can be permitted of 
 popular dictation. This is merely the principle that applies to 
 business consolidation, where the most intricate problems are 
 concentrated in a few executive heads. 
 
 How can we square this sentiment, this fundamental principle 
 of a minimum of governmental interference, with the theory 
 that the people, either individually or organized together in 
 companies, are not to be intrusted with the conduct of commer- 
 cial enterprises, and that government shall deprive the people of 
 their business opportunities, and monopolize such enterprises 
 under its arbitary power? The question cannot be answered by 
 any shifting rules of limitation — that has already been shown. 
 Under the assumption that all commerce or enterprise carried 
 on under a public franchise or privilege is proper business for 
 government to engage in, the principal departments of com- 
 mercial enterprise would be included. It is merely a question of 
 
i84 SELECTED ARTICLES 
 
 degree, at the most; and it matters little as to the difference 
 between packing-houses operating under municipal license, and 
 under guard of municipal and government inspectors, and an 
 electric company with a franchise. It resolves itself at once into 
 a question of whether, if government is more competent and 
 better entitled to conduct one-fourth of the business of the 
 country — that is, to deprive the people of one-fourth of their 
 worldly opportunities — it should not take over and conduct one- 
 half, or three-fourths, or all, and leave the people with no 
 opportunities whatever. Otherwise stated, if it is the proper 
 function of government to take from the people and operate a 
 part of the business enterprises within its jurisdiction, it is not 
 the proper function of the people to say it may not also assume 
 and monopolize other enterprises. 
 
 To be sure, municipal-ownership advocates will declare that 
 it is not proposed to deprive the people of anything; that, on 
 the contrary, it is proposed to take from the corporations that 
 have robbed the public and give to the people that which right- 
 fully belongs to them. This has a very seductive sound, but it is. 
 sophistry. The people own the businesses which it is proposed 
 government shall take over and conduct. There are perhaps 
 several millions of shareholders in the various corporations of 
 the United States. In addition, the saving banks hold over three 
 billion dollars of deposits, the life-insurance companies have 
 nearly as much, a very large percentage of all being invested in 
 corporate securities, really held with the people's money. It 
 is intended to pay them for their properties, of course. But has 
 government the money to do this? No, it intends either to bor- 
 row the money on the properties or to go in debt to the owners, 
 for them. Now we have arrived at this situation: The people 
 who are actually in the business which the government, local or 
 federal, will take over, must retire from such business. They 
 must enter other business, become idle capitalists living on their 
 incomes, or seek salaried positions. They cannot enter other 
 lines of trade without displacing some who are already in them, 
 for practically all avenues of trade are as full as reasonable 
 profits will permit ; otherwise there would be an increase of 
 competition as things now are. The municipalization or govern- 
 
MUNICIPAL OWNERSHIP 185 
 
 ment ownership of industries will not create new business. It will, 
 in fact, tend to narrow the volume of exchanges, for the reason 
 that, on the average, public operation will not be as en- 
 terprising or as ably conducted as private operation. This will 
 be disputed, but it appeals to reason that the citizens who have 
 created the country's industries, who are conversant throughout 
 with their technicalities, and who now successfully manage them, 
 are more competent to do so than any others are. The people 
 who have shown the greatest ability in building up businesses 
 are surely the ablest in managing them. 
 
 The government, after thus having displaced the most com- 
 petent business skill of the land, greatly disturbing the equilib- 
 rium of trade in so doing, and destroying the choicest avenues of 
 money-making investments, holds out to the people thus dis- 
 possessed the alternative of accepting its low-rate bonds for the 
 amoimt of their holdings — for we are not considering now the 
 radical scheme of confiscation. Thus all, so far, except wage- 
 earners, have had their incomes reduced, their possibilities for 
 advancement curtailed, with large numbers forced into idleness ; 
 while the overcrowding of other business channels and lines of 
 endeavor have reduced profits and caused business demoraliza- 
 tion. Government, meanwhile, has become shopkeeper, trader^ 
 speculator, carrier, exclusively with hired help, much of which is 
 engaged because of political influence or partisan activity. It has 
 promised higher wages, and is attempting to pay them with 
 impaired efficiency in operation and against a condition of indus- 
 trial disturbance. At the same time, its income from taxes has 
 fallen greatly, not because the rate of taxes is less — it is. in fact, 
 higher — but because all the property which it has taken over now 
 pays no taxes, and the bonds with which it paid for them are, as a 
 rule, not productive of taxes. 
 
 Something must be done to forefend disaster. An attempt 
 is made to reduce wages, which have been in many instances 
 raised through influences other than consideration for the best 
 interests of the enterprises ; and strikes and tumults follow. 
 Whatever deficiencies occur in returns must be made up from 
 the general fund. New taxes are imposed — stamp taxes, increases 
 in the excise, a modification of the tariff — which of course al- 
 
i86 SELECTED ARTICLES 
 
 ways means a raise. And then a revulsion of feeling in regard to 
 government trading. 
 
 Now, it is just as easy to deny that these results would occur 
 under an extensive experiment in public ownership and operation 
 as it is to outline them as probable. No government has entered 
 upon the scheme far enough, and tried it long enough, to 
 establish a criterion which may be used as indisputable evidence. 
 Lacking sufficient statistics of actual results necessarily leaves 
 the subiect in a degree open to conjecture; but only as any 
 proposition in conflict with logic and the known results of 
 human actions are conjectural. And we have incomplete data 
 which show the trend of municipalization experiments in the 
 direction indicated. 
 
 It is more than inconsistent, it is paradoxical, for a people 
 who have for generations maintained the doctrine of the widest 
 possible freedom in all departments of human endeavor, and 
 particularly for that portion of the people which has supported 
 that doctrine to extremes, now to appear as the sponsor for a 
 system of governmental interference with such freedom so 
 radical that it is nothing short of paternalism. This strange 
 paradox is not relieved by the excuse that the common people 
 are being despoiled by defiant corporations which enjoy and 
 abuse special public privileges. The corporations are a part of 
 the people. They are creatures of the same governmental power 
 which it is proposed shall supersede them in proprietorship, 
 and are supposed to be subject to the control of that power. 
 
 If government has created institutions that are harmful to 
 the country and the people, it is a governmental fault. The 
 people created the government and maintain it. They elect, by 
 universal suffrage, the officials who administer the afifairs of the 
 government. If these affairs are inefficiently or dishonestly ad- 
 ministered, it reflects directly upon the intelligence and the 
 watchfulness of the electors. Administrators as well as legislators 
 hold their offices by short tenures. It is the business of the 
 people — not their privilege, but their business — to keep their 
 government in clean and able hands. Just so far as they do this 
 do they demonstrate their fitness for self-government. Just so 
 far as they fail or neglect to do this do they show their unfit- 
 
MUNICIPAL OWNERSHIP 187 
 
 ness. Under our system bad government must be the result of 
 the incapacity or indifiference — which is the most hopeless kind 
 of incapacity — of the citizens. 
 
 This is so manifest as to be not debatable; yet we know 
 government has created corporations that have imposed on the 
 public, and that it has failed to exercise adequate control over 
 them. States have shown unwise liberality in granting charter 
 powers without adequate safeguards, and American municipali- 
 ties are notorious, n(5t only for their prodigality in granting 
 franchises, but in the worse than incompetent manner in which 
 they manage their business affairs generally. It is a frequent 
 comment that our governmental system has shown its weakness 
 more in the government of large cities than in any other respect. 
 Demagoguism, graft, and political trickery find in them their 
 most profitable fields, and it is in them that reform works the 
 slowest. 
 
 Even where rank dishonesty does not appear in the conduct 
 of municipal business, there has been much to condemn. We can 
 see on every hand in practically all of our cities things that 
 have been done wrong or entirely neglected. Cities have grown 
 with great strides, problems have developed rapidly, and our 
 system of rotation in office, to forestall building up an office- 
 holding class, has had the effect of keeping, too much of the 
 time, inexperienced men in the management of them. In some 
 instances, also, there have been inadequate systems imposed by 
 state constitutions or legislatures. But in all cases the shortcom- 
 ings are primarily those of the people. Franchises have been 
 corruptly bartered by councils and boards; yet we know that 
 members who have been notorious in such treachery to the pub- 
 lic's interests have been returned again and again to their ofiices 
 by the votes of the people. It is hardly an exaggeration to say 
 that the officials who have been most recreant to their trust have, 
 as a rule, been able, through their machinations, to hold their 
 places for the longest periods. Whenever municipal ownership 
 abroad is cited, it should be remembered that in European cities, 
 as a rule, the executive officers are not elected by the people, and 
 are free from political press^e. This is true even of the chief 
 cities of England and France. 
 
i88 SELECTED ARTICLES 
 
 Many other facts of common knowledge might be quoted to 
 expose the errors of government and its defects in business 
 management. The real difficulties have been great. Legislative 
 bodies and executives have lacked foresight in providing for 
 adequate control over public corporations. Entanglements and 
 litigation have resulted in many instances ; and if we freely allow 
 that corporate greed has overstepped itself and brought on a 
 storm of popular resentment, it must be remembered that in few 
 instance-^ has public management — that is, the officials of all 
 classes — been competent successfully to cope with it. And, in 
 the final summing-up, it will be found that two causes are at the 
 bottom of the whole trouble : our political system, which insists 
 on short tenures of office and selects public servants for other 
 reasons than their superior ability; and the carelessness or lack 
 of judgment of the people themselves. 
 
 There is to be taken account of the arguments that the task 
 of government in properly controlling public utility, or other 
 commercial enterprises operating under public privileges, is 
 greater than it would be in conducting those enterprises itself; 
 and that the removal of such businesses from private hands tO' 
 government proprietorship would at the same time remove the 
 principal source of political corruption. 
 
 The former contention is a necessary one for the advocates 
 of government trading, for at the outset they are met with the 
 indisputable facts given above concerning the weakness, even tO' 
 failure, in the conduct of purely official business. The very first 
 step in the logic of the case is that, if our officials, as they aver- 
 age, have failed in the conduct of afYairs purely public in their 
 nature, they would fail yet worse in conducting the largest busi- 
 ness enterprises of the country added thereto in one vast compli- 
 cation. If they have been found wanting in some things, there 
 is not the slightest warrant founded on human experience for 
 the belief that they would prove more efficient in many and 
 weightier things. Such an assumption is not only contrary to 
 experience, but is repugnant to common-sense. It does not 
 matter that municipalities are operating some public-service 
 plants with a degree of success. They might conduct them with 
 a still greater degree of success without afTecting the argument.. 
 
MUNICIPAL OWNERSHIP 185^ 
 
 As to the second claim, while it might prove true in some 
 instances, there are records that show it cannot be depended on. 
 Human nature is not changed by merely shifting the temptation. 
 Years ago Philadelphia owned and operated her gas-works. On 
 the theory of municipalization advocates, that should have pre- 
 vented tampering with the officials, so far as the gas business was 
 concerned, and the business should have been a blessing to the 
 people. But the results were contrary. The works were allowed 
 to run down, the quality of the product was low, the price for it 
 high. All this was laid to the machinations of capitalists who 
 were alleged to have bribed and conspired with the officials, 
 where the capitalists themselves were not the officials. Finally 
 a change was made. The works and business were turned over 
 to a private corporation by lease on terms alleged by the corpora- 
 tion baiters to be rank robbery of the people. For years the 
 transaction was pointed to as a horrible example of corporation 
 outrage and spoliation of the people — not, of course, through the 
 fault of the people, but because of corporate greed. 
 
 Finally it was discovered that the bargain had proved an 
 excellent one ; that the quality of gas had been improved, the 
 price cheapened, the works rebuilt and extended, while the city 
 received nearly half a million a year in cash payments. What is 
 the moral? Why, the municipality, not having managed its own 
 affairs as ably and honestly as the much-maligned gas company 
 had conducted the gas business, sought to raise a vast sum of 
 needed cash in lump payment for a further extension of its val- 
 uable privileges, thus discounting its rentals for many years ; and 
 that is how one government demonstrated its fitness for higher 
 things.' The country is studded with towns that have had unsat- 
 isfactory experience with ownership and operation of water and 
 electric-light plants, and have turned them over, or are seeking 
 to turn them over, to private companies ; and in almost every 
 instance there has been a faction that complained of the alleged 
 conspiracy of certain of their officials with capitalists. 
 
 While reliable statistics are yet lacking to demonstrate the 
 results of extensive government ownership and operation which 
 I have predicted, there are enough, not only to destroy faith in^ 
 the roseate claims of the public-ownership apostles, but to point 
 a distinct warning of the danger. The statistics are in too many 
 
190 SELECTED ARTICLES 
 
 instances discovered to be deceptive in the favorable results they 
 show. In several particulars is this true. They are given to 
 omitting proper charges for depreciation. This especially in 
 respect to electric-lighting plants, where depreciation and obso- 
 lescence have been very costly. They frequently fail to show the 
 true cost of operation by neglecting to state the services given 
 the works by other departments of the city government, and the 
 sums that are lost in taxes that would be paid under private 
 ownership ; also the quality of service rendered. And, besides, 
 the scheme has been tested on too limited a scale to permit of 
 jumping at enthusiastic conclusions. There have been, if nothing 
 else, too large a percentage of known failures, so far as the test 
 has gone. 
 
 But against this warning we are handed a flowery statement 
 of results in Europe, and especially in England and Scotland. 
 This is carrying the argument away from our conditions, and 
 even if the known facts over there were more favorable than they 
 are, it would not warrant our attempting to follow their example. 
 As to results in Great Britain, however, the game has not been 
 played through, and the final score will not be shown for years 
 to come. It may be conceded that, if an\' country possesses a 
 system and character of government capable of engaging suc- 
 cessfully in government trading, Britain is that country. Yet we 
 have reports of antiquated instruments in municipal telephone 
 systems, of lack of enterprise in perfecting and extending the 
 service which would be borne with sour grace in American cities. 
 .Not only has the service been poor, but in some instances the 
 operation has been at a loss. The same may be said of municipal 
 electric lighting in Great Britain. The service is complained of, 
 and in a number of cities, including Glasgow, Edinburgh, Bath, 
 and Bristol, has been operated at a loss. As for the municipal 
 tramways in England and Scotland, American travelers are prac- 
 tically a unit in declaring that most of the systems, and the 
 methods of operating them, would not be tolerated in America, 
 even those often quoted as examples of municipalization success, 
 such as Glasgow and Edinburgh. 
 
 Of most vital importance is the problem of municipal indebt- 
 edness which the experiment has created. More than two thou- 
 sand million of bonds have been issued in England to extend 
 
MUNICIPAL OWNERSHIP 191 
 
 municipal trading, and the investments have in some instances 
 already affected municipal credit. Some lines about London are 
 already a charge to taxpayers, and the leading newspapers are 
 sounding the alarm as to what may be the ultimate result. There 
 has also been observed an effect on the industrial system of the 
 country, and the subject of the displacement of private enterprise 
 and responsibility by government is awakening much serious, 
 thought. 
 
 The day has not arrived when we may point to England's 
 example as one which America may safely follow. 
 
 Patient, disinterested examination of the subject in its various 
 phases does not discover any warrant in experience, political 
 conditions, or the purpose of government, as viewed by the clear- 
 est intelligence of recent times, for the assumption that public 
 trading would prove the public blessing so confidently claimed 
 for it by its advocates. This will apply either in the case of 
 municipal or federal government engaging extensively in busi- 
 ness. It is characteristic of propagandists to indulge in positive 
 assertions — not merely to believe and prophesy, but to declare 
 future results. That it is the true purpose of government to 
 conduct the chief commercial enterprises of this country, or any 
 considerable portion of them, no man — no American, at least — has 
 any right to declare. That the results of municipal trading in 
 America, so far as it has been tried, have been entirely success- 
 ful, as has been frequently asserted, statistics so far obtainable 
 do not prove. It cannot truthfully be stated, without qualifica- 
 tion, that experience so far in municipal ownership and operation 
 has, as a whole, been of greater benefit to the people than pri- 
 vate ownership and operation in the same instances would have 
 been. 
 
 A hopeful theory is that by imposing ownership and opera- 
 tion of industrial enterprises on city governments the quality 
 of citizenship will be raised, because citizens will then take 
 greater interest in city affairs. It would not be difficult to 
 prove by history that, the more paternalistic governments have 
 become, the less responsibility has been shown by their citizens 
 or subjects. But it is not necessary to enter such an argument. 
 For the accepted doctrine of free government is, that it 
 
192 SELECTED ARTICLES 
 
 should protect the people and guard their interests by reason- 
 able regulation and control, and not that it should conduct the 
 business of the people. 
 
 The plea that government cannot properly control corporate 
 operations, or that it will not do so, is a pitiful one. It must 
 be conceded that in many things government has not done 
 so. But that being the natural function of government, there 
 can be no question that it should first demonstrate its efficiency 
 in that duty before engaging in commercial experiments, even 
 if the latter should be admitted a proper course for it to take 
 in any event. Let the protests of the people against corporate 
 derelictions be directed to enforcing adequate control. Let 
 the errors that have been made in the past through wasted fran- 
 chises, excessive privileges, inadequate laws and charters, be 
 remedied as fast the nature of the various cases will permit. 
 Clean the administration offices. Keep able men in office longer, 
 the delinquents not so long. Perfect the merit system, not in 
 a way that it will help shirking inefficients to retain their 
 places, but so that it will more surely encourage merit. Deal 
 with corporate interests with a view to the greatest public ^ 
 advantage, not merely with the view of carrying out arbitrary 
 ideas of short-term franchises or municipal purchase. 
 
 Government control and regulation are natural functions. 
 If they be properly exercised, they must prove more beneficial 
 to the people than government trading. They will insure im- 
 proved service of public utilities, which municipalization does 
 not. They will increase the public revenues by compensation, 
 without the danger of increased public burdens. Strict govern- 
 ment control is more likely to decrease political corruption than is 
 government trading, as the management would not be swayed 
 by political considerations; this with special reference to traction 
 properties employing large numbers of men. 
 
 What may be effected through wise control and regulation is 
 exemplified in the street and elevated railway service at Boston, 
 concise explanation of which has recently been given to the read- 
 ing public by Mr. Hayes Robbins. It is not too much to say that 
 Massachusetts and Boston have, in fact, fairly solved the problem 
 of public control and regulation. In quality of service; in mile- 
 
MUNICIPAL OWNERSHIP 193 
 
 age of track in proportion to population; in benefits to the 
 public treasury, and in all things that constitute satisfactory- 
 urban transportation, we have the highest testimony that this 
 system is superior to any in Europe; while the uniform five-cent 
 rate of fare, compared with the zone rates there, is no higher, 
 and wages of employees average twice as high. 
 
 Now, what has been done in Massachusetts may be re- 
 peated in every state in the Union, not only with respect to 
 tramways, but also as to lighting, telephone service, and water 
 supply. It was observed as far back as Aristotle that com- 
 munity of property was not a practicable scheme for populous 
 communities. How true that observation was is attested by the 
 fact that, while it has frequently been attempted, by almost 
 every character of people and under almost every social con- 
 dition, it has failed in every instance. The more extensive the 
 municipilization ideas are put into experiment, the nearer we 
 approach the community of property system, and, according to 
 all human experience, the nearer to governmental and indus- 
 trial chaos. 
 
 American Journal of Sociology. 10: 787-813. May, 1905. 
 
 Public Ownership Versus Public Control. Hayes Robbins. 
 
 When it was first announced that the Citizens' Union of 
 New York was entering upon a campaign to increase the range 
 of municipal powers so as to include ownership and operation, 
 among other things, of street railways, gas and electric-light 
 service, it was regarded as something of a politico-economic 
 sensation. The extraordinary feature was not the character 
 of the proposition itself. Municipal ownership is no novelty, 
 either as a theory in this country or as a practical accomplish- 
 ment in Europe, especially in Great Britain. But that an organi- 
 zation of the civic prominence and influence of the Citizens' 
 Union should select the opening months of a new Tammany 
 administration to start the machinery at the state capitol for a 
 ■constitutional amendment permitting these new city functions, 
 was unique in American political history, to say the least. 
 
194 SELECTED ARTICLES 
 
 Had the last municipal election in New York continued the 
 reform administration in office, a suggestion for adding an im- 
 mense new set of complex responsibilities and powers to the 
 city government's activities certainly would have seemed less 
 eccentric than coming, as it did, close upon the heels of the most 
 striking demonstration ever afforded of the insecurity of clean, 
 able, and nonpartisan government in the great "social experi- 
 ment" city of the New World. 
 
 But these are points of political expediency rather than of 
 principles at stake. The larger importance of any such move- 
 ment does not lie in the sensational interest of an unpropitious 
 launching, but in the fact that it raises again (and each time 
 more seriously, whatever the outcome of the particular agitation) 
 the issue of the wisdom and practical feasibility of taking the 
 government into these exacting and complicated fields of indus- 
 trial responsibility and management. This is, indeed, a large 
 issue; and if a fresh discussion of it leads to nothing more con- 
 crete than the remedying of certain abuses in existing systems, 
 and establishing more equitable and satisfactory relations be- 
 tween the community and public-service corporations, it will 
 have been well worth while. 
 
 The demand for public ownership and operation of street 
 railways, lighting facilities, etc., is often based upon the broad 
 contention that the furnishing of "common necessities" ought 
 logically to be in the hands of all the people. The argument is 
 obviously careless, in that it would equally justify state produc- 
 tion of wheat, sugar, coal, oil, meats, cotton, and wool — what- 
 ever, in fact, has come to be regarded as a "necessity" of life. 
 The real distinction comes in when the article in question is 
 not only a public necessity, but is supplied under practically 
 monopolistic conditions. There is a separate grouping of indus- 
 tries of this class, which is recognized in the practical policies 
 of virtually all civilized countries. From time immemorial gov- 
 ernments have elected to take over the control and operation of 
 so-called '"natural monopolies;" whether it was the development 
 of valuable natural products, especially rare mineral deposits, or, 
 in more recent times, the furnishing of water supply, drainage 
 systems, street-lighting, and even in some cases of public 
 
MUNICIPAL OWNERSHIP 195 
 
 transportation and communication facilities. The instinctive 
 appreciation that the peculiar character of such industries calls 
 for and justifies something more than a laissez-faire policy is 
 what underlay the very general support of the President's inter- 
 vention in the coal strike. The act was unofificial, to be sure, but 
 morally it had the effect of an assertion of the sovereign popu- 
 lar right to take a hand in the conduct of a virtually monopolis- 
 tic industry supplying a necessity of life. 
 
 The principle has steadily become clearer that, where com- 
 petition is impossible or ineffective, some outside agency is not 
 only admissible, but necessary, to supply or compel the progres- 
 sive improvement and the checks against extortion which natur- 
 al conditions do not in such case afford ; and since this interfer- 
 ence is required in the public interest, what more natural than 
 that the government, as the organized expression of the people's 
 will, should be the intervening agent? 
 
 Much elaborate argument has been wasted in the vain effort 
 to show that competition is really feasible under all conditions. 
 But public sentiment has become impatient of all such obviously 
 specious reasoning in defiance of known facts. Competition 
 between transportation lines, or gas -and electric-light companies, 
 or telephone systems, usually ends either in a price agreement, 
 or a division of territory, or an outright consolidation of the 
 rival corporations. ^Massachusetts has frankly recognized the 
 humbug of competition in certain of these fields, and has even 
 gone to the extent, as a recent decision of its Board of Railroad 
 Commissioners, in a case at Springfield, witnesses, of declaring 
 virtually that the monopoly is advantageous and should be pro- 
 tected ; but such an expression from the source quoted must 
 always be taken in connection with the all-important proviso 
 that the monopoly operates under a very strict and comprehen- 
 sive system of public control, and this is precisely what Mas- 
 sachusetts law provide. 
 
 Here is where the real issue lies today. There is less and less 
 effort to galvanize the corpse of competition in the public-service 
 facilities of our cities, either in practice or in theory. Equally, 
 there is less and less disposition to deny the public right to supply 
 in some way the safeguards which competition would naturally 
 
196 SELECTED ARTICLES 
 
 afford if it were actually there. The vital question is on the 
 how. And here begins the cleavage between the public-ownership 
 proposition and public control. 
 
 It will be of interest to inquire into some of the experience of 
 recent years, under both systems, in this country and abroad. 
 So far as strictly municipal undertakings are concerned, Great 
 Britain furnishes pratically all the advanced experiments of large 
 importance, and unfortunately the differences of opinion as to 
 practical results are so pronounced, and the testimony so con- 
 flicting, that positive conclusions are in many cases difificult. Not 
 only this, but in forming judgments very much depends upon 
 whether the results under municipal operation at a given time are 
 compared with previous private-management experience in the 
 same community, or with present American experience under 
 private management. 
 
 Take, for example, the famous case of Glasgow. The tracks 
 of the street-railway system were the property of the city from 
 the beginning, but were leased in 1871 to the Glasgow Tramway 
 & Omnibus Co., for twenty-three years. On November 12, 1891, 
 the Town Council voted not to renew the lease, and entered into 
 negotiations with the company for the purchase of its equipment. 
 These negotiations fell through, and the municipality thereupon 
 purchased an entire new outfit for a horse-car line — cars and 
 horses, barns, ground, buildings, and machinery. Why was not 
 an electric system installed, as it certainly would have been by 
 any American private corporation taking possession of an urban 
 transportation system so recently as 1894? 
 
 Mr. J. Shaw Maxwell, in a review of municipal-ownership 
 experiments, in the Co-operative Wholesale Societies' Annual for 
 1902, says it was because there was not time enough in the two 
 years after the negotiations with the private company collapsed 
 to the date when the city had to begin operations, to purchase and 
 install an electric plant. A different explanation is indicated in 
 the very exhaustive and favorable account of the Glasgow tram- 
 ways, to which the Light Railzcay and Tramivay Journal (Lon- 
 don) devoted almost its entire space in the issue of July 3. 1903. 
 It appears that a special committee was appointed as early as 
 July, 1891, to investigate methods of operation for the tramways 
 
MUNICIPAL OWNERSHIP 197 
 
 and a month later reported in favor of "mechanical traction :" but 
 they could not agree on whether it should be electric, cable, 
 compressed-air, or gas-motor. 
 
 The subcommittee were busy considering the question until 
 after the following May, when they decided that it would be im- 
 practicable to start the service with mechanical traction, and that 
 the safest course would be to start with horses and wait further 
 developments in regard to the various forms of traction. 
 
 In October, 1902, 
 
 offers were received for erecting and completing an electric instal- 
 lation, with all plants, appliances, rolling-stock, etc., necessary for 
 working about eight miles of the tramways in the northern part of 
 the city, including the Springburn route, on the overhead system, 
 but the committee did not then see their way to recommend the 
 acceptance of any of the offers. 
 
 Not until five years later was even a short experimental line 
 authorized, and the principal reason seems to have been that 
 "there was as yet no general concensus of opinion as to which 
 was the best system of mechanical traction." The first test-line 
 was opened in 1898, and in the following year a complete change 
 to the electric system was voted. The last horse-car was with- 
 drawn from service in 1901. 
 
 There is a conflict of testimony also with regard to the finan- 
 cial results of the Glasgow undertaking. It appears that in the 
 twenty-three years of the lease to the private company nearly 
 $1,700,000 had been expended on capital construction account, of 
 which upward of $980,000 had been paid off by the tramway 
 company, which also had expended some $617,000 on the re- 
 newal of permanent way, and contributed some $309,000 in 
 clear cash profit to the city. Statements of percentages of profit 
 made by the municipality since 1894 make a considerably better 
 showing when the capital basis upon which they are computed 
 includes (in addition, of course, to later expenditures) only the 
 net debt upon the system at the time of the transfer, than when 
 it includes, as it should, the total investment up to that time, of 
 which almost two-thirds had been contributed free and clear by 
 the operating company. 
 
 Another easy way of getting an erroneous impression of finan- 
 cial results is to compare the average annual payments to the 
 "Common Good," or net profit fund, during the whole twenty- 
 three years of the lease with the annual payments into that fund 
 since 1894. By this method it appears that only about $13,500 
 
198 SELECTED ARTICLES 
 
 per year went to the city's profit account prior to municipal man- 
 agement, while in the first year after the change, 1894-95, the 
 amount so paid was $40,193; in the four succeeding years, 
 $43,794 each; in the next three, $60,825; in 1902-3, $121,650; 
 and Mr. John Young, the general manager of the system, informs 
 the writer that "it has been decided that this sum shall be paid 
 over to the Common Good annually in the future." 
 
 But the $13,500 average for the twenty-three years before 
 
 1894 of course includes all the meager early years, from the time 
 when the total capital investment of the system was less than 
 $17,000. If, instead of stating the payments to the "Common 
 Good" as an average for the whole period, the figures are given 
 year by year, as is done for the period since the lease, it appears 
 that the amounts increased steadily prior to 1894 ^s well as since, 
 and in the last year under the old system amounted to over $27,- 
 000 ; in the last thirteen months, over $32,000. Further, it should 
 not be overlooked that if Glasgow had been obliged, as any 
 private corporation purchasing the plant would have been, to pay 
 annual interest, say at 2^/2 per cent., on the $980,000 of capital 
 investment which had been paid up by the private company, the 
 amount available for Common Good would have been less by 
 about $24,500 each year than it actually has been since the city 
 began operations. In other words, instead of $43,794 from 
 
 1895 to 1899, it would have been about $19,300 in each of those 
 years; instead of $121,650 today, it would be just over $97,000. 
 
 On the other hand, on the basis of what the old company 
 actually was accomplishing just prior to 1894, with the same 
 unpaid capital debt to carry as that taken over by the city, the 
 municipal management has steadily increased the net return to 
 the "Common Good," and that with some reduction of fares, 
 installation of a modern system, and altogether improved service. 
 
 And it is further to be noted that the movement toward 
 municipalization of British tramways is steadily forging ahead. 
 Huddersfield has been operating its own system since 1882; 
 Plymouth and Blackpool, since 1893; Leeds, since 1894; 
 Sheflf^eld, since 1896; Liverpool, since 1897; while Manchester 
 has only recently undertaken the same experiment, the largest 
 of the kind in England, covering nearly 150 miles of trackage. 
 
MUNICIPAL OWNERSHIP 199 
 
 In 1901, 56 propositions for municipalizing tramways were 
 authorized, the estimated cost ranging from about $23,000 to 
 $14,600,000. According to the Board of Trade Returns spe- 
 cially obtained on this subject in 1900, 70 out of a total of 177 
 tramway systems were then under public ownership and manage- 
 ment, and these 70 represented a total expenditure on capital 
 account of $49,650,737, as against $56,116,580 for the 107 private 
 corporations. 
 
 The circumstance above all others which has made fairly 
 satisfactory results possible, as compared with the previous sys- 
 tems, is the relatively high character of British municipal admin- 
 istration. Through long traditions of decency and much clarifying 
 experience, these cities have developed the habit of picking men 
 of honorable repute, business experience, and capacity for public 
 service ; and but for this fact it is altogether probable that the 
 experiments would have proved disastrous failures. To cite a 
 few cases by way of illustrating the average composition of the 
 governing bodies of English municipalities : in 1901 the City 
 Council of Birmingham contained forty manufacturers and 
 tradesmen associated with the metal and cutlery trades ; in Brom- 
 ley nearly half the members were manufacturers and tradesmen, 
 connected chiefly with the cotton industry; in Hull the shipping 
 interests were strongly represented ; in Huddersfield woolen 
 manufacturers were prominent ; in Sheffield the staple industry 
 was represented in all its phases, from corporation directors to 
 steel-workers and molders ; in Glasgow the municipal corporation 
 consisted of twenty-one merchants and shopkeepers, twenty-six 
 manufacturers and tradesmen, sixteen professional men, four 
 following no calling, while the great trading interests of the city 
 were well represented. 
 
 In spite of all the favorable features, public opinion in Great 
 Britain, while strongly tending toward municipal ownership in 
 many quarters, is by no means a unit on the practical results 
 achieved down to date. Mr. Maxwell himself, although a believer 
 in municipalization, quotes a number of critical judgments; for 
 example, that of Mr. Benjamin Taylor, in the electric railway 
 number of Cassier's Magazine, that "generally speaking, the most 
 perfect tramway system is procurable when the municipality owns 
 
200 SELECTED ARTICLES 
 
 the track and leases the lines to a company under municipal 
 regulations." Mr. Taylor reviewed the experience of Glasgow, 
 Huddersfield, Blackpool, Leeds, Sheffield, and Plymouth, and 
 expressed the conviction that 
 
 In no single instance has it [municipal operation] been perfectly 
 successful. Glasgow furnishes the nearest approach to success, 
 but in Glasgow, with a small track for an enormous dependent 
 population, it would take very bad management indeed to produce 
 financial failure. . . . Any well-managed company, in posses- 
 sion of the advantages which any of these corporations [municipali- 
 ties] whose work has been reviewed, possesses, would have, long 
 ere this, produced inuch better results both for itself and for the 
 public. 
 
 Whatever may be the conclusion, however, as to public versus 
 private tramways in Great Britain, when we compare the results 
 under the very best of the municipalized systems with those 
 realized in many of the larger American cities, the differences are 
 pronounced. Dr. Albert Shaw% author of Municipal Governuient 
 in Great Britain, who has sometimes been quoted as an advocate 
 of municipal ownership, declared before a committee of the New 
 York legislature : "1 have never dreamed of advocating municipal 
 ownership in the city of New York. I have never thought of it 
 as a remedy." And, as to foreign cities : "I never believed any 
 experience derived from them of any applicability to our cities. "~ 
 Mr. Charles Francis Adams, who was a member of the special 
 Massachusetts investigating committee appointed in 1897, and 
 whose right to speak with considerable authority on these matters 
 is unquestionable, declares that he has "never yet found in 
 Europe anywhere a case of municipal or public transportation 
 worthy an instant's consideration as compared with our own," 
 This has the appearance of an extreme view, to be sure; but con- 
 crete facts go a long way in support of it. 
 
 Suppose, for example, the comparison is made between the 
 Glasgow experiment, w^hich is decidedly the most favorable for 
 municipal ownership that could be taken, and the Boston system, 
 which, if it is indeed the best in the United States, has many a 
 close second so far as practical operation is concerned, whatever 
 may be said of the general fiscal relations with the community. 
 Of that, more later. 
 
 Glasgow today has 139 miles of tramway, measured as single 
 track. The population of the city is about 800,000; and in the 
 
MUNICIPAL OWNERSHIP 201 
 
 financial statement and general account issued by the Tramways 
 Committee the total population served, including the suburbs, is 
 given as one million. The Boston Elevated Railway Co. operates, 
 as a unit, some 440 miles of elevated, subway, and surface lines, 
 and serves approximately the same aggregate population, includ- 
 ing the suburbs. In other words, Glasgow has one mile of track 
 for every 7,200 of population, in round numbers ; Boston, one 
 mile for every 2,270. The Glasgow system in 1902-3 carried 
 177,179,594 passengers; the Boston company carries about 
 236,000,000 paying passengers, of whom 130,000,000 use free 
 transfers, making 366,000,000 separate trips furnished. The 
 average daily traffic is : Glasgow, 485,000 ; Boston, 1,000,000. 
 The Glasgow rolling-stock consists of about 680 cars of all kinds ; 
 the Boston company owns over 3,300. The average number of 
 cars operated in one day in Glasgow is now about 450; in Bos- 
 ton. 1,300. Thus Boston operates one car for every 770 passeng- 
 ers carried each day; Glasgow, one car for every 1,077. 
 
 This difference is reduced, however, by the fact that prac- 
 tically all the Glasgow cars are "double-deckers," seating from 
 50 to 55 passengers. A car seating 55 provides for 25 inside and 
 30 on the roof. The equipment of the Boston system is varied, 
 including 174 elevated-railway cars seating 48 passengers, with 
 comfortable standing-room for 50 more; nearly 1,600 surface- 
 railway box-cars of different sizes, the great majority seating 34 
 passengers each; and more than 1.500 open cars for summer use, 
 seating from 40 to 60 according to the number of benches. In 
 winter, therefore, although Boston operates about 40 per cent. 
 more cars in proportion to traffic than Glasgow, the average 
 seating capacity of a car on the Glasgow system is greater than 
 that of Boston surface cars by an even larger percentage ; but 
 this does not apply to carrying capacity. The standard surface 
 car on the Boston system is 25 feet long, exclusive of platforms; 
 in Glasgow, only 17 feet; which means, of course, less standing- 
 room inside. And there can be little doubt as to which of the two 
 evils is to be preferred, for winter travel — standing-room inside 
 a warm car, or a seat on the roof, exposed the cold and fre- 
 quently to storms. This exposure to weather, by the way, is a 
 permanent feature of "upper-deck" travel on the Glasgow cars. 
 
202 SELECTED ARTICLES 
 
 summer or winter ; a second roof, or cover of any sort, has been 
 found impracticable on account of the many bridges under which 
 the cars must pass. 
 
 A new type of box-cars, the largest size that can be used on 
 many of the crooked streets, and seating 36 passengers, is being 
 installed on the Boston lines. And it is somewhat unjust to the 
 Boston system, moreover, to estimate the average seating ca- 
 pacity solely on the basis of standard surface cars, even though 
 there are 1,600 of these and only 174 of the elevated cars, which 
 seat 48 each. An elevated car runs many more miles in a day 
 than a surface car, and hence handles a much larger relative pro- 
 portion of the traffic. While there are less than one-ninth as 
 many elevated as either type of surface cars, the mileage made by 
 the elevated cars is more than one sixth of the total made by the 
 surface. This, of course, increases the average seating capacity of 
 the rolling-stock as a whole. 
 
 In summer the average seating capacity of the elevated and 
 open surface cars on the Boston system is nearly, if not fully, 
 equal to that of the Glasgow cars, and this with protection from 
 the w'eather, .and without the delays and inconvenience in requir- 
 ing passengers to climb to the roof. Double-deck cars were tried 
 in Boston at one time, but abandoned because it was found im- 
 possible to handle heavy traffic with sufficient expedition ; and it 
 is chiefly on this account, in fact, that the street-railway judg- 
 ment of this country has been, on the whole, against the use of 
 this type of rolling-stock. 
 
 The Glasgow system, June i, 1903, wath 130 miles (measured 
 as single track), represented a total capital investment of 
 $13,405,024, or $103,115 per mile. The Boston system, including 
 stock^and bonds of leased lines, is capitalized at a little less than 
 $/| 4,500,000 ; and if to this be added the cost of the city-owned 
 subway, on which cost the company pays the interest and a 
 liberal sinking-fund contribution, the total capital investment 
 becomes approximately $48,500,000, or $110,227 per mile. There 
 is no presumption of overcapitalization here, as compared with 
 Glasgow, in view of the costly elevated and subway sections 
 which form a part of the Boston service, and of the further 
 fact that labor cost of construction in this country includes a 
 
MUNICIPAL OWNERSHIP 203 
 
 wage-rate practically double that of Scotland, and which is only 
 partially offset by the superior skill and energy of our workmen. 
 
 The Boston system, with earnings of about $12,000,000 an- 
 nually, pays a direct tax of seven-eighths of one per cent, on 
 gross earnings, a state corporation tax of about $16 per $1,000 of 
 market value of the stock, and local taxes on its real property, in 
 the various municipalities through which its lines pass, ranging 
 from $15 to $20 per $1,000 of assessed valuation; and, in addi- 
 tion, is required to remove snow and ice from, and maintain the 
 paving on, the street surface occupied by its tracks. The interest 
 which it pays on the cost of the subway is sufficiently in excess of 
 the interest the city has to pay on the bonds issued for its con- 
 struction, to retire the bonds and make the subway the city's 
 property free and clear in less than forty years. 
 
 The total of these taxes and service obligations, and excess 
 interest payment, now amounts to upward of $1,550,000 a year, 
 or nearly 13 per cent, of the gross earnings. Glasgow, with a 
 street-railway revenue of $3,178,471, in 1902-3, paid into the 
 "Common Good" $121,650; to which should be added the taxes 
 which the municipality as a whole assesses upon the tramway 
 property, amounting in 1902-3 to $88,488. A further addition 
 •should be made of $83,982, being the average annual payment by 
 the Tramway Committee since 1894 into the sinking-fund for 
 reduction of the capital debt; these payments, of course, are 
 profit to the municipality, in that they give it that much clear in- 
 terest in the property as an asset. The total of these payments 
 which go to the public good is $294,120, or slightly over 9 per cent. 
 of the gross revenue. The Boston corporation, serving the same 
 population as the Glasgow lines touch, pays to public-benefit ac- 
 count more than five times the gross amount so paid by the 
 Glasgow system, and 39 per cent, more in proportion to earnings. 
 
 The question of fares cannot be considered apart from that of 
 the amount of service furnished. What are the facts, then, as 
 between Glasgow and Boston? Glasgow has a graduated scale of 
 fares, ranging from i cent for a little over half a mile to 8 cents 
 for nine miles. The standard 5-cent fare in this country takes a 
 passenger 5.8 miles in Glasgow. Needless to say, the confusion 
 and complications of such a system, for the varying distances 
 
204 SELECTED ARTICLES 
 
 traveled, would prohibit it from meeting the demand for the 
 utmost possible expedition on our large American city transit 
 systems. Even more serious is the increasing rate of penalty it 
 imposes upon the wide distribution of traffic, and hence upon the 
 building up of workingmen's homes in the suburbs. 
 
 In Boston the uniform fare is 5 cents, and by means of the 
 • free-transfer privilege it is possible for this sum to ride from one 
 end of the system to the other, fully 20 miles. Wage-earners and 
 clerks employed in the business districts can live 8 to 9 miles out 
 and ride to and from their homes for 5 cents, while the Glasgow 
 "suburbanite," to travel equal distances, if the lines extended that 
 far, would have to pay 7 and 8 cents, respectively. A journey of 
 15 or 16 miles out from central points in Boston, by connection 
 with outlying suburban lines, may be taken for 10 cents, and 20 
 to 25 miles for 15 cents. The same distances under the Glasgow 
 rates would cost 13, 14, 18, and 22 cents, respectively. 
 
 The short ride and congested-district character of the Glas- 
 gow service must be borne in mind in connection with the fact 
 that the average amount received per passenger, based on the re- 
 turns of annual earnings, is a little less than 2 cents. In Boston, 
 counting the free transfer passengers, it is about 3% cents. But 
 what is the effect of the sliding scale on Glasgow traflfic? Simply; 
 that the great bulk of the travel consists of short rides within 
 the city limits. Thirty-six per cent, of the passengers pay i-cent 
 fares — that is, ride only half a mile; 56 per cent, pay the 2-cent 
 fare, covering 2.33 miles ; only 8 per cent, pay fares of 3 cents 
 and upward; in other words, only 8 per cent, make journeys of 
 more than 3.5 miles. 
 
 To be even more explicit : The most distant suburban point 
 to which the Glasgow tramways extend is Paisley, 6.95 miles. 
 To get there costs 6 cents, or 7 from the center of the city. The 
 next farthest point is Clydebank, 6.39 miles; fare, 6 cents. Three 
 other suburbs are between 4 and 5 miles, and one about 3^. 
 From Park Street station, Boston, a passenger may ride 9.53 
 miles to Arlington Heights for 5 cents; 9.83 miles to Charles 
 River Bridge; 8.23 miles to Arlington Center; 8 miles to 
 Waverley; 7.9 miles to the Melrose line; 7.36 miles to Milton; 
 J.2, miles to Neponset ; 6.32 miles to Woodlawn ; and 6.04 miles 
 
MUNICIPAL OWNERSHIP 20s 
 
 to Lake Street; and the uniform fare for any one of these jour- 
 neys, or for any two of them in combination, through free trans- 
 fer, is 5 cents. 
 
 The Glasgow system is not doing what it might and ought 
 toward reHeving the terrible congestion of workingmen's families 
 huddled within the cramped distance limits. That the need of 
 such distribution is great appears from the fact that more than 
 30 per cent, of the families in Glasgow, according to an invest- 
 igation made a few years ago, were living in single rooms, as 
 compared with about V/z per cent, in Boston. 
 
 But there is yet another most important consideration entering 
 into this matter of fares — the question of wages. The relation 
 of wage-rates paid, to the average fare charged, is twofold. 
 
 First : Wages are by far the largest item of operating 
 expenses, and, as between two systems using substantially the 
 same traction methods and carrying approximately the same 
 number of passengers per car, the one paying the higher wages 
 must necessarily charge a higher rate of fare. If the system 
 paying the higher wages also operates more lines and furnishes 
 a larger number of cars for the amount of traffic handled, all 
 the more reason why the rates of fare must be higher. 
 
 Both Glasgow and Boston use the system of electric traction. 
 Boston operates more than three times more track, and runs 4a 
 per cent, more cars in proportion to traffic. How about the 
 wages. The pay of motormen and conductors in Glasgow ranges 
 from 97 cents per day during the first six months to $1.22 after 
 three years of service. In Boston surface-car conductors and 
 motormen receive $2.25; elevated motormen, $2.30 the first year^ 
 $2.40 the second, and ^2.50 the third; brakemen, $1.85; guards, 
 $2.10; while all these employees receive 5 cents per day addition- 
 al after five years of service, 10 cents after ten years and 15 cents 
 after fifteen years. These rates are about double those paid in 
 Glasgow. 
 
 From the operating standpoint, therefore, whether it be in 
 respect to wage expense, trackage operated, or amount of car 
 movement, or all three, as is actually the case, there is abundant 
 reason for higher average fares per passenger carried on the 
 Boston system. 
 
206 
 
 SELECTED ARTICLES 
 
 The second respect in which the wage matter relates to fares 
 charged brings in the question of purchasing power. The differ- 
 ences between Boston and Glasgow street-railway wages reflect 
 similarly wide dift'erences between the general "run" of Ameri- 
 can and Scotch wages all along the line — not so great in some 
 cases, of course; in others greater. It is one of the truisms of 
 economics that prices are to be considered high or low, not abso- 
 lutely, but solely with reference to the purchasing power of the 
 community, and in a community where wages are practically 
 double the rates prevailing in another, an average fare of 3^ 
 cents would be, if anything, somewhat cheaper than one slightly 
 under 2 cents in the other; at least, so far as concerns the army 
 of wage-earners and clerks, and their families, who constitute 
 the great majority of the patrons of any urban transportation 
 system, and are the people to whom the matter of rates and 
 service is of chief importance. 
 
 It may be urged, as accounting for some of the relative ad- 
 vantages of the Boston system, that it is surrounded on all 
 sides by "feeder" electric roads which deliver passengers from 
 an area including a considerably larger population than is 
 brought into touch with the Glasgow lines. The fact is, how- 
 ever, that the bulk of the business from this wider area is 
 handled by the suburban service of the steam railroads. Hun- 
 dreds of trains each day, in and out of the two great terminals 
 in Boston, accommodate an immense traffic, and not only from 
 outlying points, but from stations directly within the territory 
 of the Boston elevated, and in constant competition with it ; so 
 that the accounts are probably square in this respect. As a matter 
 of fact, the proportion of traffic on the Boston Elevated Co.'s 
 lines which does not originate within its own territory, compared 
 with the total business, is small. 
 
 The reasonable deduction from these somewhat extensive 
 comparisons seems to be that, while public ownership and opera- 
 tion of street railways, under the favorable civic conditions of 
 British municipalities, in most cases give a better and cheaper 
 service than was afforded by the various private corporations it 
 supplanted, even this improved service is relatively meager in 
 extent, and usually of mediocre quality, compared with Ameri- 
 
MUNICIPAL OWNERSHIP 207 
 
 can experience ; and that the municipalized enterprises would 
 break down entirely if subjected to any such tests as are com- 
 monly required under American conditions. 
 
 Glasgow was selected for comparison, as already observed, 
 because it makes the best showing for municipalization, probably, 
 to be found anywhere. In other British experiments results are 
 less favorable, some of them markedly so; but in few of them 
 have the facts ever been presented with sufficient clearness and 
 fairness to warrant any very precise comparisons. The experi- 
 ment of the London County Council in constructing electric lines 
 in the south of London is a case in point. It appears that in 
 1899 the council's experts estimated the expense of this undertak- 
 ing at about $1,242,000. It has only recently been completed, and 
 proves to have cost some $4,800,000. In consequence of this 
 excessive expenditure, there seems to be a fair prospect, accord- 
 ing to the chairman of the Finance Committee of the County 
 Council, that the expenses, and charges against these lines, will 
 exceed the income, and the deficit will have to be added to the 
 tax budget. Thus far, the net returns to the council from the 
 south London system have not been anywhere near so great 
 as those from the leased lines on the north side ; but, on the 
 other hand, the fares are somewhat higher on the private lines, 
 and the service in some respects not so good. 
 
 The same uncertainty exists in regard to municipalization of 
 electric lights. The London Times presents statistics showing 
 that during 1901 the city of Salford lost $36,441 on the operating 
 account alone of its electric-light plant, to say nothing of the 
 charges on the $908,803 invested. Bath lost $6,024 in the same 
 year, on a plant which was purchased for $119,217, and upon 
 which $379,548 had been spent. Even after this expenditure, the 
 works broke down, and the city tried in vain to sell the outfit to 
 a private corporation. Bedford lost $14,598 on operating ac- 
 count; Bristol, $12,165; Morley, $9,732 ; Glasgow, $21,980; Edin- 
 burgh, $13,089. These facts certainly are striking. Granting 
 that the Times was conducting a campaign against municipal 
 ownership, and hence did not give the statistics for cities which 
 may have had more favorable experience, the specific cases here 
 cited are of such importance as to destroy any warrant for as- 
 
2o8 SELECTED ARTICLES 
 
 serting in general terms that "municipal electric lighting is a 
 success in Great Britain." It would be impossible to make such 
 a claim, evep if all the other experiments were financially satis- 
 factory. 
 
 Coming to the United States, the briefest statement of the 
 situation shows how slight a hold the public-ownership idea has 
 obtained thus far. Chicago, it is true, has voted in favor 
 •of municipal ownership of the street railway, gas and electric- 
 light plants ; but in the present financial condition of that city 
 there is little prospect of the proposal getting any farther. Thus 
 far, only one community in the land owns and operates its own 
 street railways, namely, Grand Junction, Colo., a town of less 
 than 5,000 population. Of places of 3,000 population and 
 upward, 193 are supplied with electric light by public enterprise, 
 1,190 by private; 20 operate municipal gas-works, 956 rely upon 
 private companies; 1,465 have private telephone exchanges, 
 while not one has embarked in this branch of municipal enter- 
 prise. Water-works and sewers, the two forms of municipal serv- 
 ice requiring relatively the least of expert management and 
 trained business judgment, are much more largely under direct 
 municipal control; there being only 42 private sewerage systems 
 against 1,045 public, and 661 private water companies against 
 766 public. 
 
 It is interesting to note that by far the larger number of 
 municipally owned electric-light plants and gas-works are 
 found in small places, where the conditions are relatively sim- 
 ple; very few of the large cities, where the demands of the sit- 
 uation are complex, extensive, and exacting have tried the ex- 
 periment. Of cities of 30,000 inhabitants and upward, only four 
 conduct municipal electric-light w^orks, and three municipal gas- 
 works ; while in places of 3,000 to 5.000 inhabitants, iii electric- 
 light plants are under public management, and seven gas-works. 
 In the six largest cities — New York, Chicago, Philadelphia, St. 
 Louis, Boston, and Baltimore — both electric light and gas are 
 supplied by private companies, with the partial exceptions that 
 Chicago furnishes her own electric-street lighting, and the Phila- 
 delphia gas-plant, although leased to a private corporation, is 
 owned by the city. 
 
MUNICIPAL OWNERSHIP 209 
 
 The Philadelphia experiment in gas-making is one of the 
 interesting cases of municipal mismanagement on a large scale. 
 After many years of operation by the city, the plant had so 
 deteriorated and the financial losses to the city had so accumu- 
 lated, the gas supplied was so poor in quality and high in price, 
 and the political manipulations of the "gas ring" (which Pro- 
 fessor Bryce says controlled 20,000 votes) became so notorious, 
 that after a thorough legislative investigation the whole outfit 
 was leased to a private corporation for a term of practically 
 thirty years, or from December i, 1897, to December 31, 1927. 
 The conditions of the lease provided for a complete rehabilita- 
 tion of the plant, declining price and improved quality of gas, 
 and liberal annual cash payments into the city treasury. 
 
 In the four years previous to the making of this lease the 
 expenditures incurred by the city in connection with operating 
 the gas plant, including salaries of office employees, furnishing 
 of street lamps, rentals, betterments, etc., exceeded the income 
 by $958,615.64, an average deficit of $239,653.91 per year. 
 The item of betterments during this period averaged $365,- 
 498.02 per year. In view of the condition the plant was in when 
 taken over by the private company, it is a fair inference that 
 the bulk of these so-called "betterments" were virtually waste, 
 yielding very little actual improvement in the efficiency of the 
 works. But if we waive that point, and credit the full amount 
 of the betterments to the city as permanent improvement of the 
 plant, the current operating account, disregarding the betterments 
 outgo, showed an average annual surplus of $125,844.11. In the 
 six years after the lease the cash payments to the city by the 
 private company, in consideration of the privileges granted it, 
 amounted to $2,600,523.12, or an average of $433,420.52 per 
 year. Thus the gain to the city on current operating account 
 alone, under the lease, has amounted to an average of $307,576.- 
 41 annually, as compared with the four previous years. The 
 private company now makes all the betterments (which go to the 
 city free and clear at the end of the lease), and these must a- 
 mount to $15,000,000 during the term of the lease, or an average 
 of $500,000 per year. Adding to these guaranteed betterments 
 the net gain on current operating account, it would appear that 
 
210 SELECTED ARTICLES 
 
 the average annual gain to the city since the lease went into ef- 
 fect has amounted to $807,576.41. 
 
 As a matter of fact, the company is making the bulk of the 
 betterments in the first years of the lease. By the first of Jan- 
 uary, 1904, it had expended on this account a total of $9,608,199.- 
 50. 
 
 And this does not tell the entire story. The company fur- 
 nishes the city with gas for street-lamps and public buildings, 
 free 01 expense, and is required to increase the number of street- 
 lamps to the extent of 300 per year, as ordered by the City 
 Council. At the same time, the average candle-power of the 
 light supplied has increased from a range of from 19.04 toi9.47 
 in the four years preceding the lease, to a range of from 22.72 to^ 
 23 in the six years after the lease. The price per 1,000 feet is 
 $1, of which 10 cents goes to the city treasury. The city has the 
 power to reduce the price to 90 cents, if it chooses to forego 
 its own revenue of 10 cents ; after 1907 it may reduce the rate to 
 85 cents; after 1912, to 80 cents; and after 1917, until the end 
 of the lease, to 75 cents. 
 
 In addition, the item of making service connection and 
 installing meters, part of which was formerly charged to the con- 
 sumers, is now borne entirely by the private company. The city 
 has the option of resuming possession of the plant January i, 
 1908, but only upon condition of reimbursing the private com- 
 pany for all betterments made in the meantime. At the expiration 
 of the lease the entire plant is to be turned over to the city, with 
 all the betterments, free and clear. The issue of returning to 
 city management or executing a new lease will then come before 
 the city of Philadelphia, and if those who endured the service as 
 it was before 1898 were to be the ones to do the deciding in 
 1927, there is little doubt what the verdict would be. 
 
 The experience of Boston a few years ago throws additional 
 light on the difficulties of municipal ownership in this country. 
 Under Mayor Quincy, a number of new municipal bureaus or 
 departments were created, through which the city undertook to 
 do its own printing, electrical construction, carpentering, and 
 repairing, furnish its own ice, and so on. Under the succeeding 
 administration of Mayor Hart, an experienced business man, it 
 
MUNICIPAL OWNERSHIP 211 
 
 was found that, instead of proving sources of economy, these 
 bureaus were veritable waste-pipes leading from the city treas- 
 ury, and they were closed up as fast as possible, with the excep- 
 tion of the printing-plant, for which a satisfactory offer could 
 not be obtained. Among other things, it was found, for example, 
 that the electrical equipment of a ferry-boat, which under private 
 contract would have cost only $6,800, cost $10,200. Electrical 
 work in the city building for hospital nurses cost $4,754 ; by 
 private contract it would have been $1,528. Work on a city 
 armory, which normally would have cost $2,600, absorbed $6,700 
 of the city's funds. Ice for public drinking-fountains, which 
 private companies were furnishing at $2 to $3 per ton, was 
 costing the city $6. 
 
 Political appointees, numerically far in excess of the require- 
 ments of the service, and individually incompetent as a rule, had 
 brought the bureaus to this extravagant pass ; and it was vir- 
 tually impossible to resist the drift in this direction, because the 
 Common Council would not vote money enough to carry on the 
 work of the departments, unless "places" were made for the 
 favorites of the aldermen, as demanded. Chief Electrician Wil- 
 liam Brophy, of the Boston Wire Department, reported to IMayor 
 
 Hart: 
 
 A glance at the pay-rolls shows that nearly 60 per cent, of the 
 men whose nam'es they contain were appointed at the request of 
 certain prominent gentlemen, who, to say the least, are not the 
 best judges of the necessary qualifications of the employees of this 
 department. 
 
 And among these employees, it is hardly necessary to add, there 
 was a more or less general adoption of that leisurely gait 
 which already has come to be known on the state-managed in- 
 dustries in New Zealand as the "government stroke." 
 
 Civil-service regulations proved no safeguard against these 
 aldermanic raids, and the efforts to get around the rules were 
 even carried to the extent of supplying a variety of ordinary em- 
 ployments with new and singular names for which no civil-serv- 
 ice examinations existed ! 
 
 On the general question of whether such abuses could be 
 overcome, and a civil-service system devised which would pro- 
 vide a really satisfactory selection of employees for socialistic 
 municipal enterprises, it seems high time to remark that the 
 
212 
 
 SELECTED ARTICLES 
 
 extent of effectiveness of any civil-service test, v^^here more than 
 somewhat perfunctory service is required, is very easily over- 
 estimated. It has become a sort of fetich in the popular mind, 
 to such an extent that very many participants in this line of 
 discussion have made the tacit admission that if a rigid civil-serv- 
 ice system could be established, it might then be a feasible to 
 place industrial enterprises under the management of govern- 
 ment bureaus. But the truth is that no civil-service examination 
 ever devised is adequate to select out industrial capacity, or catch 
 in its meshes that indefinable, unclassified, evasive quality of 
 practical genius which enables one man to take charge of a 
 business undertaking and bring it through to success, while an- 
 other, of equal or even superior technical knowledge, makes a 
 total failure of the attempt. 
 
 Natural selection is the only method that has ever been 
 found to develop the highest type of managing ability in the in- 
 dustrial field, and no feasible substitute for it has ever been 
 proposed. How would it be possible, for example, to establish 
 tests of business policy and management which should be re- 
 garded as the accepted "standards"? There are, in fact, no ac- 
 cepted "standards" of policy for the successful conduct of busi- 
 ness enterprises. The conditions of success are not only con- 
 stantly changing, but they are widely different at one and the 
 same time, in different plants, according to the situation, charac- 
 ter of the market, previous traditions of the business, and a hun- 
 dred and one features irreducible to concreteness. What might 
 be regarded as essential business principles in one situation, and 
 made the basis of a general competitive examination, might 
 yield a group of successful candidates notably unfit to conduct 
 enterprises under the varied and changing conditions of other 
 situations not covered by these established tests. On the other 
 hand, it is doubtful if some of the most successful managers 
 of modern industries could themselves pass an examination of 
 the sort which would probably be regarded as necessary to select 
 the best managing talent. 
 
 To bring all these considerations to bear against the municipal 
 operation of complex industrial enterprises is not, however, to 
 concede the entire case to the opposite contention of unlimited 
 
MUNICIPAL OWNERSHIP 213 
 
 private control. There are grave abuses and inadequacies in 
 private management, here and there, as well as under public 
 enterprise, although usually of a different character, and capable 
 of being remedied by other means than sacrificing the positive 
 advantages and permanent incentives to efficiency and improve- 
 ment, furnished by the element of individual rewards and penal- 
 ties. In other words, there is a middle ground of public control, 
 to which attention may well be drawn, since here, indeed, is a 
 really fruitful field. 
 
 The transportation system of Boston was selected for com- 
 parison with Glasgow intentionally, because it affords the best 
 illustration in evidence anywhere of this attempt to solve the 
 municipal-service problem along the lines of public control. The 
 public control here exercised is both specific and general : that 
 is, the Boston Elevated Co. operates under certain restraints and 
 requirements imposed equally upon all street-railway corpora- 
 tions in the commonwealth, and in addition is subject to an com- 
 prehensive set of special regulations framed in recognition of 
 the peculiar conditions of metropolitan transportation. 
 
 In addition to the various taxes already specified, whereby 
 the public receives its contribution to the "Common Good," it is 
 provided that, if any dividends are declared in excess of 6 per 
 cent., an amount equal to the excess shall be divided among the 
 cities and towns in which the company operates. In point of 
 fact, whatever has been earned in excess of 6 per cent, thus far 
 has been turned back into improvement and extension of the 
 system, and this may be expected to continue for a number of 
 years ; the plans for development of the Boston transportation 
 facilities are of a most comprehensive character, and the work 
 is steadily in progress. The division of profits above 6 per cent. 
 (8 per cent, in the case of all other street-railway companies) 
 is probably the least important of the Massachusetts public- 
 control features ; it may possibly, however, act as some measure 
 of protection of the Boston system and its present exceptionally 
 public-spirited management, against becoming the prey of specu- 
 lative interests ambitious to exploit the property solely for the 
 quick profits to be got out of.it. 
 
 The general body of Massachusetts street-railway legislation 
 
214 SELECTED ARTICLES 
 
 is very largely the outgrowth of an official investigation in 1897, 
 by a special committee, whose report is perhaps the most valua- 
 ble and suggestive that has appeared on the subject. This legis- 
 lation is of an advanced character, providing very careful pro- 
 tection of public interests and close supervision of quasi-public 
 enterprises. As a matter of fact, for more than half a century 
 Massachusetts communities have held the power of life and 
 death over street railway corporations, at short notice. The 
 franchibcs of any such company are nominally perpetual, but 
 they are subject to revocation at will in and by the communities 
 through which its lines pass, the only appeal being to the State 
 Railroad Commission. The commission may nullify the revoca- 
 tion, or sustain it if in its judgment the public interests so re- 
 quire, what ever the cause of complaint against the offending 
 corporation. 
 
 In other words, a street-railway franchise in Massachusetts 
 is what the investigating committee of 1897 termed a "tenure 
 during good behavior;" the sole exception to this indefinite- 
 term principle being in the case of the Boston Elevated Railway. 
 In view of the extraordinary investment required for per- 
 manent plant, the Boston corporation holds perpetual franchises 
 for the right of way of its elevated structures, subject only to 
 revocation of its charter; and, by virtue of taking over the 
 West End Street Railway, the Elveated Co. operates under a 
 twenty-year lease of the subway, originally granted to the for- 
 mer corporation. The surface-line franchises, however, are re- 
 vocable by the municipal authorities. 
 
 The State Railroad Commission is not only the final arbiter 
 of life and death for street-railway companies, but it determines 
 in the first instance, by careful inspection of the proposed routes, 
 plans, etc., whether the capital stock to be issued corresponds 
 with a fair estimate of the actual expense of construction to be 
 incurred; and no corporation may issue stock in excess of that 
 decision. All increases of stock must be authorized, and the 
 price per share at which it may be sold to those already owning 
 stock must be fixed, by the commission. The price so fixed must 
 represent as nearly as possible the market value of the stock at 
 the time. No certificate of original stock may be issued until the 
 
MUNICIPAL OWNERSHIP 215 
 
 par value thereof has been paid in, in cash : and no stock or scrip 
 dividends may be declared, or proceeds from the sale of stock 
 divided among the stockholders ; these restrictions apply to all 
 public-service corporations. Bonds may not be issued by street- 
 railway companies until the Railroad Commission is satis- 
 fied that the value of the real and personal property of the 
 company for railroad purposes exclusive of the value of the 
 franchises, equals or exceeds the amount of capital stock and 
 debt. These provisions render stock-watering virtually impos- 
 sible. 
 
 The railroad commissioners, also, may nullify at their dis- 
 cretion any location granted through a street for a new street 
 railway or extension of an old one. in case a majority in value 
 of the owners of real estate on that street, or ten such owners, 
 appeal to the commission within thirty days after the location 
 is granted. Even after the work of construction is completed, 
 operation may not begin until the commissioners have certified 
 that the laws relative to its construction have been complied with, 
 and the board's engineer has inspected the line in detail and 
 found everything safe and adequate. Thereafter the commission 
 may revise or alter any regulations of a street-railway company 
 for the use of its road or cars ; may determine how and to what 
 extent cars shall be heated : and the companies forfeit $25 for 
 each trip upon which the cars are not so heated, unless the 
 failure is due to an accident to the heating apparatus. The 
 district police are required to enforce this provision. If the 
 commission considers that additional accommodations are re- 
 quired, after due notice to the company it may order such ad- 
 ditional accommodations, and after one week from the service 
 of such notice, if the company neglects to provide them, it for- 
 feits $100 for each day of such neglect. 
 
 Transfer privileges may not be withdrawn except upon 
 approval of the Board of Railroad Commissioners. The books 
 of every railroad corporation must be kept in a uniform mamner, 
 upon a system prescribed by the commission, the accounts exam- 
 ined from time to time, and the results made public as the com- 
 mission may consider expedient. Such examination and publica- 
 tion of results may be compelled at any time by application of 
 
2i6 SELECTED ARTICLES 
 
 any persons owning one-fiftieth of the paid-in stock of the cor- 
 poration, or bonds or other evidences of indebtedness equal in 
 amount to one-fiftieth or such stock — an important provision in 
 protection of the minority stockholder, creditor, or bond-holder. 
 A five-thousand-dollar fine is the penalty for refusal or neglect 
 of any such corporation to exhibit its books and accounts when- 
 ever the commission requires. 
 
 These are only illustrations of the far-reaching supervision 
 exercised by the Massachusetts Railroad Commission. No other 
 in the country is endowed with powers so sweeping; no other 
 stands so high in reputation for ability, fairness, and unimpeach- 
 able honesty. Only because its extraordinary authority is never 
 abused is it possible to continue that authority in active exercise. 
 The commission is securely intrenched in the respect and con- 
 fidence of all elements in the community; so much so that it has 
 become in many cases a custom of opposing interests, corporate 
 and otherwise, to refer controversies to it for decision ; and, 
 although the decision is often adverse to the corporation inter- 
 ests, sometimes to the extent of important and expensive changes 
 in plant or equipment or method of operation, the commisssion 
 still remains the preferred tribunal. 
 
 The general attitude of the present commission toward the 
 street-railway problem is admirably summed up in a paragraph 
 of its recent decision in the Springfield case, referred to. The 
 
 commissioners say: 
 
 The operation of street railways in the larger municipalities has 
 shown that the traffic within city limits can be handled with great- 
 er success and greater safety by one than by several com- 
 panies. It will not do, however, for a company which receives the 
 privileges of monopoly to forget the obligations which go with 
 them. The public in such case can look to the one company only 
 for needful extensions and additional accommodations. In response 
 such company should be quick to meet all reasonable demands. 
 When it undertakes to perform the entire public service, it must 
 carry out the task. 
 
 The Massachusetts Commission consists of three men, 
 appointed by the governor with the consent of the special ad- 
 visory body known as the "Council," and each holds ofifice for 
 three years. Its integrity is preserved through two consider- 
 ations : the virtual absence of attempts on the part of Mas- 
 sachusetts corporations to control it by influencing the election 
 of a "friendly" governor, and the positive demand of public senti- 
 
MUNICIPAL OWNERSHIP 217 
 
 ment for a commission that shall be above criticism. To appoint 
 to this commission a man open to suspicion of representing 
 special interests would be hardly less disastrous to the future 
 political prospects of a public official than an attempt to "pack" 
 the Supreme Court with political or corporate favorites. 
 
 It might be expected from all too familiar experience else- 
 where that the power of revoking franchises would be in constant 
 use as a club for blackmail extortion ; and with a less active 
 public conscience than still prevails, for the most part, in Massa- 
 chusetts, it probably would be. But in the Bay State a liberally 
 managed, law-abiding corporation is practically as sure of fair 
 treatment and a long lease of life as if its franchises were ab- 
 solute for twehty, thirty, or fifty years. In fact, the half -century 
 of experience with revocable franchises was so satisfactory to all 
 concerned that in all the hearings before the investigating com- 
 mittee of 1897 no request to change this feature was made by any 
 municipality or corporation in the state. 
 
 Other public-service corporations are likewise under strict 
 provisions of public control. Gas and electric-light companies 
 are under the supervision of the State Board of Gas and Electric 
 Light Commissioners, who have the power of examining accounts, 
 etc. Telephone and telegraph corporations, and water companies, 
 are under the state commissioner of corporations, who is also the 
 commissioner of taxes. All issues of stock or bonds of any 
 such corporations must be approved by these commissioners re- 
 spectively, as the case may be, and must be on the basis that the 
 amount is "reasonably necessary for the purpose for which such 
 issue of stock or bonds has been authorized." Whenever the 
 mayor of a city or selectmen of a town, or twenty customers, 
 complain as to the price or quality of gas or electric light fur- 
 nished, the Board of Gas and Electric Light Commissioners must 
 notify the corporation and order a public hearing, and after the 
 hearing may order such reduction of price or improvement in 
 quality as the facts brought out may warrant. The price so 
 fixed may not be increased, except that any corporation may 
 apply for a new hearing, if it considers itself aggrieved. 
 
 The annual expenses of the Board of Railroad Commissioners 
 and the Board of Gas and Electric Light Commissioners are 
 
2i8 SELECTED ARTICLES 
 
 charged upon the various railroad and gas and electric-light cor- 
 porations, respectively, in proportion to their gross earnings. 
 
 All corporations in Massachusetts, of whatever kind, are 
 subject to state taxation upon the value of their "franchises," 
 representing the right to do business — an express assertion of 
 the principle that the carrying on of an industrial enterprise is a 
 social privilege rather than a fundamental or natural individual 
 right. The value of the franchise is determined by the state tax 
 commissioner, and is arrived at by taking the total market value 
 of the stock of the corporation at the time of the assessment, 
 and making certain deductions therefrom, as follows : In the case 
 of a telegraph or railroad or street-railway company, the value 
 of its real estate and machinery subject to local taxation within 
 the commonwealth is deducted; also so much of the value of 
 its stock as is proportional to the length of its lines lying out- 
 side the state. In the case of telephone companies, the value 
 of the real estate and plant subject to local taxation within the 
 state is deducted ; also the value of all stock of other corpor- 
 ations held by a "domestic"^ telephone company, and upon which 
 a tax has been paid in Massachusetts or any other state for the 
 preceding year ; and so much of the value of the stock of a 
 "foreign"! telephone company as is proportional to the number 
 of telephones it owns or controls outside the state. In the case 
 of all other corporations, manufacturing, etc., the value of real 
 estate and machinery subject to local taxation is deducted. And 
 it should be noted that the assessments for local taxation of 
 corporations are subject to equalization or alteration upon pro- 
 ceedings which the state tax commissioner has power to compel. 
 
 The differences between the total market value of the stock 
 and the various deductions specified is considered to represent 
 the value of the franchise, and this is taxed at the same rate as 
 that ascertained for the general state property tax in any given 
 year. 
 
 That a system of public espionage and control so thorough- 
 going and rigid as this should have given satisfactory results, 
 on the whole, and without serious abuses, is a tribute to the 
 
 , 1 "Domestic" corporation organized under Massachusets laws; 
 foreign" under laws of some other state. 
 
MUNICIPAL OWNERSHIP 219 
 
 relatively high standards of civic life and general political con- 
 ditions maintained — not without exceptions, to be sure — in the 
 commonv^-ealth, and it would take considerable optimism to as- 
 sume that similar regulations would work equally well every- 
 where — or even anywhere — else in the Union. The city of Bos- 
 ton is the danger spot, and source of constant menace to the just 
 exercise of these extraordinary powers over corporate property; 
 and many times there has been occasion to realize how narrow is 
 the margin of safe control in the hands of decent elements, 
 which prevents the legislative system from being converted into 
 a weapon of plunder in the hands of professional blackmailers 
 and "grafters." 
 
 However, if Massachusetts has to fight at every step for the 
 integrity of her public-control policies, where shall be found the 
 justification for other and less favored communities rushing 
 away beyond these limits to the extreme experiment of public 
 ownership and operation? If an effective system of regulation 
 cannot be maintained in our large cities, because of political cor- 
 ruption, what hope is there for the success of absorption out- 
 right, placing public-service facilities wholly in the hands of the 
 selfsame political influences? 
 
 Public control retains the vital spark of individual enterprise 
 and the incentive of private reward, which have kept alive the 
 spirit of industrial progress and brought nearly all the material 
 gains of civilization into being; and at the same time asserts in 
 practical form the right of the whole community to hold self- 
 interests within just bounds and guarantee to itself such benefits 
 as its own contribution to the success of the enterprises entitles 
 it to demand. There is "hard Yankee sense" in such a program. 
 It does not violate the American idea of individual achievement. 
 It has shown itself practicable under at least some American 
 conditions. But the first task of the municipal reformer is to 
 bring the general civic conditions themselves to some permanent 
 and dependable plane of honesty, public spirit, and cleanness. 
 If public control cannot succeed on any lower level than this, what 
 would happen to public ownership? 
 
ADDITIONAL REPRINTS 
 
 Calgary, Alberta, Canada. City Clerk. Municipal Manual, 
 
 1913- pp. 46-9. 
 
 Municipally-Owned Industrial Sites. 
 
 Chief among the inducements Calgary offers to manu- 
 facturers are the industrial sites owned by the city. These 
 are located in various parts of the city and were purchased 
 some two years back, to provide for the rapid industrial de- 
 velopment, which was then and is still taking place in the 
 City o: Calgary. 
 
 "Manchester,"' immediately within the southern limits ot 
 the city and situated on the Calgary-Lethbridge branch of 
 the C. P. R.. is offered manufacturers desirous of locating 
 in Calgary, on the following terms: — 
 
 1. Cost price $1,200 per acre; one-third cash, the balance 
 in equal instalments divided over a term agreeable to the 
 purchaser, up to six years, with interest at 6 per cent., pay- 
 able annually. 
 
 2. (a) The purchaser or purchasers must agree that all 
 buildings erected on land bought by them shall conform to 
 the requirements of the second-class fire limits of the city. 
 
 2. (b) To use the land for 10 years from the date of 
 purchase for manufacturing purposes only, and after 10 years 
 for the same purpose until otherwise allowed by by-law of 
 the City of Calgary. 
 
 2. (c) To begin building operations on the land purchased 
 within six months from the date of purchase and to complete 
 the buildings within a reasonable time, and if the purchaser 
 or purchasers fail to carry out this provision the agreement 
 shall be void and the land revert to the city. 
 
 2. (d) That he or they shall not assign or sublet without 
 the consent of the Council of the City of Calgary. 
 
222 SELECTED ARTICLES 
 
 2. (e) To pay the City of Calgary its proportionate share 
 of the rental of the main spur or spurs constructed to serve 
 the subdivision. 
 
 Street cars, sewer, water and electric light are extended 
 to and in use in "Alanchester." This property is approxi- 
 mately two and one-half miles from the postoffice. Appli- 
 cations for sites in this property should be made to the Rail- 
 ways and New Industries Committee of the City Council, 
 and addressed in care of the QA\.y Clerk. 
 
 Two miles east of the city limits and about five miles 
 from the postoffice, lies another tract of land owned by the 
 city, for use as industrial sites. This property is served by 
 the C. N. R. and the G. T. P. railroads. The Alberta Interur- 
 ban Railway proposes to erect their shops on this property. 
 The city holds an agreement with the vendors from whom 
 this site was purchased, whereby the vendors agree to hold 
 the east half of those blocks lying east of the city property, 
 up to November, 1914, for working men's home sites, to be 
 sold to industrial or manufacturing concerns locating on this 
 property at not more than $100.00 per 25 foot lot and to be 
 used for the purpose above mentioned. 
 
 The city also owns several blocks of land in the subdi- 
 vision known as Calgary Junction. 
 
 Another site owned b}'- the city within easy reach of the 
 business districts of Calgary, lies about two miles northeast 
 of the postoffice. The Calgar3'--Edmonton branch of the 
 C. P. R. runs through this property. 
 
 The three sites last mentioned have not yet been placed 
 on the market, but when there is a demand for them they 
 will most probably be offered at the same advantageous 
 terms as are in force in "Manchester." 
 
 Industrial sites will be sold only to bona fide manufactur- 
 ers fulfilling the above-mentioned terms. 
 
 The city has power to limit the assessment on land used 
 for manufacturing purposes to $3,000.00 per acre up to date 
 of January i, 1918, and to $5,000.00 per acre until January i, 
 1923, and to exempt from taxation buildings, improvements, 
 machinery and stock being used on said land, subject to a 
 
MUNICIPAL OWNERSHIP 223 
 
 by-law providing for such exemption being ratified by the 
 people as in the case of a money by-law. 
 
 The above clause does not mean that the industrial con- 
 cerns are exempt from local improvement taxation. 
 
 If the aforesaid land, buildings, stock or improvements 
 cease to be used or occupied for the purposes aforemen- 
 tioned, such land, etc., so ceasing to be used or occupied 
 shall be liable to taxation in the usual manner. 
 
 Calgary, Alberta, Canada. City Clerk. Municipal Manual, 
 
 . 1913. pp. 83-4. 
 
 i\Iunicipal Asphalt Paving Plant. 
 
 The asphalt paving plant which is owned and operated by 
 the Cit}^ of Calgary, is situated on the banks of the Bow 
 River, just west of jMewata Park. 
 
 The plant, when in operation, is capable of constructing 
 1500 sq. yards per da}^, but this capacity will be largely in- 
 creased when the addition, which is being made to the pres- 
 ent plant, is completed. 
 
 The cost of the paving plant up to date of January i, 
 1913, was $49,000.00 but a large sum is being expended in 
 making an addition. 
 
 Pavement is laid by this plant at an average cost of $2.10 
 per sq. j^ard. This price includes an allowance for debenture 
 interest, sinking fund, and depreciation of the plant. Pav- 
 ing laid for this sum shows a great saving when compared 
 with the price paid to paving companies under contract with 
 the City. 
 
 The above-mentioned plant has been in operation since 
 July of the year 1912 and has proved an unqualified success. 
 
 Calgary, Alberta, Canada. City Clerk. Municipal Manual, 
 
 1913. pp. 84-97. 
 
 Calgary Municipal Street Railway. 
 The City of Calgary, having a population of 35,000 suc- 
 cessfully launched an up-to-date street railway service on 
 July 5, 1909. 
 
224 SELECTED ARTICLES 
 
 For several years capitalists endeavored to get the 
 franchise, claiming that it could not be operated at a profit. 
 The city, however, did not give this away, but voted 
 $476,000.00 to build and operate it as a public utility, and al- 
 though it was not anticipated that more than operating ex- 
 penses would be received for a few years, it has been a suc- 
 cess from the start. Beginning with twelve cars of the most 
 modern type — pay-as-you-enter — it returned the city interest 
 charges and a surplus of $10,000.60 for contingent account, 
 during its first six months' operation. 
 
 Cojistruction was commenced September, 1908, and one- 
 half mile of track was laid that Fall. During the paving of 
 the main street, on May t, 1909, work was again proceeded 
 with, on the arrival of rails and material. Twelve "pay-as- 
 3'ou-enter" cars, 41 ft. 6 in. long, were ordered, and the work 
 of construction was pushed da}^ and night, with a view of 
 having a portion of the system in operation for the Alberta 
 Fair, July 5, which was accomplished by a close margin. 
 The power generator arrived July t, and two cars on July 2. 
 The railway ofiicialh^ opened at 8 a. m. on Juh^ 5, with two 
 cars, operating from the centre of the cit}' to the fair 
 grounds, a distance of about one-half mile, to the great sur- 
 prise of the citizens and the visitors generally, as it was not 
 expected possible to carry out the work in such time. 
 
 During fair week 35.460 passengers were carried without 
 an accident or interruption of any kind, and as this work 
 thereafter proceeded and additional cars arrived, they were 
 added so that by September 15 twelve cars were in opera- 
 tion, on sixteen and one-half miles of track, four miles of 
 which were paA'ed. 
 
 This work was carried on by five paving contractors and 
 one track construction company, who had the contract for 
 the unpaved section, the city doing all special work, inter- 
 sections and overhead, under the supervision of City Engi- 
 neer Childs and Superintendent McCauley. 
 
 All materials and construction is of the best; tubular steel 
 poles being used on the paved sections; the pavement, which 
 is composed of granitoid, wood block, bitulithic and asphalt; 
 
MUNICIPAL OWNERSHIP 225 
 
 the track on such sections being laid on a sub-base of four 
 inches of cement, with six-inch ties being spaced four feet 
 apart, grouted in with cement, representing on the granitoid 
 pavement sections seventeen inches of bed. 
 
 The rails are 60 and 80 lb., Lorain 6-inch and 7-inch sec- 
 tion, 60 feet long, high ''T" bonded with double compressed 
 bonds; all intersections are manganese steel, supplied by the 
 U. S. Steel Company and Hadfields, of ]\Ianchester. 
 
 Overhead feeder wires are of aluminum, and all material 
 is of the best quality, nothing being spared to make the sys- 
 tem permanent in every particular. 
 
 After a completion of the work, as first estimated, a sur- 
 plus was saved sufticient to purchase six additional cars 46 
 feet 6 inches long, which were received July i, 1910, giving 
 an equipment of 18 cars. In September, 1910, a further by- 
 law was voted to extend the line 24 miles, and purchase 12 
 additional cars and equipment, at a cost of $484,000.00. These 
 cars were received and 24 miles of additional extensions con- 
 structed in 191 1, giving a total mileage of forty and one- 
 half miles and thirty cars. 
 
 A further by-law was passed by the Council, to a vote of 
 the ratepayers, October 3, 191 1, for $375,000.00, to construct 
 twelve additional miles of track, purchase 18 cars (passen- 
 ger), one scenic car and one sprinkler car; add to the car 
 barn and equip the system with all modern appliances, which 
 has been carried out. 
 
 With the decision of the C. P. Ry. to erect their Western 
 shops in Calgary, a further by-law was passed to construct 
 three miles of line to these shops, and to purchase complete 
 six 46 feet 6 inch cars, at a cost of $82,000.00, making the 
 equipment 54 passenger, i observation and 2 sprinkler cars; 
 55^ miles of track, with 3^ miles donated to the city — a 
 total of 59 miles. 
 
 With this gift 86 acres of a park were also given, on the 
 Bow River, beautifully situated, wooded, and also water suit- 
 able for boating. 
 
 During the year all the line feeders within three-quarters 
 of a mile of the power house plant have been placed under- 
 
226 SELECTED ARTICLES 
 
 ground. Two additional sub-stations for light and power 
 for the railway, are under construction, which will increase 
 the railwa}^ power 1,200 k. w. hours. 
 
 At present power is supplied by two 500-k. w. direct 
 driven steam units as an auxiliary, and one 300-k. w. and one 
 1 500-k. w. motor generator, for which power is purchased 
 from the Calgary Power and Transmission Company at 
 $30.00 per horsepower. 
 
 The power department is separately operated, supplying 
 the city with light and power, and charges the railway for 
 such power as it uses, at 2 cents per k. w. hour. 
 
 Five classes of tickets are used: "School," good to and 
 from school for adults and any time for children, 10 for 25 
 cents; "Work," good morning and evening, 8 for 25 cents; 
 "Ordinary," good any time, 6 for 25 cents. "Ordinary,"' 25 
 ■in book form, $1.00; and pads of civic employees' tickets, 30 
 for $1.00, the latter charged to the departments in which 
 they are used. 
 
 No passes are issued to anyone, but transfers are made 
 from the different routes at ten different points in the city, 
 and a labour fare between 12 and 2 p. m. is being considered. 
 
 Employees are paid a sliding scale, representing after 
 three months' service, 28 cents; second six months, 30 cents 
 per hour; for the second year, 32 cents per hour; for the 
 third year, 34 cents, and after thre^ years, 35 cents per hour. 
 
 Free winter coats, and half cost of uniforms are granted, 
 with free uniforms after one year. 
 
 Politics are not permitted to enter into the operation of 
 the system, the Superintendent being the sole judge of quali- 
 fication necessary, and dismissals are made subject to em- 
 ployees having the right to appeal to a committee, composed 
 of the officers of the Street Railway Sick Benefit Associa- 
 tion, to arbitrate with the Superintendent should any dispute 
 arise. 
 
 The above association was organized May i, 1912, and 
 is composed of all the operating staff with proper officers 
 and constitution. 
 
 The fees are: $2.00 entrance fee and $1.00 per month there- 
 after, one-half of which is paid to the association's treasurer 
 
MUNICIPAL OWNERSHIP 227 
 
 by the street railway department, leaving the members' fees 
 $1.00 entrance and 50 cents per month. 
 
 For this, on a duly signed certificate from the doctor, 
 members receive $1.50 per day during sickness after four 
 days, and free private ward in hospital in case of injuries 
 received in the service. 
 
 The railway department also furnishes free club rooms, 
 piano, pool, shooting galleries, etc., where concerts, dancing 
 and competitions are regularly held. 
 
 Under agreement with the railway, all employees agree 
 to become members, and also if required, become district 
 constables, so that they may maintain order on the system If 
 necessary. 
 
 Operated by the City Commissioners: Maj-or J. W. 
 Mitchell, as chairman; A. G. Graves and S. J. Clarke as 
 Commissioners, with Superintendent McCauley in charge, 
 the following results have been showm up to June 30, 1912, 
 as reported to the Minister of Railwa^'-s. in annual report: 
 
 BEGAN OPERATIONS JULY 5, 1909— TWO CARS. 
 
 Fi'oui July 5, 1909, to June 30, 1910. 
 
 Revenue $144,244.18 
 
 Operating expenses 87,263.36 
 
 Surplus from operation $56,980.82 
 
 Less — 
 
 Interest on debentures $ 22,860.00 
 
 Sinking fund 4,685.29 27,545.29 
 
 Nett profit $29,435-53 
 
 Passengers carried 3*649,697 
 
 Miles operated 500,622 
 
 Salaries paid $46,513.42 
 
 From July i, 1910, to June 30, 1911. 
 
 Revenue $275,434.51 
 
 Operating exoenses 139,601.98 
 
 Surplus from operation $I35>832-S3 
 
228 SELECTED ARTICLES 
 
 Less — 
 
 Interest on debentures $ 23,220.00 
 
 Sinking fund 9,370.00 
 
 Contingent account 5 per cent. 
 
 gross revenue 13,771.72 
 
 Taxes 2,264.17 $ 48,625.89 
 
 Nett profit $ 87,206.64 
 
 Passengers carried .' 7,176,086 
 
 Miles operated 801,086 
 
 Salaries paid $76,686.85 
 
 From July j, 191 1, to June 30, 19 12. 
 
 Revenue $479,240.24 
 
 Operating expenses 282,600.56 
 
 Surplus from operation $196,639.68 
 
 Less — 
 
 Taxes $ 2,264.18 
 
 Interest on debentures 45,000.00 
 
 Sinking fund 18,160.00 
 
 Contingent account 5 per cent. 
 
 gross revenue 23,962.01 $ 89,386.19 
 
 Nett profit $107,253.49 
 
 Passengers carried 12,941,530 
 
 Miles operated 1,643,328 
 
 Salaries paid $172,521.75 
 
 For Four Months, ending October 31, 1912. 
 
 Revenue $230,984.25 
 
 Operating expenses i39,i59-83 
 
 Surplus from operation $ 91,824.42 
 
 Less — 
 
 Interest on debentures and sinking 
 
 fund $ 25,953.62 
 
 Contingent account 5 per cent. 
 
 revenue 1 1,549.19 $ 37.502.81 
 
 Nett profit $54,321.61 
 
MUNICIPAL OWNERSHIP 229 
 
 Passengers carried 5.547,809 
 
 Miles operated 810,826 
 
 Salaries paid $89,160.15 
 
 Calgary has grown during the past three years from 
 35,000 to a population of 75,000. 
 
 The above nett profits are clear of all charges, coverina' 
 operating expenses, interest, sinking fund, and 5 per cent, of 
 the gross revenue, as a contingent fund provided to cover 
 accidents to the public and the employees, and provide for 
 renewals and contingents of all kinds, not otherwise pro- 
 vided for. 
 
 The surplus in this account for the year ending June 30, 
 191 1, was $13,771.72, which, added to the sinking fund (pro- 
 vided for the same period) of $9,370.00, amounts to $23,141.72; 
 and from June 30, 1911, to June 30, 1912, $42,122.01, or more 
 than twice the amount set aside by private corporations as 
 a renewal or contingent fund. 
 
 The following statistics show the growth of the system: 
 
 Cars operated July 5, 1909 2 
 
 Cars operated July i, 1910 15 
 
 Cars operated July i, 191 1 22 
 
 Cars operated July i, 1912 48 
 
 Cars operated Dec. 31, 1912 54 
 
 Miles of Track. 
 
 July 5, 1909 3 Miles 
 
 July I, 1910 i6y2 " 
 
 July I, 1911 265^ " 
 
 July I, 1912 54 
 
 Dec. 31, 1912 59 " 
 
 Employees. 
 
 July 5,1909 16 
 
 July I, 1910 62 
 
 July I, 1911 102 
 
 July I, 1912 246 
 
 Dec. 31, 1912 266 
 
230 SELECTED ARTICLES 
 
 Aside from the regular service, an observation or "Seeing- 
 Calgary" car is operated over the different routes, on hourly- 
 trips, at a cost of 25 cents, from which all the principal parts 
 of the city may be seen, and are announced. This car cost, 
 complete, $7,500.00. 
 
 This car is the original and only one of its kind; 46 feet 
 long with elevated seats; bronze fittings, bevelled plate glass 
 mirror sides, etc. 
 
 It has been found a good investment, earning as high as 
 $124.00 per day of nine hours operation. Six additional 46 
 feet 6 inch cars were received from Preston, Ontario, on Nov. 
 25, making 54 cars, and during 1913 large extensions are pro- 
 vided for, including 24 additional motor cars, 41 feet and 
 46 feet long, and 6 trail cars, 44 feet long, the latter of which 
 will be operated to the C. P. R. shops as train cars. 
 
 Also 4 work cars, i sprinkler and i large power construc- 
 tion car, which will give the system 78 motor passenger, 6 
 trail, I observation, 9 work or freight cars, 3 sprinklers and 
 I sweeper — or a total of 98 cars of all classes. 
 
 Aside from the above 17 miles of additional track will be 
 constructed, and an additional car barn and its equipment 
 added, all at a cost of $500,000.00, which will place the capital 
 expenditure, including paving costs, at $2,300,000.00 
 
 As the railway purchases power froth the City Power De- 
 partment, that department furnishes the necessary plant, 
 which is being increased by three sub-stations, and the ad- 
 dition of 2,100 horsepower. 
 
 Of the 59 miles of track now constructed, 26 miles is 
 permanent work on paved streets, and it is expected in 1913 
 to pave an additional 9 miles; therefore it is clearly shown 
 that Calgary in operating its municipal railways is doing so 
 on a sound and business basis, and controls its own streets 
 without dictation by any monopoly, and conserving the 
 profits, which for the year 1912 will amount to over 
 $100,000.00, for the reduction of taxes and local improvement, 
 besides operating two 5,000-gallon electric car sprinklers 
 over the streets covered by the railway, without charge. 
 
MUNICIPAL OWNERSHIP 231 
 
 Regina, Saskatchewan, Canada. City Clerk. Municipal 
 
 Manual, 1913. pp. 40-3. 
 
 Electric Light and Power Plant. 
 
 The Electric Light and Power System is owned and 
 operated by the City. This utility is not only self-sustaining, 
 but revenue producing, showing a surplus of revenue over 
 expenditure of $102,000 in 1912. The generating plant con- 
 sists of: 
 
 6 boilers, aggregating 2,000 h. p. 
 
 I 100 kw. Ideal Engine type generating unit. 
 
 I 450 kw. low pressure Turbine generating unit. 
 
 1 1,500 kw. high pressure type generating unit. 
 
 2 400 kw. direct current railway units, vertical engine 
 type. 
 
 Some 300 arc and 50 incandescent street lights are in use, 
 and provision has been made for the installation of 300 ad- 
 ditional arc lights during the year 1913. Provision is made 
 in the capital estimates for 1913 for the sum of $425,000 for 
 the construction of a new Power House complete with the 
 most modern machinery and equipment, it being the inten- 
 tion, on completion of this building, to convert the present 
 Power House into a pumping station. 
 
 Provision is also made in the 1913 Capital Estimates for 
 the sum of $25,000 for investigating and reporting upon the 
 construction and operation of Gas Works, and the prepara- 
 tion of plans and specifications, it being the intention to 
 commence the construction of a Gas Plant early in 1914- 
 
 Rates. 
 
 For energy used in one installation and registered on one 
 meter in one month. 
 
 Light. 
 
 First 300 kw. hours at /c; all used in excess of 300 kw. at 
 6c per kw. hour. 
 
 Light used in day time on two rate meter in installation 
 of over 5 kw. of maximum demand, 5c per kw. hour. 
 
232 SELECTED ARTICLES 
 
 Power. 
 
 First 300 kw. hours at 5c per kw. hour; 300 to 600 kw. 
 at 4c per kw. hour. All in excess of 600 at 3>:^c per kw. 
 hour. 
 
 For power used i" day time on two rate meters in instal- 
 lation over 5 kw. of maximum demand, 3c per kw. hour. 
 
 Heating and Cooking. 
 
 Energy for heating and cooking apparatus supplied at 
 power rates. 
 
 A minimum rate of $1.00 per month to be charged on all 
 light services and $1.00 per month per connection h. p. in 
 motors or kw. of maximum demand for heating services. 
 
 Special rates arranged on large power services according 
 to condition of service. 
 
 Meter rental for light, 25 cents per month. 
 
 Meter rental for power, 50 cents per month. 
 
 Meter rental for two rate meter, 50 cents per month. 
 
 Meters are furnished for all installations. Burned out 
 lamps are renewed by the City, and lamps sold at the Elec- 
 trical Department Office at corner of Dewdney and Broad 
 Streets. 
 
 Accounts are rendered monthly by the City Treasurer 
 and are payable monthly. Ten per cent, discount is allowed 
 on current light and power only if paid within ten days of 
 account leaving treasurer's office. 
 
 In the event of nonpayment of account, connections are 
 cut off within twenty days after date of mailing and a fee 
 of $1.00 charged for each reconnection. 
 
 Regina, Saskatchewan, Canada. City Clerk. Municipal 
 
 Manual, 1913. pp. 59-61. 
 
 Street Railway. 
 
 In 1910 it was decided to undertake the installation of a 
 Street Railway System as a municipal enterprise. The Coun- 
 cil submitted to the ratepayers the question of granting a 
 f-o„^hise to one of a number of companies, who applied for 
 
MUNICIPAL OWNERSHIP 233 
 
 it; but, notwithstanding that unusual difficulties would have 
 to be overcome, they decided that it would be undesirable 
 to grant a franchise. 
 
 The work of construction was commenced in the spring 
 of 191 1, and on July 29th the first service was instituted, and 
 a constant service has been maintained since that date. 
 
 The following are details of the system up to December 
 31, 1912. 
 
 Capital Expenditure $922,000.00 
 
 Mileage of Track 16 
 
 Rolling Stock 20 cars, i snow sweeper 
 
 Gross Earnings for 1912 $100,842.00 
 
 Operating Expenses, 1912 $ 85,900.00 
 
 Total Number of Passengers Carried to Dec. 31st., 
 
 1912 2,195.726 
 
 The system has proved to be a much appreciated utility; 
 and a comprehensive scheme of extensions is outlined for 
 1913, covering practically the whole area within the city 
 limits, and providing for some fifteen (15) additional miles of 
 track; fourteen (14) additional street cars, several freight 
 cars and other freight equipment, and additional plant for 
 power. 
 
 Spur Track System. 
 
 The city is fortunate in possessing considerable property, 
 which was transferred to it from various sources in the past 
 and which at the present time, forms an exceedingly valu- 
 able asset. Parts of this property have been sold from time 
 to time and built upon, and it is being handled in such a way 
 as seems best to enhance the development of the city. A 
 section of city property covering about 320 acres has been 
 set aside as an Industrial District, and is being served by 
 spur tracks laid out in a suitable way to serve all the district 
 from the Canadian Northern, Grand Trunk Pacific and Ca- 
 nadian Pacific Railways. A large Industrial District contain- 
 ing many warehouses doing an extensive business has grown 
 up in this area, the wholesale distribution business amount- 
 ing in 1912 to over $40,000,000. The City holds warel^^"-''- 
 sites throughout this district, which are c— -ca by spur 
 
234 SELECTED ARTICLES 
 
 tracks, at a value of from $i,ooo to $2,000 for lots 25x125 in 
 size, except corner lots which are sold at a slight additional 
 advance on this price. This is less than the actual value 
 of the property, and in order to ensure that the property 
 will be developed when sold, restrictions consistent with the 
 conditions set out in the application are made whereby the 
 purchasers are required to develop the property within one 
 year from the date of purchase. The property throughout 
 this district is .being sold very fast, with corresponding 
 rapid development, thus showing that business men looking 
 for sites for their various businesses appreciate the advan- 
 tages offered to them by the city in this regard. 
 
 Winnipeg, Manitoba, Canada. City Clerk. Municipal 
 
 Manual, 1913. pp. 92-5. 
 
 Municipal Ownership. 
 
 The City of Winnipeg is a firm believer in Municipal 
 Ownership of all public utilities. The City owns and oper- 
 ates its Hydro-Electric Power Works, Water Works Plant. 
 Street Lighting System, Stone Quarry, Fire Alarm System, 
 Police Signal System, Fire Service Water Works, Asphalt 
 Plant and Gravel Pit. Winnipeg enjoj^s the distinction of 
 being the first city in America to acquire a Municipal Asphalt 
 Plant. 
 
 City Quarries: 
 
 The first quarry was opened in 1897, and made a separate 
 department in 1901. New quarry opened at Stony Mountain 
 in 1906 comprises 80 acres. 
 
 Output : 
 
 1901 — 21852 yds. at $1.30 $ 28,407.60 
 
 191 1 — 891 19 yds. at $1.20 106,942.80 
 
 1912 — 84221 yds. at $1.10 92,643.10 
 
 Paid in Freight — Wages 
 
 1901 — $16,984.00 $26,219.00 
 
 ^^'T $26,998.99 41.824.68 
 
 I912— $23,OoQ^,^,_^^ 47,173.56 
 
MUNICIPAL OWNERSHIP 
 
 235 
 
 City Gravel Pit— 
 
 This plant was started in 1882 and was placed in the 
 Quarries Department in 1912. Lot contains 40 acres. 
 
 Output: 
 
 191 1 — 51090 yds. at 65c $33,208.50 
 
 1912 — 65136 yds. at 60c 39,081.60 
 
 Day Labor: 
 
 The Pavements, Sewers and general improvements con- 
 structed in the Citj'-, including Water Works extensions, are 
 done very largely by day labor at a considerable reduction 
 in cost to what it was under the contract system. 
 
 Fire Service Water Works: 
 
 The City has installed a High Pressure Water System 
 for additional fire protection in the central business parts 
 of the Cit3^ The plant consists of four large and two small 
 Glenfield-Kennedy pumps driven by Crossley gas engines 
 and has a capacity of 9,000 gallons per minute at 300 lbs. 
 pressure. The cost of the system is assessed upon the prop- 
 erties within the benefited area, but the City at large pays 
 the cost of maintenance and operation. 
 
 No. of miles of mains 9 
 
 No. of hydrants 95 
 
 Gas Works: 
 
 The City has the authority to issue debentures to the 
 amount of $600,000 for the purpose of constructing gas 
 works. 
 
 Municipal Power: 
 
 Realizing the grea! advantages afforded to manufacturers, 
 power users and the householders generally by having avail- 
 able an abundant supply of electric energy for power and 
 lighting purposes, the City of Winnipeg in 1905 reached a 
 decision to undertake an hydro-electric development as a 
 municipal enterprise. After a careful examination of the 
 hydraulic resources of the Winnipeg River, the engineers of 
 the City reported in favor of the site at Point du Bois. the 
 estimated cost of the developm^^^^ t^xMg^ ^1)3,250,000, and in 
 June, 1906, the ratepp-- ^ expressed themselves in favor of 
 
236 SELECTED ARTICLES 
 
 the City expending this amount of money on municipal hy- 
 dro-electric works. The designs for the works were com- 
 menced in the fall of 1906 and tenders received and contracts 
 let for the general works in January, 1909, and for machinery 
 for equipment of the Generating Station in September, 1909. 
 The construction and equipment of the system, including 
 the Transmission Line, Terminal Station and a portion of 
 the distribution lines in the City, was completed on October 
 16, 191 1. LTpon completion of a thirty days test the plant 
 was turned over to the City for operation, and it speaks vol- 
 ume^ for the excellence of design, construction arnd equip- 
 ment of the works when the fact is known that from the 
 time the electric power was first turned on the plant has 
 given service without interruption of any kind. 
 
 » 
 
 Twentieth Century Magazine. 7:8-15. November, 1912. 
 
 ^Municipal Lighting. C. M. Sheehan and Albert Firmin. 
 
 The United States today is knit together by a labyrinth 
 of roads, avenues, streets, and alleys upon which the rich 
 and the humble, the just and the unjust, are free to traverse 
 on a common basis, without let or hindrance, so long as a 
 decent regard for the rights of other wayfarers is observed. 
 These thoroughfares, with practically no exceptions, were 
 cut and constructed and are now being maintained by the 
 people, through diverse political units or governments rang- 
 ing in form all the way from simple village boards of super- 
 visors to great municipalities like New York City. We have 
 become so accustomed to this state of affairs, and the results 
 have been so eminently satisfactory, that we never question 
 the wisdom which prompted or the force of public opinion 
 which has continued it. Though we may be desirous at 
 times of changing the particular government officials who 
 are empowered to exercise supervision over our thorough- 
 farp<;, and occasioually find it imperative to do so, we never 
 entertain any thougnt v.? -^rljcally changing the system or 
 substituting private for public cu^u. 1,, 
 
 ► ! I I 
 
MUNICIPAL OWNERSHIP 
 
 ^Z7 
 
 The care and maintenance of our streets and avenues is 
 a very large and very complex problem, but as we are ac- 
 customed to it, we are not awed; yet, strangely enough, 
 when the question arises as to whether or not governments 
 should themselves light public streets, or engage corpora- 
 tions to do so, there is, on the part of many, a timorous un- 
 certainty as to the wisdom of public ownership, and in some 
 cases a vigorous denunciation of the plan. This denuncia- 
 tion is based on the assumption that the government can- 
 not perform such work as satisfactorily as the corporations. 
 That is to say, we accept the greater problem and shy at the 
 lesser. In some cases, while this extreme view is not enter- 
 tained, the almost equally absurd view is advanced that, 
 though the government should be permitted to illuminate 
 the thoroughfares, it should be strictly confined to that 
 work alone, and restrained from connecting the wires or 
 pipes of such street system with the residences, stores, and 
 factories of its citizens which line them. Yet in many cases 
 those who fear such an extension of government ownership 
 are the users of water delivered by municipal agencies, or 
 the recipients of some other form of government activity 
 of a parallel character. It is to show that there is nothing 
 startling in the proposition of municipal ownership of light- 
 ing plants, and that such municipal plants are making head- 
 way even against tremendous and unfair antagonism, that 
 this article is written. At this time, municipal electric light- 
 ing plants only will be considered. 
 
 The commercial conditions of the past fifty years have 
 brought about a situation where men engaged in business 
 are impelled to win trade, not b}- the superiority of the 
 wares they offer or the modesty of their prices, but by pre- 
 venting would-be rivals from engaging in competition against 
 them. The effort is so to bring matters about that the 
 market, whatever it be, shall be monopolized and fenced in 
 for personal exploitation. The electric lighting of municipal- 
 ities and villages is no exception. Those who at the outset 
 of the development of electric lighting feared competition 
 from municipal ownership or entertained designs of exploita- 
 
238 SELECTED ARTICLES 
 
 tijn, quickly secured legislation to prevent cities and towns 
 from constructing, purchasing, or taking over plants for pub- 
 lic operation, except upon conditions which are intentionally 
 designed to be difficult to fulfil. Ordinarily, the village, 
 town, or city which desires to establish an electric-light 
 plant must first obtain the consent of the legislature. The 
 influence in our several legislatures of the interests that are 
 antagonistic to the extension of public ownership is a mat- 
 ter of such common knowledge that it is not necessary to 
 more than call it to mind here, when it will be seen what 
 difficulties are likely to be encountered in the effort of cit- 
 izens of a town or city to secure from the legislature enabling 
 acts. Then when the consent of the legislature is finally 
 obtained, the consent of the local authorities must be pro- 
 cured. After all of which it not infrequently happens that 
 the question must be submitted to popular vote, and ordi- 
 narily finally to win out it must secure at least three-fifths of 
 all votes cast on the proposition — in many cases, indeed, the 
 afiirmative vote must be equal to three-fifths of the vote cast 
 for the highest officer voted for at the same election, so 
 that every person who fails to vote on the proposition has 
 his vote counted against public ownership. And, after all 
 these difficulties have been overcome, the contract for con- 
 struction or the details of purchase must be approved by 
 certain of the local authorities. While all these obstacles 
 have to be overcome before a municipal plant can be in- 
 stalled, a private corporation can usually procure a franchise 
 to supply current by a mere majority vote of a quorum of 
 a legislature. Thus while a municipality is encountering 
 difficulties which seem created to embarass and harass it, 
 the corporation can secure from the legislature the franchise 
 it desires, and finds its path both straight and smooth. Yet 
 with all these obstacles in the way, municipal ownership of 
 electric-light plants has grown from one, in 1881, to I377) J" 
 1911. 
 
 It will be observed that the people are awakening to the 
 necessity of municipal operation, for while in 1882 the ratio 
 of public to private plants was but i to 8^^, in 1892 it was 
 
MUNICIPAL OWNERSHIP 239 
 
 I to 5. in 1902, I to sVo, and in 191 1 it reached i to 3^. If 
 a municipal plant is abandoned, however, or substituted by 
 a private plant, the press agents of the electric interests 
 throughout the country advertise the fact far and wide and 
 it goes forth that municipal ownership is a failure; and this 
 notwithstanding that on the whole it is gaining ground. 
 The Federal Census of 1907 shows that during the preceding 
 five years though only ^3 municipal plants changed to pri- 
 vate operations, 113 private plants changed to municipal 
 operation. 
 
 There is a feature of municipal ownership of lighting 
 plants in the United States to which attention has never 
 been adequately called, and which is of striking force as 
 indicative of the struggle that is going on, and of how the 
 movement towards municipalization is compelled to make 
 headway very largely under the most disadvantageous con- 
 ditions. In explanation of what this feature is, it should be 
 said that electricity, like most commodities, can be manu- 
 factured in large quantities relatively cheaper than in small, 
 and ordinarily the greatest profits can be realized in serv- 
 ing the largest communities. Small communities ofifer fewer 
 inducements than large for capital, considered dollar for 
 dollar; and hence, while the struggle of the interests has been 
 to prevent the introduction of municipal plants anywhere, 
 the opposition has been strongest in locations where profits 
 have seemed greatest. The burden of supplying the least 
 desirable locations has fallen on the municipalities, 3^et an 
 analysis of results shows they have been mainly successful. 
 
 This feature of confining municipal undertakings to the 
 risks which look unprofitable, and leaving the good things 
 in the commercial world to private concerns is not only true 
 of lighting plants but is exhibited in the case of certain 
 New York City ferries. These are pointed out as municipal 
 failures, whereas the ferries were actually private failures 
 before they were turned over to the city. The companies 
 which operated them could not do so profitably. Matters 
 went from bad to worse, and the communities which were 
 dependent upon them, and particularly Staten Island, saw 
 
240 SELECTED ARTICLES 
 
 ahead great land value and property depreciation, if not 
 absolute ruin, in the event of suspension of traffic, so that 
 the municipality in self-protection was obliged to take that 
 which no corporation or individual would continue. That 
 municipal ownership of ferries would prove a failure from 
 the standpoint of financial returns was a foregone conclu- 
 sion, but the conditions were and continue such that no form 
 of ownership can be anything but a failure on the same basis. 
 As long as there was a prospect of profit either from opera- 
 tion or stock juggling, the corporation held on; when this 
 ceased, it let go. 
 
 It is not to be understood from what has been said, how- 
 ever, that municipal ownership is absolutely confined to 
 small towns, for there are numerous exceptions, and some 
 of the greatest successes have been in large places; but a 
 study of the history of their creation shows that the struggle 
 has been the keenest and the greatest opposition has been 
 encountered where the prospects have indicated that the 
 trial would be most worth while. 
 
 In the case of private ownership in large towns and cities, 
 it is very common for the extension of wires to be confined 
 to the principal streets, as is the case in Brooklyn, N. Y. 
 Here a private company has been operating since 1884, yet 
 the streets upon which current can be obtained, even in the 
 thickly settled districts, are comparatively few, and the 
 company gives as an excuse that the cost of extension of its 
 wires is prohibitive; yet in scores of villages throughout the 
 country isolated plants are successfully operated under 
 municipal ownership though the population thereof is no 
 greater than that of a single square block in Brooklyn. 
 
 Investigation shows that in 173 places where municipal 
 ownership prevails, with a total population of 1,158,143, the 
 ratio of consumers to population is about one to eleven per- 
 sons, whereas in Brooklyn, under private ownership, and 
 with all the advantages of a compact population of about 
 1,700,000 in which to develop business, the ratio is only one 
 to every no persons. In 173 places enjoying municipal own- 
 ership, it has been found that the ratio of consumers to pop- 
 
MUNICIPAL OWNERSHIP 241 
 
 ulation is the equivalent of every second family. This is 
 important, for it shows, from the standpoint of service, that 
 people must be getting what they want or they would not be 
 seeking it so largely. 
 
 Naturally the question as to whether or not municipal 
 plants are furnishing current as cheaply as private plants is 
 very common. Let us again take the Brooklyn company as 
 a standard of privately owned plants, a high exemplar of 
 which it professes to be. Until recently its ordinary rate was 
 12 cents per kilowatt, but following a campaign by a lead- 
 ing civic association, in July, 1912, it reduced it to 11 cents, 
 with much advertising of its concession; yet out of 251 
 plants recently investigated, all operated municipally, it was 
 found that 201 charged less than 11 cents. 
 
 An analysis has been made of eighteen municipal plants 
 whose method of bookkeeping conforms in details of cost to 
 that of the Brooklyn company, the object being to compare 
 the cost of the various units which enter into the cost of 
 current. The results are shown in the accompanying table. 
 
 It is noticeable that the actual cost of generation and 
 distribution combined is practically the same in the munici- 
 pal and the private concerns. There is a wide difference, 
 though, between the "general expenses" and "fixed charges" 
 of the public and of the private company. It will be ob- 
 served that the Brooklyn Edison Co., the private company, 
 charges up under these headings two and a quarter cents 
 out of a total cost of four and seventy-three one hundreths 
 cents, whereas only one of the public plants equals this fig- 
 ure, and most of them are even below one cent. Further 
 inquiry shows that, under the head of fixed charges, the 
 inunicipalities in several instances are including sinking 
 funds. The reason this item is so heavy in the case of 
 private companies is that interest upon bonded indebtedness 
 must be met from this fund, and the swollen bonded in- 
 debtedness is the burden that tells. 
 
 The corporations are forever complaining that they are 
 oppressed by taxation and that it is unfair to compare them 
 with municipal plants for the reason that such are untaxed, 
 yet with our specimen private company we see that taxa- 
 
242 
 
 SELECTED ARTICLES 
 
 '>^ 
 
 W 
 
 o 
 
 o 
 
 
 _J 
 
 
 -J 
 
 
 o 
 
 
 h. 
 
 
 UJ 
 
 
 I 
 h 
 
 > 
 
 z 
 
 > 
 
 < 
 
 m 
 
 □. 
 
 
 2 
 
 > 
 
 o 
 
 h 
 
 o 
 
 o 
 
 z 
 
 cr 
 
 o 
 
 h 
 
 c/) 
 
 o 
 
 Q 
 
 LU 
 
 Ul 
 
 _J 
 
 
 UJ 
 
 z 
 
 o 
 
 > 
 
 z 
 
 -J 
 
 
 ^ 
 
 o 
 
 o 
 
 D 
 
 o 
 
 Q 
 
 CC 
 
 O 
 
 CQ 
 
 CC 
 
 
 n. 
 
 UJ 
 
 
 z 
 
 li. 
 
 h 
 
 o 
 
 
 
 Q 
 
 h 
 
 Z 
 
 o 
 
 < 
 
 o 
 
 w 
 
 
 h 
 
 LJ 
 
 z 
 
 > 
 
 < 
 
 h 
 
 _l 
 
 < 
 
 Q. 
 
 DC 
 
 _J 
 
 < 
 
 Q. 
 
 < 
 
 Q. 
 
 2 
 
 
 O 
 
 O 
 
 o 
 
 Z 
 
 o 
 
 D 
 
 7 
 
 2 
 
 
 
 i 
 
 
 o 
 
 
 I 
 
 
 w 
 
 
 UJ 
 
 
 -J 
 
 
 CQ 
 
 
 < 
 
 
 h 
 
 
 •H 'Ai "X -Jsd „^ 
 
 uinuiix-BiM • '-^ 
 
 • CO 
 
 
 W - 
 
 C\ 
 
 asu9clx3 
 
 XBa9U90 
 
 T-r> T^TT^Jrr^ • • • . 
 
 ^ 
 
 On 
 
 •uoiinqia;sia ocr^oo<^Oroc\CN 
 
 PUB ^! cr\"po q\Cr\0) cnOnCk 
 
 uoi:iBa9U30 ^'-'"-^i-^'-' -.i-h 
 
 n CI )-( oi d ^t ^ '* oj "^^ 
 uop'BX'BX 9 P o q q o o q o o 
 
 IT) 
 
 o 
 
 01 
 
 q 
 
 q >-; 
 CO fO 
 
 c o 
 
 oi CO o 
 
 CO O CO 
 
 00 o| 00 
 •-< oi oi 
 
 tx 00 t-< 
 
 CO CO Tf 
 
 q Tt- q 
 o 
 
 
 '^ o 
 
 
 o o 
 
 •saS.i'Biio c 
 
 30 
 
 o o <^ o 
 
 tN^ uo lO CO O ^ 
 
 o c c P ^ 
 
 u 
 
 sasiieux^ 01 ^o o o CO -- 01 <^ K^ 
 l^aauao ■'■■■■ ^ ■ • 
 
 HH CO 
 
 CO CO o 
 •"O O CO 
 
 
 OOu-)Ort-CNO rtin^J^i-OcvoOl cjO^'5_ 
 
 •uonnqiJ^sia >^ 00 ^ IT) in vq lo r^ r> vq co {^ t^ u-. r> ^ 
 
 oi 
 
 ^O O 01 cvn ^+0 co^*^^ cotN.'^iJ^'-i Si *^ 
 •uopBjauoo Lo ^H ^ ^^ij ^ cv, f^ (-^ ^^ 01 Tf J ^ H- 01 CO q^ 'T' 
 
 i-i M * i_; >-< * ■ M ^ ^^ _■ ' ^- 01 01 '"' "^ 
 
 ^ .• >H 
 
 t: 9 
 
 l-< 
 
 
 CD 
 
 C 
 
 o 
 
 o 
 
 m 
 
 (-■ 
 C 
 03 
 
 o - tir 
 
 r^:^^ 
 
 c 
 
 c 
 
 o 
 
 U 
 
 CJ 
 
 :::; ^ S 
 
 C3 
 
 03 
 
 . H ^- - 
 
 U -^ ^ '-^ "5 
 
 O o 
 bo fl 
 
 03 
 
 03 
 
 P3 
 
 O 
 
 o 
 
 
 "o 
 
 
 1^ 
 
 o 
 
 03 
 
 S-i 
 
 oT 
 'o 
 
 h—l 
 
 Q 
 
 3 
 
 o 
 
 
 03 
 
 >: ^ 
 
 c» 
 
 03 
 CO 
 
 c o . - o j: 
 
 5^ be U ^ o 
 
 ';-; 03 be o 
 
 d^ U « < ^ 
 
 t^ 01 
 
 t< " 
 
 CO lO 
 CO 01 
 
 oi 
 
 CO IN» 
 
 00 HH 
 
 iH ro 
 00 t^ 
 
 01 Tf 01 Tf 
 
 00 t-i c« 
 
 O CO o 
 
 ■ t« 
 
 a 
 
 CO CO <u 
 
 > 
 CO 
 
 
 o 
 
 03 
 
 c 
 bo 
 
 to 
 
 <u 
 bo 
 ;-> 
 
 ^ 00 
 
 r^ On 'TU 
 
 01 ^ ^ 
 
 O ^ 
 
 X 
 
 <u u:: 
 -i-j 
 o3 CD 
 
 o ^ 
 
 O 
 
 U 
 
 c o 
 .9 -^^ 
 
 a; 
 
 b£ 
 cd 
 t-i 
 
 > 
 < 
 
 o 
 
 en 
 
 03 
 
 <u 
 C 
 
 bo 
 
 c 
 o 
 
 s- 03 
 
 O 
 
 o 
 
 -a 
 
 c 
 
 •5 
 
 
 CJ 
 en 
 
 c 
 
 03 U= u 
 
MUNICIPAL OWNERSHIP 243 
 
 tion is but three-tenths of a cent per kilowatt, out of a 
 total cost of four and seventy-three one hundreths cents, 
 and this includes the special franchise tax. Investigation 
 brought out an interesting fact in respect to this company 
 in this particular. In the report of the Public Service for 
 1908, it was set forth that the tangible property on which the 
 "Kings County system" (Brooklyn system) is assessed for 
 taxes was but $1,581,240. to wdiich was added franchise value 
 of $10,550,000, or a total of $12,131,240 on which tax was 
 assessed, yet the reported capitalization was $20,805,993.92. 
 It is conceded that the value placed on the property for the 
 purpose of taxation was too low, and, it is fair to infer, was 
 adopted to escape taxation. But even allowing for this, it 
 is plainly apparent that the capitalization was out of all pro- 
 portion to the actual value of the plant and equipment. The 
 franchise value represents mainly capitalization of excess 
 profits. How much better it is for the communities to con- 
 struct their own plants and confine capitalization to the 
 actual cost than to permit private parties to pyramid capi- 
 talization in this way and then burden the consumers with 
 a weight of interest even to eternity. 
 
 In the case of private plants, whether business grows or 
 not, there is practically never an effort to diminish indebted- 
 ness. The men who dominate the affairs of corporations 
 are largeh^ those who derive their incomes from the interest 
 on the bonded indebtedness of their undertakings, and nat- 
 urally the effort is to perpetuate and not to terminate their 
 bonds. In the case of municipally owned plants there is 
 contrary effort. It is found, for instance, that the municipal 
 plants mentioned in the following table, forty-two in all. are 
 free of debt: 
 
 City Value 
 
 of Plant 
 
 Sanitary District of Chicago, 111 $4,036,599 
 
 Chicago, 111 2,788,909 
 
 Logansport. Ind 750.000 
 
 Jacksonville, Fla 515,703 
 
 Fort Wayne, Ind 300,000 
 
 Owensboro, Ky 211,000 
 
244 SELECTED ARTICLES 
 
 Coldwater, ]\Iich 170,000 
 
 Henderson, Ky 161,000 
 
 Austin, Minn 85,000 
 
 Bangor, Me 85,000 
 
 Auburne, Ind 75, 000 
 
 Peru, Ind 65,000 
 
 Galveston, Texas 65,000 
 
 Bay City, Mich 57,974 
 
 Whitehall, Mich 50,000 
 
 Aurora, 111 46,469 
 
 Clarkson, Neb 40,000 
 
 So. Brooklyn, Cleveland, Ohio 40,000 
 
 Paducah, Ky 36,000 
 
 Ada, Minn 30,000 
 
 St. Peter, Minn 30,000 
 
 Carmi, 111 ' 30,000 
 
 Appleton, Minn 25,000 
 
 Bayfield, Wis 20,346 
 
 Elkhorne, Wis 29,866 
 
 St. Joseph, Minn 20,000 
 
 Shelbina, Mo 20,000 
 
 Wolfboro, N. H 20,000 
 
 Solvay, N. Y 20,000 
 
 Arcadia, Wis 20,000 
 
 Columbus, Wis 20,000 
 
 Thornton, Ind 19,000 
 
 Little Rock, Ark 15,000 
 
 Son way, Ark 15,000 
 
 Fairfield, Iowa 15,000 
 
 Blair, Wis 15,000 
 
 Westfield, N. Y 12,000 
 
 St. Clairsville, Ohio 10,000 
 
 La Grange, Mo 7,5oo 
 
 Erie, Colo 4,000 
 
 Bath, 111 3,200 
 
 Benedict, Neb 3,ooo 
 
 $9,982,546 
 
MUNICIPAL OWNERSHIP 245 
 
 Of the 259 municipal plants with a total valuation of 
 $25,402,106, the bonded indebtedness amounted to but 
 $8,961,579. The municipalities ordinarily undertake to cre- 
 ate a sinking fund for liquidating the bonds as they fall due, 
 but how seldom it is that corporations do so. The sugges- 
 tion that the public service corporations should be com- 
 pelled to create a sinking fund for the liquidation of suc- 
 ceeding bond issues is of but recent origin, and as yet has 
 secured no considerable indorsement, though it is a matter 
 of exceeding great importance to the public. Yet so long 
 as our lax laws permit the continuation of the system now 
 prevailing, bonded debts will mount not only up to the full 
 value of the plants but to a point where it will exceed this 
 value and will discount future earnings. 
 
 It is true that the cost of all the various municipal plants 
 mentioned as free from debt has not Deen paid exclusively 
 from earnings, but in some cases from taxation, but the time 
 is coming when the public will recognize that it is better 
 to pay for whatever is required outright by taxation and 
 thereafter freely to enjoy it even unto eternity than to 
 acquire it by means of indebtedness and pay the bill at the 
 expiration of a long period of drain from interest charges, 
 which are more than likely to exceed in the aggregate the 
 original debt. In the case of municipal lighting plants, and 
 other undertakings of a kindred character, when there are 
 reasonable prospects of amortizing the initial cost by earn- 
 ings, there is justification for incurring indebtedness, but 
 sound finance dictates that municipalities should incur other 
 debts only in extreme and very exceptional cases. The evil 
 that ensues from a departure from this rule is shown in the 
 case of New York City, where last year the interest charges 
 on the outstanding debt were 27 per cent of the taxes raised. 
 
 To engage private corporations to do the work of public 
 agencies offers no escape from the evils of bonded indebted- 
 ness, as may be seen by reverting to what has already been 
 said in respect to such corporations being enamored of their 
 debts and ever reluctant to diminish them. The substitution 
 of the name "corporation" for the name "government" does 
 
246 SELECTED ARTICLES 
 
 not alleviate, for in the end the public must bear the burden. 
 Then also municipalities are able to borrow at less interest 
 than corporations, so that when bonded debt is incurred by 
 them the burden is not as great as when incurred by corpora- 
 tions. 
 
 The greatest deterrent to municipal ownership is the fear 
 of graft, yet the insidious pyramiding of bonded indebtedness 
 and the watering of stock by private corporations is greater 
 in magnitude than graft ever was. Mr. Roger W. Babson 
 has estimated that there is $30,000,000,000 of water in the 
 capitalization of the corporations of the United States. This 
 means that we are now paying interest on excess capitaliza- 
 tion to the amount of $160 per family, or one-half as much 
 as taxes to the national, state, county, and municipal gov- 
 ernment paid on a per capita basis by the citizens of New 
 York City, the highest taxed people in the world. The cor- 
 poration is conducted for the advantage of those controlling 
 it at any particular time, and it seldom happens that the 
 interests of those in control and the general public are re- 
 garded as identical, so that it is not surprising the municipal 
 plants, which are directly contrary in purpose, being con- 
 structed and operated for the public and not for private gain, 
 should compare therewith much more than favorably. 
 
 There can be no longer any doubt that municipal owner- 
 ship is here to stay. Everything points to the absorption 
 by the government of those undertakings which are essen- 
 tially monopolies. There will doubtless be scattered cases 
 where success will not be achieved, where the municipal 
 plants will lapse back into private hands, but with advancing 
 civilization and the rapid growth of our cities, electric light- 
 ing will become increasingly essential for our well-being, 
 and it will be brought more forcibly home to us than ever 
 that we cannot, without great jeopardy, permit interests with 
 ends inimical to the great welfare to control it. One-half 
 of our lives we are subjected by nature to darkness, which 
 can be relieved only by artificial means. There is but one 
 safe repository for a means so vital to our well-being, and 
 that is in the hands of the people themselves. 
 
MUNICIPAL OWNERSHIP 247 
 
 Twentieth Century Magazine. 7:27. November, 1912. 
 
 Public Ownership of Urban and Suburban Street Transpor- 
 tation. Henry Demarest Llo^'d. 
 
 Municipal ownership w^ould mean: 
 For the street car emplo^'^ees: 
 
 Better wages. 
 
 Shorter hours, 
 
 Othe" gains, and in so far as they are citizens. 
 
 Self-employment. They would continue wage-workers, 
 but wage-workers of the public of which they are a sovereign 
 part. 
 
 For other employees a daily exhibit of this difference be- 
 tween public and private employment. 
 For the public: 
 
 1. Lower fares. 
 
 2. Better service. 
 
 3. The latest improvements. 
 
 4. Inclusion of public health, decency, distribution of pop- 
 ulation as elements to be considered in the development of 
 the street-car lines. 
 
 5. Removal of the corrupting influence of the street car 
 millionaires in press, politics, pulpit, society, the clubs, the 
 Council, etc. 
 
 6. Cutting out a link, and a most important one, in the 
 chain of the private, profit-seeking monopolies of public utili- 
 ties, making the next step that much easier. 
 
 7. Educating the public in the public ownership and opera- 
 tion of the "means of production, distribution, and exchange," 
 and giving them confidence to proceed to other socializations 
 as light, land, houses, docks, manufacture of articles used by 
 the city, and from that to manufacture of articles used by 
 the citizens. 
 
 8. Enabling land values to be (i) modified as by exten- 
 sions into the country, by "one city, one fare'' rates: (2) so- 
 cialized as by municipal experiments, like those in London 
 and elsewhere in buying land, building houses — another form 
 
248 SELECTED ARTICLES 
 
 of the "ownership and operation of the means of production, 
 distribution, and exchange." 
 
 9. Bringing electric lighting and heating within practical 
 reach, since the power plants could also furnish light and 
 heat. 
 
 Here is a movement in which every step towards social- 
 ization is made easy for us. The industry presents in an ag- 
 gravated form every evil of which the socialists complain in 
 the moiern situation, exploitation, corruption, monopoly. 
 Every citizen is in touch with the evil, and by tens of thou- 
 sands they can be taught socialist doctrine and let to co- 
 operate in socialist work. The saving of fares would be the 
 smallest item in the lists of human benefits, but still a sav- 
 ing of $12 to $24 a year by every man, woman, and working 
 child who uses the cars regularly is something, is it not? 
 Our total federal tax is only $75 per capita. 
 
THIS BOOK IS DUE ON THE LAST DATE 
 STAMPED BELOW 
 
 AN INITIAL FINE OF 25 CENTS 
 
 WILL BE ASSESSED FOR FAILURE TO RETURN 
 THIS BOOK ON THE DATE DUE. THE PENALTY 
 WILL INCREASE TO 50 CENTS ON THE FOURTH 
 DAY AND TO $1.00 ON THE SEVENTH DAY 
 OVERDUE. t. 
 
 MAR 10 1934 
 
 a^ 
 
 X O i 
 
 m ''^'' '""^ 
 
 ■r-i 
 
 NOV g" "m 
 
 mi 9 1335 
 
 ^^^ 
 
 DEC 26 1944 
 
 C-Cf X-i 
 
 . «. fl r*N 
 
 LD 21-100m-7,'33 
 
 ../ 
 
<t-r'\ 
 
 s «i- r^^ 
 
 ■*. c 
 
 ■n 
 
 y 
 
 UNIVERSITY OF CAUFORNIA IvIBRARY 
 
 L