UC-NRLF 
 
 SB 31 131 
 
"<&** 
 
 REPORT 
 
 ON THE 
 
 CHICAGO DOCK PROBLEM 
 
 With Special Reference to 
 the Questions of Municipal 
 Ownership and Leasing Policy 
 
 PREPARED FOR 
 
 JOHN M. EWEN, Chicago Harbor Commissioner 
 
 BY 
 
 GEORGE C. SIKES 
 
 OF (HE 
 
 UNIVERSITY 
 
 OF 
 

CONTENTS. 
 
 PAGE. 
 
 Letter of Transmittal 4 
 
 Summary and Conclusions 5 
 
 Text of Report 
 
 I. As to Municipal Ownership of Dock Facilities . 10 
 
 II. Leasing Policy 50 
 
 III. The Importance to Chicago of the Passenger, 
 Fruit, Vegetable and Package Freight Busi- 
 ness 62 
 
 Appendix A Extract from Report of the Street Rail- 
 way Commission to the City Council of Chicago, 
 December, 1900, entitled, "Public Control and 
 Duration of Grants" 68 
 
 Appendix B Extracts from the Report of the Metro- 
 politan Improvements Commission, created by act 
 of the Massachusetts Legislature to Study the 
 Boston Situation ,..,..,. , . . , 76 
 
 251781; 
 
LETTER OF TRANSMITTAL, 
 
 MR. JOHN M. EWEN, 
 
 Chicago Harbor Commissioner. 
 
 Dear Sir : 
 
 Pursuant to your directions I have prepared and submit here- 
 with a report dealing with certain phases of the Chicago dock 
 problem, especially municipal ownership and leasing policy, to 
 which you suggested that I should give special attention. 
 
 In preparing the report I have utilized such printed material 
 as was available and have visited in person many of the ports 
 mentioned. For facts relating to the European situation I have 
 drawn chiefly upon the information procured for the Chicago 
 Harbor Commission by Professor Goode. 
 
 Respectfully submitted, 
 
 GEORGE C. SIKES. 
 Chicago, October, 1909. 
 
SUMMARY AND CONCLUSIONS. 
 
 In view of the popular controversy that has raged in Chicago 
 over some phases of the municipal ownership question, it is well 
 to draw certain distinctions. Both public sentiment and expert 
 opinion are divided as to the wisdom of public ownership and 
 operaton of such utilities as street railways, lighting plants and 
 telephone systems. With water works systems, however, to take 
 another example, the case is quite different. It is generally con- 
 ceded that plants for furnishing city water should be publicly 
 owned and the tendency is in the direction of the municipaliza- 
 tion of this utility. 
 
 II. 
 
 With respect to public ownership, docks properly belong in 
 the same category as water works and not in the class of utili- 
 ties like street railway, lighting and telephone plants that are 
 the subject of controversy in this regard. Experience, the trend 
 of events, and the best official and expert opinion on the subject 
 substantially all lead to the same conclusion that the wisest 
 ultimate policy with regard to what are commonly known as 
 commercial dock facilities, such as it is intended to provide 
 north of the mouth of the Chicago river, is public ownership. 
 Whether the docks shall be constructed and owned by the city 
 from the outset, or whether a private corporation shall be used 
 as the agency for providing them in first instance, under condi- 
 tions that shall admit of their later acquisition by the municipal- 
 ity, is a question of business judgment to be decided according 
 to the concrete situation in any particular case. 
 
m. 
 
 The principal ports of Europe are either publicly owned or 
 are managed by harbor trusts on lines that bear much more sim- 
 ilarity to public than to private ownership. New York has muni- 
 cipal ownership of docks. The ports of New Orleans and San 
 Francisco have public ownership and management by state com- 
 missions. Montreal, the chief port of Canada, has public own- 
 ership and management by a Dominion commission. Boston and 
 Philadelphia have chiefly railroad and private ownership. Bal- 
 timore, with railroad and private ownership, is inaugurating a 
 program of municipal ownership. Galveston presents the most 
 creditable example of development under private ownership to 
 be found in this country, largely because the development, while 
 private, is on the basis of unity. Los Angeles has extended its 
 city limits to the ocean and is planning to make extensive dock 
 developments on the basis of municipal ownership. Oakland, 
 also, has plans for extensive developments on the basis of munic- 
 ipal ownership. Seattle and Tacoma in Washington and Port- 
 land in Oregon have mixed railroad and private ownership. The 
 principal owner of water front property in Vancouver, British 
 Columbia, adapted to shipping purposes, is the Canadian Pacific 
 Railroad. The lake ports usually have a combination of railroad 
 and private ownership. 
 
 IV. 
 
 Unity and development according to a comprehensive plan, 
 offering adequate facilities for all applicants on fair terms, 
 are the chief essentials to a well-ordered port. This comprehen- 
 sive plan should take account of rail as well as water terminals. 
 No one with faith in the future water commerce of Chicago can 
 believe that the docks which it is proposed to provide north of 
 the mouth of the Chicago river will prove adequate for future 
 needs. It will be necessary some time to provide additional fa- 
 cilities in some other part of the city. Where, it is difficult to 
 say at this time. The problem calls for further study, separately 
 and in connection with the railway terminal problem and the 
 proposed Lakes-to-the-Gulf waterway. It would seem that the 
 
city should make provision for a thorough-going study by ex- 
 perts of Chicago's railroad terminal problem. It would seem 
 also that the General Assembly of Illinois in connection with 
 proposed legislation for the spending of $20,000,000 to promote 
 waterway development, should order an inquiry as to what the 
 connecting channel into Lake Michigan is to be. The present 
 Chicago river cannot be considered satisfactory for that pur- 
 pose. Without proper dock terminals Avith railroad connections 
 and transshipping facilities, open on fair terms to competitive 
 commerce, the Lakes-to-the-Gulf Deep Waterway would fail to 
 accomplish much that is expected of it. 
 
 V. 
 
 There is little in the experience of other ports to guide Chi- 
 cago with reference to the proper terms to be incorporated into 
 a franchise grant, in case it should be decided to promote dock 
 development in first instance on the basis of private ownership. 
 More light may be gained on this subject by an examination of 
 Chicago's own experience with other public utilities, especially 
 the street railways, than is to be secured from a study of ports 
 elsewhere. The main features of Chicago's franchise policy as 
 worked out in the traction settlement ordinances are: (1) The 
 reservation to the city of the right to terminate the grant at any 
 time for purchase by the city or by a licensee corporation; (2) 
 the effort to eliminate speculative profits: (3) full publicity of the 
 affairs of the grantee corporation ; (4) controlling participation 
 by the city in the planning and execution of the work of recon- 
 struction. Of these four features the first named is the most 
 vital, although all are important and would seem to be applicable 
 to the dock situation. The problem of proper dock develop- 
 ments in this community presents many difficulties, complexities 
 and uncertainties, and is closely related to other unsolved prob- 
 lems, especially that of proper rearrangement of railroad term- 
 inals. An era of reconstruction and of tremendous improvement 
 is believed to be directly ahead for Chicago. Nothing should be 
 done that cannot be made to fit into whatever larger plan may 
 be worked out. No rights should be created that will stand as a 
 
bar to later unity. If the docks under discussion are to be built 
 and owned by a private corporation, it should be only on condi- 
 tion that the owners stand ready to sell at any time to the city 
 or to another licensee corporation, thus making it possible to 
 correlate the docks with other related undertakings, whenever 
 plans for development on a harmonious scale may be worked out. 
 
 VI. 
 
 The various arrangements under which boats are permitted 
 to use dock facilities may be divided into three main classifica- 
 tions : First, there is the leasing system, as practiced in New 
 York City, under which boat lines make definite leases of dock 
 space for fixed periods and during the life of the lease have the 
 exclusive control of the particular dock space specified. Then 
 there is the New Orleans system under which the charges are 
 based on the tonnage capacity of the vessel, without regard to 
 the quantity of goods moved over the wharf. New Orleans 
 makes no charge whatever against the goods, but collects its 
 entire revenue from the ship owner. Galveston and Montreal 
 furnish examples of the third system, under which no charge is 
 levied against the vessel, but the entire revenues are raised by a 
 schedule of dues on the commodities moved over the wharf. 
 Some ports have a combination of two or more of these systems. 
 In San Francisco, for example, there is a charge both on vessel 
 and goods. In addition to the three types of charges above men- 
 tioned, there is usually a special charge for the use of sheds, 
 either in the form of sheddage dues or of fixed rental for the 
 use of shed facilities. The storage charges on goods left on the 
 pier longer than specified periods of time is in its nature akin 
 to the storage charge imposed by warehouse concerns. Chicago 
 probably would adopt the pier leasing system, as distinguished 
 from the plan for dockage or wharfage dues, as that system is 
 the simplest and is the one with which the shipping interests of 
 the Great Lakes are most familiar. It should be the policy, how- 
 ever, to have at all times sufficient unleased pier space at which 
 occasional boats may load and unload. For the use of such 
 piers it would be most convenient, perhaps, to provide a sched- 
 
ule of wharfage dues, after the manner of Galveston and Mon- 
 treal, imposing a charge of so much a ton on goods moved over 
 the pier. For passenger boats not having regular leased pier 
 space, it would be necessary to devise a system of charges^based 
 probably on the size of the boat. It is of the utmost importance 
 that the principle be adopted that all pier leases or assignments 
 of dock space be subject to revocation on short notice. Possibly 
 at the outset in Chicago it might be expedient to compromise and 
 provide that leases should have ten years of definite duration 
 and after that be subject to revocation at will. Whatever leas- 
 ing policy the city may deem wise for itself it would naturally 
 expect a corporation developing docks under a franchise ar- 
 rangement to follow. If rights of shippers and vesselmen are to 
 be safeguarded under a system of private ownership of docks, 
 provision must be made for continuing public control of dock 
 management, including supervision of all leasing arrangements. 
 
 VII. 
 
 The importance to Chicago of the passenger, package freight 
 and fruit and vegetable business has been underestimated here- 
 tofore. The welfare of the city requires that better provision 
 be made for the accommodation of such business. 
 
I. 
 
 AS TO MUNICIPAL OWNERSHIP OF DOCK 
 FACILITIES. 
 
 In view of the popular controversy that has raged in Chi- 
 cago over some phases of the municipal ownership question, it 
 is well to draw certain distinctions. 
 
 Both public sentiment and expert opinion are divided as to 
 the wisdom of public ownership and operation of such utilities 
 as street railways, lighting plants and telephone systems. With 
 water-works systems, however, to take another example, the case 
 is quite different. 
 
 It is generally conceded that plants for furnishing city water 
 should be publicly owned and the tendency is in the direction 
 of the municipalization of this utility. One reason for the public 
 ownership of water plants is that the water supply bears an in- 
 timate relation to the health of a community. Another is that 
 water plants call for large capital outlay, but require a very 
 small operating force as compared with such utilities as street 
 railways and lighting and telephone plants. The city can effect 
 economies by borrowing money at lower rates of interest than 
 can a private corporation, while the management of a water 
 system does not present serious complexities or the patronage 
 dangers inherent in the employment of a large operating force. 
 Of the sixteen water-works plants existing in the United States 
 in 1800, but one was municipally owned. In 1906, nearly 60 per 
 cent, of the water-works plants were municipal property. During 
 the past century 205 plants were changed from private to mun- 
 icipal ownership, while only twenty changed from public to 
 private. Of the thirteen largest cities in the United States, all 
 but one San Francisco own their water-works and San Fran- 
 
 11 
 
cisco is clamoring for a change. Of the thirty-eight cities with 
 a population of 100,000 or over in 1900, all but eight own their 
 water plants. 
 
 With respect to public ownership, docks properly belong in 
 the same category as water-works and not in the class of utili- 
 ties like street railway, lighting and telephone plants that are 
 the subject of controversy in this regard. Docks, to be sure, 
 do not bear the relation to public health that the water system 
 does, but docks do affect in a peculiarly vital manner the com- 
 mercial life of the community. They involve ultimately, if not 
 immediately, large capital outlay, with an operating force 
 smaller even than is required for the management of a water 
 plant. 
 
 Experience, the trend of events, and the best official and ex- 
 pert opinion on the subject substantially all lead to the same 
 conclusion that the wisest ultimate policy with reference to 
 what are known as commercial dock facilities, such as it is in- 
 tended to provide north of the mouth of the Chicago river, is 
 public ownership. "Whether the docks shall be constructed and 
 owned by the city from the outset, or whether a private cor- 
 poration shall be used as the agency for providing them in first 
 instance, under conditions that shall admit of their later acqui- 
 sition by the municipality, is a question of business judgment 
 to be decided according to the concrete situation presented in 
 any particular case. 
 
 Types of Ownership. 
 
 According to types of ownership, docks may be divided into 
 five main classes, as follows : 
 
 1. Public ownership, including both state and city owner- 
 ship. 
 
 2. The harbor trust. 
 
 3. Railroad ownership. 
 
 4. Ownership by private corporations or individuals not en- 
 gaged in the transportation business, either rail or water, which 
 permit shipping companies to use the facilities either under a 
 leasing arrangement or on the payment of wharfage. 
 
 12 
 
5. Ownership by the boat line which maintains and operates 
 the dock facilities primarily for its own use. 
 
 The foregoing classification relates to what are characterized 
 as commercial docks. I have not undertaken to deal in-this re- 
 port with industrial harbor facilities, that is, with manufactur- 
 ing locations on navigable waters especially equipped for bring- 
 ing in raw materials of manufacture and taking out finished 
 products by boat. 
 
 The principal ports of Europe are either publicly owned or 
 are managed by harbor trusts on lines that bear much more 
 similarity to public than to private ownership. The most con- 
 spicuous exception to the prevailing rule in Europe has been 
 London, but even the management of that port has recently 
 been turned over to a harbor trust created by special act of 
 Parliament. Private management of dock facilities in London 
 was found to be productive of high charges and in other ways 
 inconsistent with the most progressive development of the 
 world's metropolis. After a most exhaustive inquiry by a royal 
 commission the change of policy was recommended and Parlia- 
 ment authorized a harbor trust to take over, improve and man- 
 age the dock facilities of London, the price of the properties 
 acquired being about $200,000,000. Professor Goode, in his re- 
 port to the Chicago Harbor Commission (page 105), concludes 
 his account of the transfer of the London dock facilities from 
 private ownership to the harbor trust with this comment : ' 
 
 "It is most significant for us in Chicago that the best brains in Britain, 
 after years of exhaustive study, have adopted the policy of having one 
 powerful independent monopoly in charge of the business of the port. Pri- 
 vate interests disappear, and the affairs of the port are to be managed as 
 one estate in the interest of all the people doing business in the port; and 
 with the intention not of paying the largest dividend possible, but of giv- 
 ing the best possible service, and paying an interest of only about 3 per 
 cent, on the actual capital investment." 
 
 The favorite type of port management in Great Britain is 
 that of the harbor trust; in continental Europe direct public 
 ownership is usual. Liverpool, Glasgow and the Tyne ports, in 
 addition to London, have the harbor trust. The Manchester 
 canal project was undertaken by a private corporation actuated 
 
 13 
 
by much the same public spirit as a harbor trust. In return for 
 municipal aid in the form of extensive loans, the city was given 
 a majority of the membership of the board of directors, thus 
 making the control dominantly, though indirectly, municipal 
 When the debt is repaid the city's representation on the direc- 
 torate will be reduced. Bristol is a port under municipal man- 
 agement. In Southampton the docks are owned and operated 
 by the London and Southwestern railway. Cardiff offers an 
 instance of private ownership. The Marquis of Bute, owner 
 of extensive coal lands back of Cardiff, found it necessary to 
 develop a harbor as a means of providing facilities for shipping 
 his coal. The port of Havre in France is subject to both na- 
 tional and municipal control. The divided authority, although 
 all public, is the cause of confusion and delay and interferes 
 much with efficiency of management. The Belgian port of Ant- 
 werp is a municipal monopoly, controlled directly by the city 
 council. Rotterdam, Holland's great port, is also under munic- 
 ipal ownership. Hamburg offers a case of state ownership, but 
 the state of Hamburg comprehends little beside the city, so that 
 it is in practical effect municipal ownership. 
 
 Mixed Ownership in Marseilles. 
 
 Marseilles, France, is a port with mixed ownership public 
 and private. The beginning of Marseilles as a large seaport 
 dates- from 1856, when a company was given a concession for 
 the development of facilities on the basis of private ownership. 
 A United States consular report of 1895, published in the report 
 on "Docks and Terminal Facilities " by the Massachusetts Com- 
 mission in 1897, gives the following description of the situation 
 in Marseilles at that time : 
 
 "In 1872, when the business of this port was practically in the hands 
 and under the control of the private company of the docks and entrepots, 
 the commerce had reached such proportions that the docks and wharves 
 were altogether insufficient for the requirements of trade, and reclamations 
 for delay and damage became numerous and frequent, and were generally 
 unheeded. The private company, intrenched in its monopoly, continued to 
 impose its full tariffs, and refused any enlargement of its facilities. To re- 
 lieve this congested and paralyzing condition, new docks were authorized 
 by national legislation in 1874, were begun in 1875 and completed in part 
 
 14 
 
in 1881. Public sentiment demanded in strong and vigorous tones the con- 
 struction of new docks, and that they should be owned and controlled by the 
 public authorities as a security and protection for all time against the 
 monopoly and exactions of private companies. Free labor and free~quays 
 was the battlecry of the agitation. Litigation arose; the private com- 
 pany of the docks and entrepots claimed an exclusive concession from the 
 State. The courts decided against the contention of the private company, 
 and the new national docks were undertaken, completed and are now con- 
 trolled by the Marseilles Chamber of Commerce. The competition be- 
 tween the public and private companies has been most beneficial. It has 
 stimulated improvements and multiplied facilities, while the port charges 
 have decreased more than eight per cent, in five years." 
 
 The report by President Stephens and Chief Engineer Cowie 
 of the Montreal Harbor Commissioners, made in 1908, after a 
 tour of inspection of European ports, found the divided man- 
 agement in Marseilles a barrier to progress. I take the follow- 
 ing from their " General Impressions ' ? of the port of Marseilles: 
 
 "DIFFERENCES OF OPINION. Lack of harmony between the differ- 
 ent port interests was in evidence, and general dissatisfaction appeared to 
 exist as to the progress of the Port. 
 
 "AUTHORITIES. The disadvantages were apparent of having three 
 authorities and at least two administrative systems in the Port, viz.: 
 
 "The Government. 
 
 ' i The Chambre de Commerce. 
 
 "The Cie. des Docks et Entrepots. 
 
 ' ' The visible results of some features of policy with regard to harbour 
 development and administration, may be seen by the transfer of business 
 which formerly was done at Maseille to Genoa, showing that even with 
 Government support and a splendid natural situation, a port may be dis- 
 tanced by foreign competitors." 
 
 New York's Municipal Dock System. 
 
 New York, New Orleans and San Francisco, in this country, 
 have publicly owned docks, as has also Montreal, the chief port 
 of Canada. 
 
 New York's municipal dock system dates from 1870, when 
 the law creating the department of docks of the city was passed 
 by the state legislature. By its early charters New York city 
 had been granted the title to most of the land under water bor- 
 dering upon Manhattan island. Gradually, through transfer of 
 
 15 
 
rights to private parties, the city lost control of the greater part 
 of its water front. The wharves in the main were privately 
 owned. There was no orderly development. Facilities were 
 poor and charges high. In the decade prior to 1870, especially, 
 complaint against the inadequacy of facilities was voiced in offi- 
 cial reports and in the press. A private corporation sought the 
 right to take over, under a fifty year lease, what city piers were 
 still left and to acquire and improve others. An organization 
 known as the Citizens' Association supported a bill for the crea- 
 tion of a harbor trust to take charge of the docks of New York 
 and Brooklyn. Neither of these propositions was received with 
 favor. Mayor Hoffman, in a message to the council in 1868, 
 expressed the opinion that the city wharves and piers had never 
 been properly valued. He thought them worth $10,000,000 at 
 that time. He favored putting the docks in charge of a com- 
 mission composed of three members appointed by the mayor and 
 of the sinking fund commissioners. The law enacted two years 
 later embodied a modification of this suggestion. Tweed, who 
 was then in the height of his power, aided the passage of the 
 law and undoubtedly intended to utilize it for purposes of 
 plunder. The exposure came too soon, however, to permit 
 Tweed to profit from manipulation of the dock department. Ac- 
 cording to the provisions of the law, all the expenditures of the 
 dock department, current as well as capital, were to be met 
 out of bond issues which the dock commissioners were to issue, 
 and spend the proceeds thereof, without the -approval or super- 
 vision of the legislative branch of the city government. Even 
 to this day the policy of meeting all expenditures out of bond 
 issues is continued, the receipts in turn all being turned into the 
 sinking fund. The receipts of the dock department since its 
 creation have, as a matter of fact, exceeded its expenditures. 
 
 The dock department is operating municipal ferries at 
 a loss and using the proceeds of bond issues to pay 
 the deficit. A loss on the municipal ferries was expected, 
 but it is a very difficult matter for the ordinary citizen to learn 
 from the published accounts what the loss is. The method of 
 financing the dock department is unsound and its system of ac- 
 counts and publicity is faulty. The feature of dock department 
 
 16 
 
management calling for the most serious criticism, that of leas- 
 ing policy, is considered in the second division of this report. 
 The taking over of the operation of the ferries has added diffi- 
 culties and causes of criticism that would not apply to 4he man- 
 agement of the docks as distinguished from the ferries. The 
 management of the dock department has been criticized from 
 time to come, in official reports and otherwise. Yet nowhere 
 have I seen it seriously suggested that the policy of public 
 ownership of docks in New York was a mistake. On the con- 
 trary, the system of public docks is commonly assigned as one 
 reason for the remarkable commercial development of New York 
 City. With political conditions as they have been in New York 
 for the past forty years, perfection in the dock department was 
 not to be looked for. On the whole, the management of the 
 dock department seems to have been considerably better than 
 might have been expected under the circumstances. On the 
 physical side the development has been especially creditable. 
 Immediately after the organization of the department, an or- 
 derly plan of development was formulated and in the main has 
 been adhered to. Water front rights have been acquired until 
 now the city owns about three-fourths of the water front of 
 Manhattan island. The piers and the sheds, especially the newer 
 ones, are both substantial and elegant in construction. The use 
 of car floats in the harbor of New York is very extensive. The 
 dockage in Brooklyn and on the Jersey shore is mostly under 
 private or railroad ownership. The privately-owned docks of 
 the Hamburg-American and North German Lloyd lines are in 
 Hoboken, on the Jersey side of the river. The ability of these 
 powerful companies to provide themselves with good dock facili- 
 ties does not give them the advantage over weaker companies 
 in the port of New York that they might possess were it not 
 for the dockage accommodations furnished by the city. Since 
 the merging of Brooklyn into Greater New York there has been 
 a movement to bring some of the Brooklyn shore under city 
 ownership. 
 
 A most interesting private undertaking is that of the Bush 
 Terminal Company in South Brooklyn. This company owns 
 considerable water frontage, projecting from which it has built 
 
 17 
 
several extensive piers. In part these piers are utilized by 
 boat lines, but industrial features have been made prominent. 
 Back of the piers are warehouses used for general storage pur- 
 poses. There are also several buildings designed especially for 
 factory purposes. These buidlings are several stories high. Floors 
 or parts of floors are leased to manufacturing concerns. The 
 Bush Terminal Company operates a terminal railroad with 
 tracks connecting the piers, warehouses, and manufacturing 
 buildings. Raw materials or other supplies for the tenants of 
 the manufacturing buildings are landed by boats or car floats 
 at the Bush docks. The Bush Terminal Company makes de- 
 liveries from its receiving docks directly to the floor of the 
 manufacturer by means of its terminal railroad and the elevator 
 service in the building. The finished products of the manufac- 
 turing plants are sent out in the same way. 
 
 I call attention to this matter as something that may be 
 deserving of study when the time comes for developing further 
 industrial harbor facilities in the Calumet region, along the 
 banks of the Sanitary District canal and on the branches of the 
 Chicago river. 
 
 New Orleans Under a State Commission. 
 
 In New Orleans the larger part of the commercial water front 
 of the port is publicly owned and is under the management of a 
 board of commissioners appointed by the governor of the state. 
 The ownership has long been in the city of New Orleans. Fol- 
 lowing some dissatisfaction with city management, a lease of a 
 large portion of the water frontage was made to a private cor- 
 poration in 1891 for a ten-year period. According to the terms 
 of the lease the lessees were authorized to collect and retain for 
 themselves all the charges allowed to be made for the use of 
 the property. This arrangement was productive of still greater 
 dissatisfaction and had not been in operation long before an at- 
 tempt was made to get away from it. The corporation receiving 
 the lease spent little in improvements and took out very large 
 profits. In 1896 a law was passed by the general assembly of 
 Louisiana creating a board of commissioners of the port of New 
 Orleans, the members of which are appointed by the governor. 
 
 18 
 
This commission was given power to regulate the commerce and 
 traffic of the harbor, to administer the public wharves, to con- 
 struct new wharves where necessary, and was authorized Jto de- 
 velop the facilities of the port on progressive lines. The board 
 was not able to get control of the public wharves until the ten- 
 year lease made in 1891 had expired. Since the board actually 
 got control, in 1901, extensive improvements have been made. 
 The management of the port appears to have been progressive 
 and capable. Charges have been lowered and there appears to 
 be general satisfaction with the present situation on the part of 
 merchants and vesselmen. The city of New Orleans has brought 
 about the construction of a switching railroad back of the 
 wharves. The railroad is operated by a city commission which 
 works in complete harmony with the port commissioners. 
 
 The Illinois Central Railroad has an extensive system of dock 
 facilities some little distance north of the center of the city. 
 While these facilities are excellent for the purpose of the Illi- 
 nois Central Railroad, they would not satisfy the needs of the 
 port in general, largely for the reason that they are controlled 
 by a railroad which is interested only in developing its own 
 rail business. 
 
 The Southern Pacific interests control considerable water 
 frontage across the river from New Orleans, but the tendency 
 of these interests within very recent years has been to make 
 use to a considerable extent of the public docks on the New Or- 
 leans side of the river. This is in marked contrast to the situa- 
 tion in Galveston, where the Southern Pacific has already con- 
 structed its own docks, rather than be dependent upon the facili- 
 ties of the Galveston Wharf Company. 
 
 The Harbor of San Francisco. 
 
 The harbor of San Francisco, like that of New Orleans, is 
 managed by a state commission. The policy of state ownership 
 was adopted in 1863. Practically all of the water front avail- 
 able for commercial uses is controlled by the commission. Al- 
 though the harbor management has been subjected to some criti- 
 cism at times, there has been no suggestion of ab^idoning public 
 
 tt 
 
ownership. The present board of harbor commissioners is mak- 
 ing extensive improvements. Some of the IICAV piers now under 
 construction are the best to be found in the country outside of 
 New York City. In one way, the commission has lived from 
 hand to mouth; that is, it has paid for its improvements chiefly 
 out of revenues. This is one of the criticisms made against the 
 port management. Business men say that dock improvements 
 should be paid for out of bond issues and carried out on an 
 extensive scale. This policy is now being adopted. Recent bond 
 issues have made possible the improvements now in progress 
 and it is the expectation to put out other bond issues in the 
 near future as a means of aiding further development. 
 
 The fact that the management is in the hands of the state 
 rather than the municipality is a cause of some embarrassment 
 in this respect. As the bonds that may be issued by the port 
 of San Francisco are state bonds, authorization for them must 
 be secured by direct act of the legislature and approved by vote 
 of the people of the state at large. It is the theory, of course, 
 that the revenues of the port will be ample to meet both prin- 
 cipal and interest payments, as the port heretofore has been 
 self-sustaining, but the credit of the state is behind the bonds. 
 Los Angeles and Oakland are planning extensive dock improve- 
 ments through the agency of the municipal government, Cali- 
 fornia is a large state with diverse interests and many jealousies. 
 San Francisco is likely to be subject to embarrassment, there- 
 fore, in requesting the state to issue bonds for its port develop- 
 ment. In this respect it is apparent that San Francisco might 
 be better off with municipal management of its docks in place 
 of the present state ownership. 
 
 Many of the piers in the harbor of San Francisco lack rail- 
 road switch track connections and the port management has 
 been criticised on that account. The Harbor Commissioners 
 within recent years, however, hav6 constructed and now operate 
 a public belt railroad. The newer docks are being provided with 
 switch track facilities and it is the expectation that the de- 
 ficiency of the older docks in this respect will be remedied. The 
 political strength of the teaming interests owners and employes 
 
 30 
 
combined evidently has been a factor heretofore in preventing 
 the establishment of railroad switch connections with piers. 
 
 Oakland, across the bay from San Francisco, is planning ex- 
 tensive harbor developments. Recent litigation has resulted in 
 giving the city title to water front areas that had been occu- 
 pied by private companies. The charter of Oakland has been 
 amended so as to give the city power "to provide for the con- 
 struction, maintenance and use of and on the water front of the 
 city of Oakland, wharves, docks, slips, warehouses, railroads and 
 all other necessary or desirable improvements; to grant fran- 
 chises as now or hereafter provided by law and also for the con- 
 struction and use of wharves, docks, slips, warehouses, railroads 
 and railroad terminals on the water front." It is specifically 
 stipulated that grants to railroads of the privilege to reach the 
 water front shall be without discrimination. It is the announced 
 purpose of the city authorities to undertake extensive develop- 
 ments on the basis of municipal ownership. 
 
 Montreal's Port a Public Monopoly. 
 
 The management of the port of Montreal until recently has 
 partaken largely of the character of the English harbor trust. 
 Up to January 1, 1907, the governing body of the port consisted 
 of commissioners appointed by the Dominion government, by 
 the city of Montreal and by various commercial bodies. By the 
 law that became operative January 1, 1907, the board consists of 
 three members, all appointed by the Dominion government, thus 
 making the case one of federal ownership. There was criticism 
 that the larger body, composed of members owing their appoint- 
 ment to divers sources, did not work harmoniously. 
 
 The Harbor Commissioners control the entire water front of 
 the city and manage it on the basis of a public monopoly. 
 Within the last few years very extensive improvements have 
 been made and more are planned for the near future. The Har- 
 bor Commissioners own and operate a belt railroad, the tracks 
 of which are located on the property they control so that switch 
 engines may be operated at any time of the day or night. In 
 some places, notably Boston, Philadelphia and Baltimore, the 
 
 21 
 
switching of cars, in parts of the harbor at least, is prohibited 
 except at night. The facilities for the interchange of com- 
 modities between the railroad and the boat line are especially 
 good in Montreal. The Harbor Commissioners own grain ele- 
 vators which recently have been equipped with conveyor sys- 
 tems that make it possible for the boat to take on grain at the 
 berth to which it goes to unload its cargo. The Harbor Com- 
 missioners own the portions of the water front devoted to in- 
 dustrial uses, as well as those on which commercial docks are 
 maintained. For industrial purposes the commission makes 
 leases to plants, running for varying periods, but usually for 
 not more than forty years. 
 
 The port of Montreal is closed by ice nearly half of each 
 year and is subject to other disadvantages. The improvements 
 are not as expensive as in cities having a larger volume of traffic. 
 But in adaptation to its needs, the dock system of Montreal is 
 one of the best on the continent. It is so, largely because the 
 development is on a basis of unity, the harbor commissioners 
 being the sole owners of dock facilities in the port. The presi- 
 dent of the board, Mr. George W. Stephens, and the chief engi- 
 neer, Mr. Frederick "W. Cowie, recently made a report, based on 
 a tour of personal inspection, on "British and Continental Ports 
 with a View to the Development of the Port of Montreal and 
 Canadian Transportation." In that report they give the follow- 
 ing as one of the features of success of any port : 
 
 "(b) Ownership and Control of the Entire Harbor Area. No com- 
 plete development can take place without unity of purpose and concentra- 
 tion of authority. The value of complete. ownership and the non-alienation 
 of any territory or rights are inestimable. The existence of rights, fran- 
 chises or privileges in the hands of individuals may hamper business and 
 endanger or discourage further extension. " 
 
 The following are some of the "General Impressions" of Mr. 
 Stephens and Mr. Cowie, as set forth in their report : 
 
 "1. The ports that are doing the biggest business, and doing it most 
 efficiently, are the ports that have kept their facilities ahead of actual re- 
 quirements. 
 
 "2. The ports that ha,ve remained stationary or lost in. prestige have 
 been those that neglected to provide facilities before business was forced 
 
to seek elsewhere the same facilities provided by rival terminals. Business 
 follows the facilities. 
 
 ' ' 3. Unity of authority, concentration of business, depthr of water 
 areas, and facilities for despatch of business are the prominent character- 
 istics of successful port administration. 
 
 "4. The necessity of providing large and convenient storage areas 
 where cargo may be collected and cared for. 
 
 "5. The lowest cost of handling cargo from the hold of the ship to 
 consignee and vice versa, was found to be in a port where one authority 
 controlled the entire operation, and where the transit sheds were three to 
 five stories high. ' ' 
 
 Having dealt with the four ports on the American continent 
 in which the ownership is entirely, or chiefly, public, I will now 
 proceed to consider ports having a mixture of public, private, 
 and railroad ownership. 
 
 The Lesson of the Boston Situation. 
 
 Boston, to my mind, is instructive chiefly for the lesson in its 
 failure to grasp the needs of its situation and to move aggressive- 
 ly for their satisfaction. The backwardness of Boston with re- 
 spect to dock facilities is in marked contrast with its progressive 
 activities in some other municipal lines. Boston has had more re- 
 ports and studies made of its dock situation and has done less to 
 improve conditions than most other communities. An examina- 
 tion of some of these various official reports may prove instruct- 
 i\e. In 1895, the legislature of Massachusetts created a commis- 
 sion to conduct "an investigation of the wants of the port of Bos- 
 ton for an improved system of docks and wharves, and terminal 
 facilities in connection therewith." The commission was spe- 
 cifically instructed to make a general study of the question of 
 public ownership of docks and wharves and the desirability of 
 the adoption of public ownership in Boston. 
 
 The report prepared contained much information and was 
 able and instructive. It found in favor of the general policy of 
 public ownership. The following quotation indicates the point 
 of view: 
 
 ' ' Wharves are the means whereby the public on land can transfer them- 
 selves and their goods to the water, and vice versa, just as turnpikes, 
 
streets and highways are the means for enabling free and easy transporta- 
 tion wholly on land. No impediments or barriers beyond the limit of pub- 
 lic control should be permitted to obstruct freedom of communication be- 
 tween land and water. The rivers and seas are the highways of water- 
 borne freight and passengers, and the right of landing and embarking ought 
 to suffer no more or greater legal obstruction than the right of traversing 
 the highway on sea or land. It becomes the duty of the public, then, to 
 preserve that right for present and future use. 
 
 "In order to reap the fullest enjoyment of this right, facilities and 
 conveniences must be supplied for the required use. These necessarily be- 
 come a charge, owing to the cost of construction and maintenance, in con- 
 sequence of which a toll must be paid by the users. This toll is an una- 
 voidable obstruction to free transference over a wharf which is built for 
 increased accommodation and for lessening the cost of handling. But it is 
 obvious that the smaller the toll the less will be the obstruction. 
 
 "Aside, however, from questions of natural right and justice, there are 
 other business and practical considerations which appear as satisfactory 
 
 reasons, as given in the communication of our consuls from different ports. 
 ***** 
 
 "In addition to the foregoing, from the testimony which this commis- 
 sion has been able to gather, both through the agency of its committee 
 who went abroad in the summer of 1895, when they conferred with the 
 leading merchants and officials of seventeen foreign ports (and elsewhere), 
 and from correspondence and personal interviews, held with the representa- 
 tives of various ports in this country, this commission has become satisfied 
 that the reasons for public ownership and control reside, as hereinbefore 
 stated, not only in those natural rights which underlie the exercise of true 
 popular liberty, but in that business sagacity and far-sighted prudence 
 which is able to apply the principles of economy, to realize that delay 
 means cost and despatch means profit, and that uniform and stable charges 
 attract as fixed factors in a business calculation, and also in the under- 
 standing that all these elements are most completely suppled through pub- 
 lic ownership and control.'' 
 
 While this commission found in favor of the general prin- 
 ciple of public ownership of docks, and recommended certain 
 developments by the state in the harbor of Boston, it failed to 
 apprehend a principle of dock policy of more importance even 
 than that of public ownership. The following is the opening 
 paragraph of its summary of conclusions and recommendations: 
 
 "Public Ownership of Foreshore. That a portion of the foreshore 
 should forever be preserved in the ownership and control of the people, 
 for uses and purposes such as the needs of changing conditions may from 
 
 24 
 
time to time require, but that it is neither necessary nor desirable that 
 the entire foreshore of the harbor should be thus heldj on the contrary, 
 a diversified ownership is believed to be healthiest, and therefore the ac- 
 quisition of certain parcels within the limits of the city of Boston, as here- 
 inbefore described, is recommended. " 
 
 In finding for "diversified ownership" of port facilities, the 
 Massachusetts commission ran counter to the teachings of ex- 
 perience and the recommendations of practically all other offi- 
 cial and expert reports upon the subject. Unity of management 
 and development according to a comprehensive plan are the first 
 requisites to the highest type of port. The curse of the Boston 
 situation is unrelated diverse ownership. 
 
 On the strength of the recommendation made by this com- 
 mission, a pier was built in the Commonwealth Flats of South 
 Boston, known as Commonwealth pier. It was completed in 
 1901, at a cost of $381,877.09. The pier is 1,200 feet long and 
 400 feet wide. It is not equipped with sheds and is without 
 switch track connections. Not even a regular street has been 
 opened to give connection with the pier, although it is possible 
 to drive from the street to the pier over unoccupied land. Un- 
 der the circumstances it is small wonder that the pier has been 
 little used and that the revenue derived from it since its con- 
 struction had amounted in 1908 to onty $12,847.19. Failure to 
 lay switch tracks to the Commonwealth pier presumably is due 
 to the hostility of railroad interests. The failure to open a street 
 to the pier has been due to the inability to secure the co-opera- 
 tion of governmental agencies having control of such matters. 
 
 The legislature of Massachusetts in 1907 again ordered an in- 
 quiry, this time by the Board of Harbor and Land Commission- 
 ers, into "the cost and advisability of constructing and main- 
 taining a system of metropolitan docks in the city of Boston to 
 be owned and controlled either by the Commonwealth or by 
 the said city." 
 
 This board, still accepting as gospel the finding of the prior 
 commission, that diverse ownership of harbor facilities was de- 
 sirable, reached the following conclusion: 
 
 "For various reasons briefly indicated above, the Board does not think 
 
 25 
 
it advisable at present to construct and maintain a system of metropolitan 
 docks in Boston. The time may come when such construction would seem 
 advisable, but at present it is in the opinion of the Board premature." 
 
 In leading up to this conclusion, the board had the following 
 to say: 
 
 "The advisability of constructing and maintaining a system of piers 
 under public control would seem to depend primarily on the immediate ne- 
 cessity for more dock accommodations, and the improbability of the work 
 being undertaken under private ownership. 
 
 "At the public hearing on the resolve no sentiment or opinion was 
 expressed in favor of public ownership of docks. The answers of various 
 persons to written inquiries by the Board did not favor public ownership 
 and control of wharves and docks; on the contrary, many persons ex- 
 pressed themselves in opposition. Even the most advanced advocates of 
 public ownership do not advocate public ownership and control in advance 
 
 of some general demand or necessity in some particular line or business. 
 * # * * * 
 
 ' ' The Commonwealth pier might be equipped with sheds, warehouses, 
 railroad tracks and hoists, if only some one could indicate the use to which 
 the pier would be put. Sheds sufficient for cheap bulk freight would not 
 answer for storage of valuable cargo. Various things are left in doubt 
 until a use is indicated or a tenant discovered. Besides these practical 
 questions there is the public question of going into the dock and wharfage 
 business in competition with private owners. There are other available 
 docks ready for use at the market rates, and persons ready to build more 
 docks on demand. If the Commonwealth is to enter the dock, wharfage and 
 warehouse business, it would seem proper for the Legislature to first con- 
 sider and decide the question. " 
 
 Of all the official reports which I have seen dealing with the 
 subject of docks, this is the only one to pass even mild disap- 
 proval upon the policy of public ownership, and this entire re- 
 port it seems to me is detrimental in its influence upon the 
 proper development of Boston, not so much because it fails to 
 approve of public ownership as because it fails to comprehend 
 the pressing need of Boston with reference to dock facilities and 
 management. The report of the president and chief engineer 
 of the Harbor Commissioners of Montreal reflected the experi- 
 ence of all the progressive ports of the world and the judgment 
 of practically all the official and expert opinion on the subject 
 outside of Boston when it said: "No complete development 
 
can take place without unity of purpose and concentration of 
 authority. ' ' 
 
 The Prime Need of Boston. 
 
 The Boston and Maine and the Boston and Albany railroads 
 have very good dock facilities in Boston, but in each case the 
 docks are maintained and operated as accessories of the rail- 
 roads that own them. These separate sets of docks are not 
 correlated with each other or with the remaining dock facili- 
 ties of the city, nor do they meet the needs of Boston as a busi- 
 ness community for dock facilities. The New York, New Haven 
 and Hartford railroad also owns several piers that must be con- 
 sidered good merely as piers that form the water terminal of a 
 railroad system, although for some reason they are very little 
 used. The Commonwealth's new pier, located just beyond the 
 New York, New Haven and Hartford piers, although seemingly 
 offering a good example of mere pier construction, is also little 
 used, as already pointed out. The dockage facilities on the 
 main peninsula of Boston which are used for the accommoda- 
 tion of vessels engaged in the coastwise and excursion business 
 are a veritable hodgepodge. The ownership is diverse. The 
 development is scraggly and uneven. Much of the property is 
 used for purposes that do not call for water front locations. The 
 rentals charged are high and new lines seeking dock facilities 
 would have difficulty in finding accommodations in this part of 
 the harbor, which is where they need to be. Only a few of the 
 piers have switch tracks. The belt railroad located behind the 
 piers is situated in a busy public street and can be utilized only 
 at night. The prime need of Boston, it would appear, is to have 
 this portion of its water front taken over and improved on a 
 basis of unity by some single authority. To be sure it would 
 cost a large amount of money to acquire this property, but its 
 revenue-producing possibilities would be increased by rearrange- 
 ment and improvement by a single authority according to some 
 orderly plan. The welfare of the community as a whole would 
 be promoted by such a course. 
 
 There is very general agreement that the dockage facilities 
 of Boston ar- unsatisfactory and unsuited to the Bleeds of com- 
 
 27 
 
merce. Mr. Desmond Fitzgerald, the engineer, expressed the 
 sentiment on that question which one hears generally from the 
 men who understand the situation in Boston, when he said in 
 his report to the Metropolitan Improvements Commission: "No 
 one versed in sane construction can visit the dock terminals of 
 Boston without realizing that they are in the main the product 
 of haphazard and patchwork policy largely unworthy of the 
 port and unsafe for present and expected passenger and freight 
 business." 
 
 The Metropolitan Improvements Commission, created by the 
 legislature of Massachusetts in 1907 to study the Boston situa- 
 tion, to my mind manifested a much keener appreciation of the 
 nature of the problem, confronting Boston than either of the 
 two reports thus far considered. 
 
 The extracts from the report of this commission which I de- 
 sire to present are too extended for insertion in the text of this 
 report. Hence, they are published at the end as "Appendix B." 
 The burden of the report is that development should be under- 
 taken in accordance with a comprehensive plan, and that that 
 plan should take account not only of water terminals, but of 
 rail terminals as well. 
 
 While the suggestion of the Metropolitan Improvements Com- 
 mission is that the work of improvement be undertaken by a 
 terminal company, it lays due emphasis upon the need for public 
 direction in such matters. It is recommended that the Common- 
 wealth be given a direct hand in the management of the terminal 
 company through the election by it of a definite proportion of 
 the board of directors. 
 
 The report of the Metropolitan Improvements Commission 
 has only recently been made public. Presumably its recom- 
 mendations will receive the serious attention of the legislature 
 that meets next winter. 
 
 The Move for Municipal Ownership in Philadelphia and 
 Baltimore. 
 
 Philadelphia is a port which has suffered much from railroad 
 domination. The Pennsylvania and the Philadelphia and Eead- 
 
 38 
 
ing railroad companies own a large proportion of the water 
 front. The city owns a few piers, while others are the property 
 of various private owners. There is a strong public sentiment 
 for the municipal ownership of more docks, as evidenced by the 
 action of business organizations, led by the Maritime Exchange, 
 in securing legislation enlarging the city's charter powers. In 
 response to this movement the legislature in 1907 enacted a law 
 creating a department of wharves, docks and ferries and au- 
 thorizing the city to acquire, construct and own additional piers. 
 There has been considerable adverse public criticism because the 
 first head of the Department of Wharves, Docks and Ferries 
 made no serious move to carry out the purpose of the act with 
 reference to the acquisition by the city of additional dockage 
 facilities. There has recently been a change in the head of this 
 department and it is expected that more active steps will be 
 taken in the near future in furtherance of the purpose of the 
 act creating the department. No well-defined comprehensive 
 program of dock development appears to have been worked out 
 in Philadelphia. The idea seems to be merely that the dock de- 
 partment shall create new piers wherever there are available lo- 
 cations. However, the situation in Philadelphia is naturally 
 simpler than that in Boston and in some other cities. 
 
 In Baltimore, as in Philadelphia, the principal dockage facili- 
 ties have been owned by the railroads, together with diverse 
 private ownership. The movement for municipal ownership of 
 docks, which is now Avell under way in Baltimore, received its 
 chief impetus from the great fire of 1904. In accordance with 
 the recommendations of the Burnt District Commission, the Har- 
 bor Board was created as a sub-department of the Department 
 of Public Improvements. The legislature conferred upon the 
 city the power to acquire the title to water front property and 
 construct piers thereon. Inasmuch as the docks in the business 
 center had been destroyed by fire, it was a natural thing for the 
 city to begin the work of pier construction in that area. New 
 harbor lines were established and a plan of comprehensive de- 
 velopment outlined to be carried out as rapidly as the condi- 
 tions should warrant. The small and inadequate piers were re- 
 placed by larger ones having slips of greater width and other- 
 
 29 
 
Avise better fitted for the accommodation of shipping. Balti- 
 more, on account of the fire, is doing what Boston should do, 
 that is, beginning the work of reconstruction in the very center 
 of the harbor where property values are the highest. 
 
 Norfolk has a combination of railroad and private ownership 
 with some street ends still in the possession of the city. New- 
 port News is an example of a railroad-owned port, the dockage 
 facilities there being the property of the Chesapeake and Ohio 
 railroad. 
 
 v 
 
 The Galveston Wharf Company. 
 
 The port of Galveston presents the best example of private 
 ownership coming within my observation. This is because the 
 development in Galveston, although private, is upon the basis of 
 unity. The Galveston Wharf Company was incorporated by spe- 
 cial act of the Texas legislature, in 1854, the original name be- 
 ing the Galveston Wharf and Cotton Press Company. The com- 
 pany owned the land bordering on the water, but the city owned 
 the street ends. After considerable controversy between the 
 company and the city a compromise arrangement was arrived at 
 in 1869, under which the city gave the street ends to the com- 
 pany in return for which the company turned over to the city 
 one-third of its capital stock. By the arrangement the city 
 names one-third of the directorate, but is not allowed to vote 
 its stock in the selection of the other directors. In order to in- 
 sure control of the affairs of the company by the private stock- 
 holders, it is expressly stipulated that in all stockholders' meet- 
 ings no measure shall be adopted or action taken except by the 
 vote of three-fourths of all the stock of the company, exclusive 
 of that held by the city. While, therefore, the city has one- 
 third of the stock and thus receives one-third of the dividends 
 declared, and while it is represented on the board of directors, 
 the dominating control in shaping the policy of the company is 
 private. 
 
 The Galveston Wharf Company is' a wharf company pure and 
 simple. It is not interested in transportation lines, either rail 
 or water, except that it owns and operates the belt railroad 
 which gives switch track connections with the piers. The facili- 
 
 30 
 
ties offered for the accommodation of shipping are creditable. 
 The only criticism offered is that the charges are said by some 
 to be high. The Southern Pacific railroad has already -estab- 
 lished dock facilities of its own in the port of Galveston and it 
 is said that the Rock Island and Santa Fe systems will do the 
 same in the near future, as a means of economy. This action of 
 the three railroads creates diversity where before there was 
 unity, but this does not signify so much in Galveston as it might 
 in other situations. The Galveston Wharf Company controls 
 the water front nearest to the business center of the city and 
 will continue to develop and manage that according to a har- 
 monious plan. The three railroad systems in question probably 
 will not undertake to do more than provide landing places for 
 vessels doing an extensive business with the particular railroad. 
 The Galveston Wharf Company has not paid large dividends, but 
 it is supposed to be putting a considerable proportion of its 
 earnings into permanent improvements. The great storm of 1900 
 put the company to an expense of about $650,000 in repairing 
 damage done to its property. 
 
 There appears to be no demand for public ownership and 
 management of the wharf system in Galveston. On account of 
 its misfortunes the city has been put to heavy expense in mak- 
 ing public improvements and is evidently satisfied to leave to 
 the Galveston Wharf Company the task of keeping the wharves 
 in condition for the accommodation of shipping. 
 
 Although the volume of shipping through the port of Galves- 
 ton is large, the city itself is small, and the local business conse- 
 quently is of less importance. Galveston is primarily a transfer 
 point between the boats and the railroads. There is not, there- 
 fore, so much need for public ownership in Galveston from the 
 community point of view as might be the case in a larger city 
 in which the local business was a matter of more concern. Rail- 
 roads are the chief parties in interest in the Galveston situa- 
 tion, inasmuch as their rates on traffic through the port of Gal- 
 veston must take account of the wharf charges at that port and 
 the railroads are better able to look out for themselves than 
 would be a large number of smaller shippers not so closely 
 
 31 
 
bound together. Some of the railroads, as already stated, are 
 looking out for themselves by building docks of their own. 
 
 Activity in Los Angeles. 
 
 Los Angeles is a city that has been aroused to the need for 
 progressive port development largely by the hope that the open- 
 ing of the Panama canal will mean a tremendous increase in the 
 volume of shipping for the Pacific coast. Los Angeles is situ- 
 ated some twenty-five miles from the Pacific ocean. Its natural 
 port is the harbor of San Pedro, adjacent to which are the vil- 
 lages of San Pedro and Wilmington. These villages, of course, 
 were unable to develop the port facilities on a public basis and 
 private interests seemed destined to get control of all the avail- 
 able water frontage. To forestall this, Los Angeles outlined 
 and carried through a plan for consolidation with the villages 
 of San Pedro and Wilmington which should enable it to take 
 charge of the development of the harbor of San Pedro. With 
 considerable difficulty an enabling act was secured from the 
 legislature designed to permit Los Angeles to take in a narrow 
 strip of land running from the original limits of the city to the 
 seacoast, and then spreading out to take in the villages of San 
 Pedro and Wilmington. Strong efforts were made by private 
 interests to defeat the project through an adverse vote in one or 
 the other of the villages. In order to carry the proposition 
 through, the leaders of the consolidated movement in Los An- 
 geles give assurance that $10,000.000 would be spent by the city 
 of Los Angeles in the next ten years in the development of mun- 
 icipal docks in the harbor of San Pedro. The vote for the con- 
 solidation in San Pedro was 726 for to 227 against. The vote 
 in Wilmington was 107 for to 61 against consolidation. The 
 strength of the movement in Los Angeles proper was indicated 
 by the fact that the vote there for the proposition was in excess 
 of 13,000 to only about 200 against. 
 
 These votes were taken in August last. Litigation has al- 
 ready been started with a view to recovering for the public 
 water frontage areas which it is contended are now held illegally 
 by private parties. A view of the map of the consolidated area 
 gives one the impression that Los Angeles is literally reaching 
 
out its arm to the ocean to seize its share of the future shipping 
 of the Pacific coast. 
 
 Seattle's Wise Plans Thwarted. 
 
 Seattle, Washington, with an excellent location on Puget 
 Sound, is an example of a community which started out, upon 
 the admission of the state of Washington into the Union in 1889, 
 with the deliberate intention of having public ownership, but 
 which finds itself thwarted in that respect. Following are some 
 of the provisions of the constitution of Washington, adopted at 
 the time of the admission of the state to the Union: 
 
 Article XV, Section I. The Legislature shall provide for the appoint- 
 ment of a commission whose duty it shall be to locate and establish harbor 
 lines in the navigable waters of all harbors, estuaries, bays and inlets of 
 this state, wherever such navigable waters lie within or in front of the cor- 
 porate limits of any city or within one mile thereof upon either side. The 
 state shall never give, sell, or lease to any private person, corporation, or 
 association any rights whatever in the waters beyond such harbor lines, 
 nor shall any of the area lying between any harbor line and the line of ordi- 
 nary high tide, and within not less than fifty feet nor more than 600 feet of 
 such harbor line (as the commissioners shall determine) be sold or granted 
 by the state, nor its right to control the same relinquished, but such area 
 shall be forever reserved for landings, wharves, streets, and other conven- 
 iences of navigation and commerce. 
 
 Article XV, Section 2. The Legislature shall provide general laws for 
 the leasing of the right to build and maintain wharves, docks, and other 
 structures upon the areas mentioned in Section 1 of this article, but no 
 lease shall be made for any term longer than thirty years, or the Legislature 
 may provide by general laws for the building and maintaining upon such 
 area, wharves, docks, and other structures. 
 
 Article XVII, Section 1. The State of Washington asserts its owner- 
 ship to the beds and shores of all navigable waters in the state up to and 
 including the line of ordinary high tide, in waters where the tide ebbs and 
 flows, and up to and including the line of ordinary high water within the 
 banks of all navigable rivers and lakes: Provided, That this section shall 
 not be construed so as to debar any person from asserting his claim to 
 vested rights in the courts of the state. 
 
 Article XXVII, Section 2. All laws now in force in the territory of 
 Washington, which are not repugnant to this constitution, shall remain 
 in force until they expire by their own limitation, or are altered or re- 
 pealed by the Legislature: Provided, That this section shall not be so con- 
 
 33 
 
strued as to validate any act of the Legislature of Washington Territory 
 granting shore or tide lands to any person, company, or any municipal or 
 private corporation. 
 
 It was the evident intent of the framers of the Washington 
 constitution that the state should maintain the ownership of 
 the water front of the cities of the state in much the same man- 
 ner as California had retained the ownership of the water front 
 of S'an Francisco. This intent was even recognized by the Su- 
 preme Court of the United States in an opinion rendered Decem- 
 ber 19, 1892, delivered by Chief Justice Fuller, in the case of 
 "Yesler vs. The Harbor Line Commission," in which it was said: 
 "The design of the state law is to prohibit the encroachment by 
 private individuals and corporations on navigable waters, and to 
 secure a uniform water front." 
 
 The first Harbor Line Commission that was appointed took 
 this view both of the constitution and of the act of the legisla- 
 ture creating it. In its second and final report, submitted in 1893, 
 this commission, after quoting portions of the opinion of the 
 Supreme Court of the United States in the Illinois Central Lake 
 Front case, proceeded to say: 
 
 "For these and other reasons mentioned in the exhaustive opinion of 
 the court, delivered by Mr. Justice Field, it was held that the grant made 
 by the Legislature was a revocable one, and that no legislature had the 
 right to make a permanent transfer of the public property of the people of 
 the State of Illinois in their navigable waters to any private corporation. 
 It is precisely in accordance with the principles laid down in the decision 
 from which we have just quoted, that the people of the State of Washington 
 have wisely determined to reserve from sale and reserve for public use 
 so much of the water front in its harbors, not exceeding six hundred feet 
 in width, as may be necessary for commercial purposes. In view of the 
 fact that the navigable waters of the state and the lands under them should 
 be held for public use, and also of the further fact that the jurisdiction of 
 the United States extends over these navigable waters, the State of Wash- 
 ington has very wisely and properly refrained from any attempt to sell 
 or dispose of any tide lands below the line of mean low water. The State 
 of Illinois and other states of the Union, notably New Jersey, have gotten 
 themselves into serious difficulties not only with their own citizens, but 
 with the National Government, by undertaking to sell, grant and otherwise 
 dispose of, in fee simple, the lands they own under their navigable waters. 
 The tide lands of the State of Washington, which lie between high and low. 
 
 34 
 
water, may be sold without injury to the interests of commerce arid naviga- 
 tion, but we think a mistake would be made if any measures were adopted 
 looking to the disposal of the lands below the line of low waler._ These 
 lands should be kept for public use, together with all areas reserved within 
 established harbor lines and water ways. The history of those older states 
 which have large commercial interests is full of the evidence of loose, negli- 
 gent or wilfully corrupt management of their properties upon the water 
 front of their various harbors. The state and city of New York, for ex- 
 ample, have been striving for years in the courts, by means of condemna- 
 tion proceedings and otherwise, at vast expense, to recover their control 
 of the water front of that city, in order that it may be properly main- 
 tained and improved for the public benefit. In the year 1810, the city 
 granted to John Jacob Astor certain water lots in the lower part of the 
 city of New York, aggregating 425 feet and 4 1-4 inches along the water 
 front at a yearly rental of $356.91. In the year 1892, his heirs were paid, 
 after a long and expensive course of litigation, the sum of $520,709.49, in 
 order to secure their relinquishment of the claim they held to wharfage 
 rights upon this property. Other examples of a similar character might be 
 quoted. It is certainly desirable that the State of Washington should avoid 
 as far as possible the errors and mistakes of management into which the 
 older states have fallen in the care of so valuable and important a public 
 trust." 
 
 A Great Opportunity Wasted. 
 
 When this Harbor Line Commission undertook to lay out 
 harbor lines in furtherance of its announced policy it was bit- 
 terly opposed by various interests. Through litigation this com- 
 mission was estopped from carrying out its program and laying 
 out harbor lines in accordance therewith in Seattle and in other 
 principal cities of the state. The expiration of the term of office 
 of the commission found its work uncompleted. The legislature 
 made provision for a new harbor line commission differently 
 constituted. This new commission proceeded to lay out harbor 
 lines in Seattle and the other large cities which clearly did vio- 
 lence to the spirit of the constitution. The inner harbor line 
 was located well out in deep water, in many cases several hun- 
 dred feet beyond the actual physical inner harbor line. The 
 outer harbor line, of course, would be still farther out. In many 
 cases the inner harbor line, as located by the new commission, 
 was beyond the end of the piers as actually constructed, and in 
 the case of the longer piers even as now T existing, not more than 
 
 35 
 
300 or 400 feet of the piers extends beyond the inner harbor line. 
 The land under water inside the inner harbor line as constituted 
 by the new commission was then sold at nominal prices to the 
 owners of the adjacent shore lands. Thus the piers of moderate 
 length became private property. The longer piers were partially 
 private property and partially on land belonging to the state, 
 the portion of the land under water on which the pier rested 
 outside the inner harbor line being leased by the state to the 
 pier owner for a thirty-year period at a nominal rental. Thus 
 Seattle, despite its constitutional provisions designed to insure 
 state ownership and uniform development, in reality has private 
 ownership and scraggly and uneven development. The land un- 
 der water to which the state has retained title under the harbor 
 lines as laid out is of little value for dockage purposes. The 
 city of Seattle is the owner of a number of street ends, but these 
 street ends, as a rule, merely serve as slips for the benefit of the 
 privately owned piers on either side thereof. 
 
 There are citizens of Seattle who contend that the situation 
 as actually developed is a fraud upon its face and a perversion 
 of the letter as well as the spirit of the constitution of the state. 
 It is likely that this contention will some day be pushed to the 
 point where the courts will be obliged to pass upon it. 
 
 One cannot look into the situation in Seattle without feeling 
 that a great opportunity has been wasted by that city. Dock 
 property now privately owned, but which was intended to re- 
 main the property of the state, has increased enormously in 
 value in recent years. Had title remained in the state, the pub- 
 lic would have been in a position to derive large revenue from 
 the leases of dock facilities, or it would have been in a position 
 to provide for a reduction in charges for the benefit of commerce. 
 
 The ownership is railroad and private. The situation re- 
 minds one much of that in Boston, the development in both 
 places being scraggly and uneven and much of the water front 
 property is devoted to business purposes other than the accom- 
 modation of shipping. Seattle is much better off than Boston, 
 however, in that it has good switch track facilities connected 
 with the railroads operating in Eailroad avenue back of the 
 piers, 
 
 36 
 
The original law provided that 75 per cent, of the revenues 
 derived from the sale of tide lands in any given port should be 
 used as a special fund "for the construction and maintenance 
 of a system of permanent and substantial improvements in aid 
 of commerce and navigation in and for the harbor of such city 
 or town wherein such tide lands may be sold." 
 
 It was evidently the intention that the state should embark 
 upon a policy of construction and ownership of dock facilities 
 as was done in San Francisco. But the revenues derived from 
 the sale of tide lands have not been utilized for this purpose. 
 
 A vital defect of the situation in Seattle is that there is no 
 harbor authority as such, of any importance. There is a harbor 
 master in Seattle, but his powers and duties are very limited. 
 The state's agent in looking after wharf property is the com- 
 missioner of public lands, who, as the name of the office implies, 
 concerns himself chiefly with the state's interest as a land owner. 
 There is no official charged with the duty of looking after the 
 public's interests in the harbors of the state from the naviga- 
 tion or commercial point of view. 
 
 The situation in Tacoma is very much the same as that in 
 Seattle. Control of practically all the water front has passed into 
 the hands of the railroads and other private owners. 
 
 There is some agitation in Seattle to create a port authority 
 to look after tne shipping interests of the city. A bill urged 
 for passage in the last legislature, but without success, gave to 
 the particular commission it was intended to create, power to 
 take property, construct docks, and to raise part of the revenue 
 therefor by special assessment upon property benefited. It was 
 specially made the duty of this commission to "adopt a compre- 
 hensive scheme of harbor development. " 
 
 Portland, Oregon, located on the Willamette river, has di- 
 verse ownership, partially railroad and partially private. As in 
 other such ports, the developments are scraggly and uneven, 
 with a water front devoted to a considerable extent to business 
 purposes other than the accommodation of shipping. There ap- 
 pears to be some agitation on the part of the public for munic- 
 ipal ownership of docks in Portland, although there is no official 
 
 37 
 
movement in that direction. A recent public policy referendum 
 vote showed a substantial majority in favor of public ownership. 
 
 Vancouver, British Columbia, furnishes a case of railroad 
 ownership, nearly all the water front devoted to dockage uses 
 being the property of the Canadian Pacific railroad. The piers 
 devoted to the general shipping business are operated by com- 
 panies that take leases from the Canadian Pacific railroad. The 
 principal purpose of the development that has thus far taken 
 place is to serve the interests of the Canadian Pacific railroad 
 as a rail carrier. The local interests of the port have been treated 
 as secondary. 
 
 In the Great Lakes Ports. 
 
 In the ports of the Great Lakes rail and private ownership is 
 the rule. In some of these ports exceptional facilities have been 
 provided for handling the great bulk commodities of lake com- 
 merce. The facilities of Duluth, for example, for sending out iron 
 ore and receiving coal, are remarkably good. Cleveland, like- 
 wise, has an especially good equipment for loading coal onto the 
 vessels. The accommodations for the passenger and package 
 freight boats are commonly owned either by railroad companies 
 or by the boat lines themselves. There is very little public own- 
 ership of docks on the Great Lakes nor is there ownership by 
 companies engaged in the dock business, like the Galveston 
 Wharf Company. Practically all the water front of Buffalo is 
 owned by the various railroads which also control the boat lines 
 engaged in the package freight business at that port. As was 
 pointed out in the report submitted by me to the Harbor Com- 
 mission, this railroad control of dock facilities in Buffalo does 
 much to enable the railroads to dominate the lake shipping busi- 
 ness and to keep independent boat lines out of the field, to the 
 detriment of the entire area naturally tributary to the Great 
 Lakes. The principal dockage facilities in Milwaukee are owned 
 by the Chicago, Milwaukee and St. Paul railroad. The facili- 
 ties afforded by these docks for handling package freight 
 through Milwaukee are much more satisfactory than the facili- 
 ties offered in Chicago and help to explain the rapid growth of 
 the package freight traffic in the port of Milwaukee. The fol- 
 
 38 
 
lowing table shows the combined receipts and shipments by 
 tons of unclassified freight of the ports of Chicago (including 
 South Chicago) and Milwaukee, for the years named: 
 
 Chicago. Milwaukee. 
 
 1901 1,465,339 923,423 
 
 1902 1,899,418 1,064,172 
 
 1903 1,645,084 983,694 
 
 1904 1,432,608 953,095 
 
 1905 1,738,096 1,116,121 
 
 1906 1,640,010 1,162,950 
 
 1907 1,733,678 1,545,920 
 
 Chicago is in the crudest stage, in which each boat line is 
 expected to look out for itself and find dockage accommodations 
 where it can. The various railroad companies have piers where 
 vessels can take on and unload freight for that particular rail- 
 road. But for its city and miscellaneous business each boat 
 company must have accommodations of its own. It would be 
 .more economical and better for all concerned if a system of 
 piers could be provided where all the boats engaged in the pas- 
 senger business and in the package freight and fruit and vege- 
 table traffic could be brought together. 
 
 The comparison of charges of different ports is a matter of 
 very great difficulty because of the different systems in use. 
 With New Orleans collecting its revenues by dockage dues 
 against the vessel and Galveston imposing charges only against 
 the goods, it is not an easy matter to decide which port gives 
 the cheaper service and how much the difference may be. The 
 difficulty is increased many fold in undertaking to compare either 
 New Orleans or Galveston with New York City, where most of 
 'the piers are under rental and no such charges as dockage or 
 wharfage appear. 
 
 The Royal Commission appointed to inquire into the adminis- 
 tration of the port, of London made very elaborate comparisons 
 of the charges of London with other ports and found the charges 
 in London to be higher than in cities with public ownership or 
 harbor trust management. 
 
 A statement prepared on January 3, 1907, for the Commis- 
 
 39 
 
sioners of the Port of New Orleans gives the actual charges paid 
 by the Civilian of the Harrison line in the port of New Orleans 
 as $894.06. The statement as submitted to the New Orleans 
 commissioners purports to figure what the charges would have 
 been on the same vessel and its cargo in the port of Galveston, 
 on the basis of the Galveston wharfage rates. According to this 
 statement, the charges against the vessel and cargo in the port 
 of Galveston would have been $4,201.53, or more than four times 
 the actual charges in the port of New Orleans. Although there 
 can be no doubt that the charges for service in New Orleans 
 under public ownership are lower than in Galveston under pri- 
 vate ownership, it is improbable that the average disparity would 
 be as much as this particular statement shows. 
 
 There can be no doubt, either, that the dock charges in San 
 Francisco under public ownership are lower than in Seattle and 
 other ports on the Pacific Coast under private ownership, al- 
 though it is difficult to deal in precise figures. In Seattle the 
 prevailing charge is 50" cents a ton Tjpon goods moved over the 
 wharf, with no charge against the vessel. The prevailing charge 
 against goods in San Francisco is only 5 cents a ton, but there 
 is also a dockage charge against the vessel. The officials in San 
 Francisco claim that their dockage charge against the vessel, 
 'combinJed with the toll of 5 cents a ton against the goods, amounts 
 to about one-third or one-half of the charge imposed against the 
 goods in Seattle. 
 
 Montreal, at the eastern terminus of the Canadian Pacific 
 Railroad, under public ownership, has much lower schedules of 
 dock charges than Vancouver, the Pacific terminal of the 
 Canadian Pacific Railway, under railroad ownership. As before 
 stated, however, no charge whatever is made in the railroad-' 
 owned port on goods having a rail haul. 
 
 The charges of Montreal are comparable with the charges 
 of Galveston, or with those of the railroad-owned docks in Boston 
 upon goods not having a rail haul. The Montreal rates are 
 much lower. The dock charge on asphalt, for example, in the 
 port of Montreal is 8 cents per ton. In Galveston it is l 1 ^ cents 
 per 100 pounds, or 25 cents a ton, while in Boston the charge 
 
 40 
 
is 40 cents for a long ton of 2,240 pounds. Other items are 
 likely to show about the same differences. 
 
 The Benefits of Public Ownership. 
 
 A study of the principal ports of the world discloses that 
 those with the most progressive development are owned by pub- 
 lic authorities, either state or municipal, or are managed by 
 harbor trusts. The chief exception is Galveston, which fur- 
 nishes an example of progressive development under private 
 control. Railroad ownership of docks affords efficient service, 
 as a rule, for railroad purposes, but railroad-owned docks do 
 not satisfy the needs of a community for facilities for handling 
 traffic not transferred to or from railroad carriers. "Where one 
 raiload owns the docks, other railroads are placed at a disad- 
 vantage, to the injury of the community at large. Moreover, 
 while railroads encourage connecting ocean traffic, with which 
 rail competition is impossible, they seek to suppress coastwise 
 traffic and inland water transportation. Control of dock facili- 
 ties is an important aid to the railroads in suppressing competi- 
 tion by water carriers. As a rule the most wide awake and 
 public spirited communities that have private ownership of docks 
 are making moves to bring about public ownership. 
 
 Unity and development according to a comprehensive plan 
 are the chief essentials to a well ordered port. It is rare in- 
 deed that private ownership signifies harmonious development on 
 a basis of unity. And where it does there is the specter of man- 
 agement in the interest of private monopoly. Diverse private 
 ownership means scraggly, uneven and unrelated development. 
 Boston, Seattle and Portland afford good illustrations of this 
 point. A mixture of public and private ownership may, of 
 course, give the same result. But a usual purpose of public 
 ownership or harbor trust management is to promote unity. 
 Therefore, partial public ownership is likely to lead ultimately 
 to complete public ownership. 
 
 Practically all the official and expert declarations on the 
 subject are in favor of public or harbor trust management of 
 docks. The only exception within my knowledge is the report 
 
 41 
 
made in 1907 by the Massachusetts Harbor and Land Commis- 
 sioners, to which reference has already been made. 
 
 The harbor trust idea has not been taken up in this country. 
 Under the harbor trust plan the management of a port is en- 
 trusted to a group of men constituting a legal entity, chosen in 
 various ways. Usually a part of the number is chosen by desig- 
 nated governmental authorities and the rest elected by the ship- 
 ping interests of the port. The trust authority borrows money 
 on the revenues of the port and in other ways manages its af- 
 fairs like a private corporation. But there are no profits either 
 to stockholders or to members of the board who direct its af- 
 fairs. After interest allowance, and the payment of expenses, 
 the surplus revenues are devoted to improvements or charges 
 are lowered. The aim is merely to make the port management 
 self-sustaining. It will be seen that the harbor trust plan is 
 really more akin in nature to public ownership than to private 
 ownership. 
 
 The Harbor Trust Idea. 
 
 The savings banks of the New England states and of New 
 York are managed on somewhat the same plan, except that the 
 trustees of the savings banks, instead of being appointed or 
 elected as are the members of the British harbor trusts, are self- 
 perpetuating. But the savings banks of New England and New 
 York are supposed to be managed solely for the benefit of de- 
 positors, without stockholders to draw dividends and without 
 profit to the directors. The Consumers' Gas Trust Company of 
 Indianapolis was a venture along similar lines. This company 
 was organized a number of years ago to supply consumers with 
 natural gas at cost. The stockholders agreed to be satisfied with 
 fixed dividends and control of the company was vested in a self- 
 perpetuating board of trustees who managed the business in the 
 interest of consumers, just as a British harbor trust manages a 
 port in the interest of the shippers and vesselmen. This Indian- 
 apolis arrangement was a marked success while it lasted and 
 was terminated only because of the exhaustion of the natural 
 gas supply. Another company has since been formed and au- 
 thorized to engage in the artificial gas business in Indianapolis 
 
 42 
 
on the same lines. Under its franchise this company agrees, 
 when the stockholders have been repaid, with interest, to convey 
 the gas plant to the city, to be owned and operated or leased by 
 it. Mayor Dunne's so-called "contract plan" for dealing with 
 the Chicago street railway question was similar in essence to the 
 British harbor trust plan, the difference being that the "con- 
 tract plan" sought to vest control in trustees that should be 
 self-perpetuating. The plan of street railway management 
 which Mayor Johnson tried without success to install in Cleve- 
 land was the same in essence as Mayor Dunne's "contract plan." 
 
 While the harbor trust plan has worked remarkably well in 
 Great Britain, there seems little likelihood of its receiving ser- 
 ious consideration in this country. That leaves public owner- 
 ship as the only alternative to the various forms of private own- 
 ership and of these alternatives, on the question of ultimate pol- 
 icy, the choice seems clearly to lie on the side of public owner- 
 ship. 
 
 Public ownership is of two kinds state and municipal. New 
 York's docks are municipal, while those of New Orleans and 
 San Francisco are administered by boards appointed by the gov- 
 ernor of the state. The move toward public ownership in other 
 American ports usually takes the form of municipal ownership. 
 Examples are Baltimore, Philadelphia, Los Angeles and Oakland. 
 Public ownership of docks in Boston, under present tendencies, 
 means state ownership. The Harbor Commissioners of Montreal 
 are a creature of the Dominion or federal government. Chi- 
 cago's docks, if public, would naturally be municipal, as it is 
 the policy in this community to have such matters attended to 
 by the municipal rather than the state authorities. 
 
 Franchise Possibilities Considered. 
 
 While the decision with reference to dock management must 
 be in favor of the policy of ultimate municipal ownership, the 
 question as to whether the docks shall be built and owned at 
 the outset by the city or by a corporation acting as the agent 
 of the city is one of business judgment to be decided according 
 to the facts of the concrete situation presented. The ability of 
 
 43 
 
the city to borrow money at lower rates of interest than can a 
 private corporation constitutes a strong argument in favor of 
 city ownership at the outset. Then, too, this process actually in- 
 sures city ownership, whereas, if the docks once pass into private 
 hands, the practical difficulty in actually securing control of 
 them at any given time in the future may be great, whatever 
 the legal and theoretical possibilities of municipal acquisition 
 may be. On the other hand, with the borrowing power of the 
 city limited, it may be desired to use the available bond issues 
 for other purposes. Some citizens doubtless would prefer that 
 public money be not risked in an undertaking that might be 
 deemed to have hazards. Such citizens will argue that the in- 
 terests desiring additional dockage facilities, or willing to pro- 
 vide them, should be allowed to take the initial steps on private 
 capital, leaving the city in a position to come into possession 
 later. The decision of the question is likely to be influenced 
 much by the kind of terms which a responsible private corpora- 
 tion desiring to go into the dock business may be willing to offer. 
 
 I have found little in the experience of other ports to throw 
 light on the question as to what kind of an arrangement should 
 be made with a private corporation, in case it should be deemed 
 advisable to provide for initial development on a franchise basis. 
 The leasing of docks existing and owned by a city does not fur- 
 nish a parallel to the 'situation now confronting Chicago, in 
 which it is proposed that a private corporation be authorized 
 to build docks where none whatever exist at present. Privately 
 owned docks as a rule are held under absolute title of owner- 
 ship. However, I take it that Chicago does not intend at this 
 day to permit new dock development in public waters on any 
 such basis. 
 
 The effort of the city of Cleveland to work out an arrange- 
 ment with a boat company for the improvement of piers on the 
 lake front of that city may have some suggestive value for Chi- 
 cago. The city of Cleveland owns a small pier projecting into 
 the lake, that is of little use at the present time. It was planned 
 to lease this pier for thirty-five years. Although the lease was 
 to be made only after taking competitive bids, it was expected 
 that the Detroit and Cleveland Navigation Company would se- 
 
 44 
 
cure the pier. The understanding was that this company should 
 advance to the city $205,000 to be used for building the pier and 
 the superstructure and also to do some street paving. At the end 
 of the thirty-five years the pier was to be the absolute property 
 of the city, with all the improvements thereon. The company 
 was to agree to keep the property in such condition that it would 
 be worth 70 per cent, of its reconstruction cost. The size of the 
 pie* was to be 750 feet wide and 300 feet long. The city under 
 the ordinance as passed by the council was to reserve the right 
 "to terminate and revoke any such lease, with suitable compen- 
 sation to the lessee, should the city at any time desire to change 
 the use of this property, to reorganize the harbor facilities of 
 the city, to construct lake front boulevards or parks, or to carry 
 out any other public purposes, upon giving two years' notice of 
 the intention of the city so to do." The carrying through of 
 this leasing arrangement has been blocked "temporarily by the 
 refusal of the railroads to agree to make switch track connec- 
 tions with the proposed dock, as the boat interests are unwill- 
 ing to go ahead without assurances upon the point of proper 
 switch track connections. 
 
 Features of Traction Franchise Policy. 
 
 If it be decided to permit dock development under a fran- 
 chise arrangement, more light may be gained on this point from 
 an examination of Chicago's own experience with other public 
 utilities, especially the street railways, than is to be secured 
 from a study of ports elsewhere. 
 
 The main features of Chicago's franchise policy as worked 
 out in the traction settlement ordinances are: (1) The reserva- 
 tion to the city of the right to terminate the grant at any time 
 for purchase by the city or by a licensee corporation; (2) the 
 effort to eliminate speculative profits; (3) full publicity of the 
 affairs of the grantee corporation; (4) participation by the city 
 in the planning and execution of the work of reconstruction. Of 
 these four features, the first named is the most vital, although 
 all are important and would seem to be applicable to the dock 
 situation. 
 
 45 
 
The traction question was before the community a long time 
 before it was disposed of, and the features of policy underlying 
 the final settlement received long and careful consideration. The 
 report of the Street Railway Commission submitted to the city 
 council in December, 1900, outlined and discussed the principal 
 features of policy later incorporated in the traction settlement 
 ordinances, devoting special attention to the most vital one, 
 that of the duration of grants. The discussion by the Street 
 Railway Commission of that feature of policy (though consid- 
 ered in that report chiefly in relation to street railways) enunci- 
 ates principles so pertinent to the present dock situation that I 
 reproduce that portion of the document in question as an appen- 
 dix to this report. 
 
 If the argument of the Street Railway Commission on this 
 point needed support it might be found in the language of the 
 following excerpt from the opinion of the Supreme Court of 
 the United States in the celebrated case of the people against 
 the Illinois Central Railroad, involving claims, to the Chicago 
 lake front : 
 
 "It is hardly conceivable that the Legislature can divest the state 
 of the control and management of this harbor (Chicago) and vest it abso- 
 lutely in a private corporation. Surely an act of the Legislature transfer- 
 ring the title to its submerged lands and the power claimed by the railroad 
 company to a foreign state or nation, would be repudiated without hesita- 
 tion as a gross perversion of the trust over the property under which it is 
 held. So would a similar transfer to a corporation of another state. It 
 would not be listened to that the control and management of the harbor of 
 that great city a subject of concern to the whole people of the United 
 States should thus be placed elsewhere than in the state itself. All the 
 objections which can be urged to such attempted transfer may be urged to 
 a transfer to a private corporation like the railroad company in this case. 
 Any grant of this kind is necessarily revocable and the exercise of a trust 
 by which the property was held by the state can be resumed at any time. 
 Undoubtedly there may be expenses incurred in improvements made under 
 such a grant, which the state ought to pay; but, be that as it may, the 
 power to resume the trust whenever the state judges best is, we think, in- 
 controvertible. The position advanced by the railroad company in support 
 of its claim to the ownership of the submerged lands and the right to the 
 erection of wharves, piers and docks at its pleasure, or for its business in 
 the harbor of Chicago, would place every harbor in the country at the 
 mercy of a majority of the Legislature of the state in which the harbor is 
 
 46 
 
situated. We cannot, it is true, cite any authority where a grant of this 
 kind has been held invalid, for we believe that no instance exists _where 
 the harbor of a great city and its commerce have been allowed to pass 
 into the control of any private corporation. But the decisions are numerous 
 which declare that such property is held by the state, by virtue of its 
 sovereignty in trust for the public. The ownership of the navigable waters 
 of the harbor and of the lands under them is a subject of public concern 
 to the whole people of the state. The trust with which they are held, there- 
 fore, is governmental, and cannot be alienated except in those instances 
 mentioned of parcels used in the improvement of the interest thus held, or 
 when parcels can be disposed of without detriment to the public interest in 
 the lands and waters remaining. This follows necessarily from the public 
 character of the property, being held by the whole people for purposes in 
 which the whole people are interested." 
 
 The Nature of Chicago's Terminal Problem. 
 
 Aside from the broad considerations of policy applying to 
 public utility grants generally, there is a special reason why the 
 arrangement with a private company (if one should be entered 
 into) for the construction and ownership of docks north of the 
 mouth of the Chicago river should be subject to termination at 
 any time. 
 
 No one with faith in the future water commerce of Chicago 
 can believe that the docks in question will be adequate for future 
 needs. It will be necessary to provide additional facilities in 
 some other part of the city. Where, it is difficult to say at this 
 time. The problem calls for further study, separately and in 
 connection with the railroad terminal problem and the proposed 
 Lakes-to-the-Gulf waterway. Chicago's railroad terminal prob- 
 lem calls for a thorough-going expert inquiry in the near future. 
 
 The general assembly of Illinois will not display wisdom if it 
 proceeds to spend $20,000,000 to promote waterway development 
 without inquiring what the connecting outlet into Lake Michigan 
 is to be. The present Chicago river cannot be considered a satis- 
 factory outlet. Possibly a careful inquiry into this subject would 
 lead to indorsement of the suggestion of Lyman E. Cooley for a 
 new connecting channel between the Sanitary District canal and 
 Lake Michigan in the vicinity of Twenty-second street. In that 
 event the further suggestion of Mr. Cooley that Chicago's future 
 
 47 
 
harbor development should be along the Sanitary District canal 
 might also meet with approval. The suggestion of Mr. Isham 
 Randolph (made in connection with his recommendation for a 
 lake front harbor), that the right of way of the old Illinois and 
 Michigan canal be utilized as the roadbed of a belt railroad 
 joining the harbor and the railroads, would fit in admirably with 
 the Cooley suggestion, if the latter be found by expert inquiry 
 to be feasible. 
 
 The problem of proper dock developments in this commun- 
 ity presents many difficulties, complexities and uncertainties, and 
 is closely related to other unsolved problems, especially that of 
 proper rearrangement of railroad terminals. An era of recon- 
 struction and of tremendous improvement is believed to be di- 
 rectly ahead for Chicago. Nothing should be done that cannot 
 be made to fit into whatever larger plan may be worked out. No 
 rights should be created that will stand as a bar to later -unity. 
 If the docks under discussion are to be built and owned by a 
 private corporation, it should be only on condition that the 
 owners stand ready to sell at any time to the city or to another 
 licensee corporation, thus making it possible to correlate the 
 docks with other related undertakings, whenever plans for de- 
 velopment on a harmonious scale may be worked out. The Com- 
 mercial Club, in its report on a plan of Chicago (page 65), sug- 
 gested that the proposed freight center, the harbors and the 
 connecting transportation systems should be welded together 
 into one complete machine for doing the transportation busi- 
 ness of Chicago "all probably to be owned jointly by some 
 general utility corporation." This suggestion of the Commercial 
 Club" report bears considerable resemblance to the recommenda- 
 tion of the Massachusetts Improvements Commission for a cor- 
 poration representing the railroads and the Commonwealth to 
 develop and control the dock and terminal facilities of Boston. 
 Chicago should retain the power to make docks hereafter or- 
 ganized become a part of this general utility project, whenever 
 it may be realized. 
 
 It would seem that not much financial risk should be in- 
 volved in connection with the construction of the proposed 
 docks north of the mouth of the river. Most of the boat lines 
 
 48 
 
are anxious to go there, provided the proper facilities be ar- 
 ranged for. The term proper facilities would include satisfac- 
 tory switch track and street car service. When the plans have 
 been prepared and estimates of cost made, the boat line managers 
 can be called in and asked what rent they are willing to pay for 
 assignments of space. The leasing contracts could be entered 
 into in advance of the beginning of construction. 
 
 49 
 
II. 
 
 LEASING POLICY, 
 
 Under the head of leasing policy will be discussed the var- 
 ious arrangements under which boats are permitted to use dock 
 facilities. These various arrangements may be divided into three 
 main classifications. 
 
 First, there is the leasing system, as practiced in New York 
 city, under which boat lines make definite leases of dock space 
 for fixed periods and during the life of the lease have the ex- 
 clusive control of the particular dock space specified. 
 
 Then there is the system in use in New Orleans, under which 
 the charges are based on the tonnage capacity of the vessel, 
 without regard to the quantity of goods moved over the wharf. 
 New Orleans makes no charge whatever against the goods, but 
 collects its entire revenue from the ship owner. 
 
 Galveston and Montreal furnish examples of the third sys- 
 tem, under which no charge is levied against the vessel, but the 
 entire revenues are raised by a schedule of dues on the com- 
 modities moving over the wharf. 
 
 Some ports have a combination of two or more of these sys- 
 tems. In San Francisco, for example, there is a charge on both 
 vessel and goods. 
 
 In addition to the three types of charges above mentioned, 
 there is often a special charge for the use of sheds, either in the 
 i'orm of sheddage dues or of fixed rental for the use of shed 
 facilities. 
 
 The storage charge on goods left on the pier longer than 
 specified periods of time is in its nature akin to the storage 
 charge imposed by warehouse concerns. 
 
 51 
 
The New Orleans system of charges against the vessel ac- 
 cording to tonnage capacity is unusual in this country, but is 
 more common in foreign ports. The effect of its operation is 
 supposed to be to make the port more attractive to shippers of 
 goods, inasmuch as the goods are made to bear no wharfage 
 charges whatever. The system in use in Galveston and Mon- 
 treal, on the other hand, is designed to attract vessel owners to 
 the port inasmuch as it imposes no burdens upon them what- 
 ever. Supposedly, however, in the long run, conditions are 
 equalized in the rates for transportation of the carriers, both 
 rail and water. 
 
 Pier Using Privileges Revocable. 
 
 Eegular line vessels doing business in the port of New Or- 
 leans have definite dock space assigned to them which is held 
 for them exclusively so long as they are able to make full use 
 of the space. It is the policy of the port authorities of New 
 Orleans to give boat companies no contract rights for fixed per- 
 iods of time for the use of dock space. Assignments of space or 
 agreements for the use thereof are subject to revocation by the 
 port authorities at any time. In case berth space which has 
 been assigned to a particular boat company is hot occupied by 
 the boats of that company at any given time, the port authori- 
 ties reserve the right to dock some other vessel at that point 
 and this right is frequently exercised. Where shed facilities are 
 furnished there is an additional charge based likewise upon the 
 tonnage of the vessel. In cases where the port authority was 
 unable to provide sheds and the boat companies advanced the 
 funds, they were given in return preferential rights to the dock 
 space in question until such time as the loan, without interest, 
 should be repaid, all of the sheddage charge and 25 per cent, of 
 the wharfage charge being devoted to such repayment. 
 
 Galveston and Montreal have schedules of charges for mov- 
 ing goods across the wharf, either to or from the boat, that are 
 much like the tariff schedules of a railroad company. These 
 schedules provide for different rates for different classes of 
 goods. The charge on cotton, for example, in Galveston, is 1J 
 cents per 100 pounds. In both Galveston and Montreal, as in 
 
 52 
 
New Orleans, definite assignments of space are made to regular 
 boat lines, but none of these assignments has a fixed tiffieTlura- 
 tion. They are revocable at the will of the port authority and 
 where the space is not utilized to the full limit of its capacity 
 the port management reserves the right to put in other vessels. 
 There are special charges on a, rental basis on account of shed- 
 dage. 
 
 The charges collected by the port authority of San Francisco 
 are termed dockage, tolls, and wharfage. Dockage is the charge 
 against a vessel for occupying a berth. The rates vary according 
 to the class and size of the vessel. Tolls are the charges made 
 for merchandise passing over the state wharves. The rate is 5 
 cents a ton, except on a few commodities such as lumber and 
 brick, for which there are different rates. Wharfage in the port 
 of San Francisco is defined as the charge made for leaving mer- 
 chandise on state premises longer than the time specified in the 
 rules. In most ports this is called storage and the term wharf- 
 age is used to define what are called tolls in San Francisco. As 
 in New Orleans, Galveston and Montreal, so it is the policy of 
 the port authorities in San Francisco to make no assignments of 
 space and to give no rights of occupation or use of piers that 
 are not revocable at any time. Recently an exception has been 
 made to this policy as a means of securing the construction of 
 much needed sheds with the aid of private capital. Where the 
 lessee of a dock would agree to put up a shed with his own 
 money, the harbor authorities have given definite term leases, 
 not to exceed fifteen years in length, on condition that the shed 
 become the property of the harbor commissioners at the ex- 
 piration of the lease. 
 
 While the charges made by the harbor commissioners in the 
 port of San Francisco are very moderate, the pilotage dues and 
 the stevedoring and teaming charges are so heavy as to make 
 the handling of goods through the port of San Francisco rather 
 expensive. 
 
 In Seattle, Vancouver, Tacoma and Portland the schedules of 
 charges are very simple. The prevailing rate on commodities for 
 the privilege of using the wharf is 50 cents a ton, with no charges 
 
 53 
 
against the vessel. Different rates are provided for special 
 classes of commodities. In many cases the boat line owns or 
 leases its pier, or if it is engaged in interchange traffic with. a 
 railroad, uses the railroad company's pier. In Boston, Phila- 
 delphia, Baltimore, Norfolk arid in the lake cities the boat lines 
 commonly use railroad piers or own or lease their piers and such 
 charges as dockage or wharfage do not appear. 
 
 The Policy of Railroads as Pier Owners. 
 
 Where a railroad company owns dock facilities there is com- 
 monly no charge whatever, either against the boat or upon the 
 goods that have a rail haul. But upon goods not having a rail 
 haul there is a toll or wharfage charge just as there is in Gal- 
 veston. The charges imposed by a railroad company upon goods 
 not having a rail haul are likely to be rather high. The railroad 
 companies doing business in San Francisco absorb the toll of 5 
 cents a ton on commodities carried by rail to or from competi- 
 tive railroad points. To non-competitive points the railroads 
 terminating in San Francisco do not, absorb the toll imposed on 
 the goods by the harbor commissioners of San Francisco, but 
 add the toll to the freight rate. 
 
 Passenger boats doing an extensive business ordinarily have 
 leasing arrangements for the use of the pier space which they 
 require. The lesser excursion boats are commonly charged so 
 much a day or a month or a season, the charge being based 
 roughly on the size of the boat and the amount of business done. 
 
 New York's Pier Leasing Policy. 
 
 I have reserved the New York situation for separate and 
 more extended treatment because it seems to serve as an exam- 
 ple of unwise policy. 
 
 There are a few "open" piers in New York city, usually un- 
 shedded, at which boats may tie up and load or unload upon the 
 payment of wharfage. These piers are few in number and are 
 used for the most part only by canal boats and sailing vessels. 
 Steamboats would not think of depending upon the open piers 
 in New York city for accommodations. Nearly all the munic- 
 
 54 
 
ipal piers in New York harbor are used under leases of varying 
 terms and conditions. 
 
 From the establishment of the dock department in 1870, to 
 1902, pier leases were made by the board of dock commissioners, 
 consisting first of five and later of three members. By charter 
 legislation of 1901, effective January 1, 1902, the dock depart- 
 ment was made a single headed department. The commissioner 
 of docks was authorized to make pier leases, but leases of more 
 than one year's duration must have the approval of the board of 
 sinking fund commissioners. Neither the board of aldermen 
 nor the board of estimate and apportionment have anything to 
 do with pier leasing policy. Revocable permits and leases for 
 Jess than a year are made by the. dock commissioner on his own 
 authority. Pier leases, once obtained, may be transferred or 
 sublet with the sanction of the dock commissioner. There is 
 no requirement for publicity with reference to sub-leases or 
 transfers. The dock commissioner in practice ordinarily gives 
 his consent without knowing the detailed terms of the sub-lease 
 or transfer. Speculative traffic in leases might be going on for 
 all the dock commissioner or the public is aware. It is gossip 
 that there is much speculation in leases and that fortunate in- 
 dividuals or companies make large sums of money by transfer- 
 ring at large advances leases to municipal piers. The law pro- 
 vides that leases may be made for ten year periods with the 
 privilege in the lessee of not to exceed four renewals of ten years 
 each, or fifty years in all. The leases must be let by public auc- 
 tion unless the board by unanimous consent decides that com- 
 petitive leasing is not expedient. In practice, public letting "has 
 almost entirely disappeared. 
 
 In the history of the dock department there have been very 
 few instances of fifty year leases of water front property and 
 these were for industrial rather than for navigation purposes. 
 The leases to boat lines are ordinarily of twenty years' or thirty 
 years' duration that is, a ten year lease with the right to a re- 
 newal of one or two periods of ten years each. 
 
 There seems to be no settled basis of ascertaining the amount 
 of rental to be charged for piers. As a matter of fact the rates 
 of rental for piers of substantially the same value vary widely. 
 
 55 
 
It is impossible to avoid the conclusion that influence, polit- 
 ical and otherwise, has been a factor in the leasing policy of the 
 New York Dock Department. Moreover, this influence has been 
 exerted at times in a manner detrimental to the interests of 
 shipping and of the public. 
 
 The most conspicuous instance is afforded by the ice trust 
 scandals of the Van Wyck administration. It was largely through 
 the favoritism of the dock department that the so-called ice trust 
 was enabled to get such a strong hold upon the situation at that 
 time. Many instances can be cited of politicians securing leases 
 to pier space devoted to dump uses for less than market value 
 of the space. If such leases, instead of being definite term con- 
 tracts for fixed periods of considerable length, were revocable 
 at will, any serious abuses that might develop could be easily 
 remedied. 
 
 Case of the Enterprise Transportation Company. 
 
 The possibility of favoritism by the dock department may 
 signify much with reference to the matter of railroad control 
 of water transportation. Under the Van Wyck administration, 
 Charles W. Morse, then at the head of the ice trust and also in- 
 terested in many boat companies, seemed to be able to get a 
 large number of leases for the boat companies in which he was 
 interested. Under the present administration the remnant of 
 the Morse boat holdings appear to have difficulty in securing 
 pier accommodations. The New York, New Haven and Hart- 
 ford Eailroad Company, which how controls all the steamship 
 lines operating on Long Island Sound except the Morse line, the 
 Metropolitan SteamsSip Company, operating the Harvard and 
 the Yale between Boston and New York direct, has of late been 
 securing, either directly or through its constituent companies, a 
 considerable number of leases to desirable dock property. It 
 looks very much as if the New York dock department, whether 
 knowingly or unknowingly is not for me to say, has pursued a 
 policy that was calculated to enable the New York, New Haven 
 and Hartford Railroad Company to drive competitors out of 
 business. 
 
 The history of the Enterprise Transportation Company 
 
 56 
 
serves to substantiate this statement. This was a small 
 company that undertook to conduct a transportation lme~ be- 
 tween New York and Boston, by way of Fall River. The Enter- 
 prise Transportation Company had the very greatest difficulty 
 in getting dock accommodations of any kind in New York city. 
 One pier that it had was taken away from it for purposes of re- 
 construction. It then sought to secure a lease to the newly con- 
 structed Pier 28 in the East river. The pier which it desired 
 was, on June 20, 1906, leased to the Joy Steamship Company, a 
 New York, New Haven and Hartford concern, for $42,000 a 
 year. This is by far the highest rental paid for pier space on 
 the East river and amounts to more per square foot than is paid 
 in most instances on the North river, where dock space is sup- 
 posed to be much more valuable. After the pier had been leased 
 to the Joy Steamship Company it laid practically unused for a 
 long time, thus tending to substantiate the accusation that the 
 high rental was paid by the New York, New Haven and Hart- 
 ford interests, not for the use of the pier, but to prevent its 
 use by a rival. After much difficulty the Enterprise company 
 managed to lease, at a large rental, half a pier from another con- 
 cern that did not need all its space. The Enterprise Transporta- 
 tion Company continued in business for some time and main- 
 tained considerably lower rates, both for passengers and freight, 
 than the competing boats of the New York, New Haven and 
 Hartford Railroad Company's boat lines, thus benefiting ship- 
 pers. But it had to meet the continued opposition of the rail- 
 road interests in many ways. For instance, the New York, New 
 Haven and Hartford steamship lines could get a through rate 
 with the Pennsylvania Company much lower than could be se- 
 cured over the Enterprise route. This matter was several times 
 called to the attention of the Interstate Commerce Commission, 
 which body in one of its reports said : 
 
 "In an investigation entitled 'In the matter of alleged discrimination 
 against the Enterprise Transportation Company b.y railroad lines leading 
 from New York City 7 (11 I. C. C. Kep. 587) it was shown that railroad lines 
 west from New York City made joint through rates with the New England 
 Navigation Company, controlling the Fall River line of steamers, which 
 plies between New York and Fall River, Mass., and some other New Eng- 
 land cities, and also controlling other important steamer lines operating on 
 
 57 
 
Long Island Sound. Such joint rates applied in both directions between 
 Western and New England points. The New England Navigation Company 
 is owned and operated by the New York, New Haven and Hartford Bail- 
 road Company. The rail lines centering in New York and running westerly 
 thereof refused, for stated business reasons, to make the like or any joint 
 rating arrangement with the Enterprise Transportation Company, a steam- 
 ship line pyling between Fall River and other New England points and New 
 York City and in competition with the New England Navigation Com- 
 pany's Fall Eiver line. 
 
 "It appeared that the Fall River line might, by reducing rates on 
 local traffic force out of business the Enterprise Transportation Company, 
 while obtaining a lucrative and supporting business from the through traffic, 
 and upon disappearance of such competition restore the former charges. 
 The existence of the Enterprise Transportation Company as a competitive 
 factor was of distinct value to the public, and that existence might depend 
 upon its right to engage in through business. This investigation was made 
 by the Commission with the understanding that it was without power to 
 grant any relief, and no opinion as to whether the through routing arrange- 
 ment should have been extended to the Enterprise Transportation Company 
 was expressed; but the Commission expressed the opinion that if the pub- 
 lic is to have the legitimate benefit of water competition it is evident that 
 authority should be provided to establish through routes between rail and 
 water carriers, or at least to prevent unjust discrimination by rail carriers 
 between connecting water lines." 
 
 After the amendment of the Interstate Commerce law this 
 charge of discrimination against the Enterprise Transportation 
 Company was again brought before the Interstate Commerce. 
 Commission and an order was issued requiring the Pennsylvania 
 railroad to make reasonable through route and joint rate ar- 
 rangements with the Enterprise Company. But before this or- 
 der actually became operative the Enterprise Company gave up 
 the struggle and went out of business in the fall of 1907. 
 
 On the very same day on which Pier 28 in the East river was 
 leased by the dock authorities to the Joy Steamship Company 
 at an exceptionally high rental, thus keeping it out of the hands 
 of the Enterprise Transportation Company, the dock authorities 
 made leases of valuable dock space in the North river to certain 
 transatlantic lines and justified the very low rental on the 
 grounds that it was the duty of the dock authorities to encour- 
 age commerce. But vessel interests engaged in coastwise ship- 
 
 58 
 
ping business in opposition to railroad controlled boats have 
 not shared in that encouragement. It is predicted by some that 
 the Metropolitan Steamship Company, not under railroad con- 
 trol, will have very great difficulty in securing dock accommo- 
 dations in New York harbor next year unless it makes terms 
 with the New York, New Haven and Hartford railroad interests. 
 
 The Evil of Definite Term Leases. 
 
 The greatest objection to private ownership of dock facilities 
 is that the private owners may use their control to suppress 
 competition and promote monopoly. A study of the New York 
 situation indicates that public ownership under the system of 
 long term leases may be productive of the same evil, but to a 
 lesser degree. Private ownership, being perpetual, would tend 
 to make the abuses perpetual. But under public ownership, and 
 with the leasing system in use in New York city, the leases will 
 expire in twenty or thirty years at the outside and thus enable 
 the public in the course of time to regain control. If all leases 
 to piers in the harbor of New T York were subject to revocation 
 at any time, as is the policy in New Orleans, San Francisco, 
 Montreal, Liverpool, Glasgow and many other European ports, 
 the evils I have pointed out in the New York situation would not 
 develop, or if they did, could be easily remedied. The railroads 
 are popularly supposed to be very influential in. the politics of 
 California, yet I was unable to find any criticism that the Har- 
 bor Commissioners in San Francisco, where pier leases are revoc- 
 able at will, have used their power to suppress independent boat 
 lines engaged in business in competition with railroad-owned 
 boat lines, although the struggle of the railroads for the control 
 of all coastwise shipping business is in evidence on the Pacific 
 as well as on the Atlantic seacoast. 
 
 The pier space in New York is not utilized to the best ad- 
 vantage. The railroads have more of the pier space than they 
 really need. Several boat lines have piers devoted to their own 
 exclusive use and do not have the business to keep the piers 
 occupied all the time. Many of these piers could accommodate 
 more boats. Yet, while this is true, shipping is kept out of New 
 York city because of inability to secure dock facilities. This is 
 
 59 
 
especially true of boats that would like to engage in the coast- 
 wise traffic. If all leases to municipal piers in the harbor of 
 New York were revocable at any time, as in New Orleans, San 
 Francisco and Montreal, the harbor authorities could make a 
 rearrangement which would permit the accommodation of boat 
 lines that are now excluded. 
 
 As Chicago's study of the street railroad question led to the 
 conclusion that all franchises to street railway companies should 
 be subject to termination at any time, so a study of the dock 
 problem here and elsewhere must lead to the conclusions : First, 
 that if the docks are developed and owned in first instance by a 
 private corporation, the franchise should be subject to termina- 
 tion at any time; and second, that the leases to the boat com- 
 panies for dock space should likewise be subject to revocation 
 at any time, or on short notice. 
 
 The only excuse offered in New York for leases of twenty 
 years' or thirty years' duration is that the lessee usually is re- 
 quired to build a shed upon the pier and that as the shed, at the 
 end of the lease, becomes the property of the city, the lessee 
 must have a sufficient guaranteed time to insure his getting his 
 value out of the shed. There are two ways of meeting this ob- 
 jection. Either the city should build the shed as well as the 
 dock in first instance, or the city in reserving the right to term- 
 inate the lease should provide for reasonable payment to the 
 lessee on account of the shed, in case of revocation. 
 
 Recommendation for Chicago. 
 
 Possibly at the outset in Chicago it might be expedient to 
 compromise and provide that leases should have ten years of 
 definite duration and after that be subject to revocation at will. 
 
 Baltimore started out with the policy of making fifty year 
 leases. As in New York, this policy was justified because the 
 lessee erected the shed and it was deemed necessary on this ac- 
 count to give long guaranteed time to enable the lessee to get the 
 value of his shed back. The engineer in charge of harbor work 
 announces that he intends to recommend city construction of 
 sheds as well as piers in the future, thus doing away with the 
 necessity for long term leases. Outside of New York and Balti- 
 
 60 
 
more, leases of definite term duration generally are for periods 
 of not more than twenty years and frequently the period is much 
 shorter than twenty years. In Boston private dock owners in 
 numerous cases make twenty year leases. The arrangements 
 which the Boston and Maine railroad make with boat companies 
 for the use of docks are generally limited to five years. The 
 Massachusetts Harbor and Land Commissioners make no leases 
 of dock space for longer than fifteen years. In Seattle the North- 
 ern Pacific Railroad Company makes twenty year leases, but 
 provides for revaluation and change of rental every five years. 
 The Canadian Pacific Railroad Company in Vancouver makes 
 twenty year leases which are subject to termination at the will 
 of the company. The leasing arrangements of the Chicago, Mil- 
 waukee and S>t. Paul railroad with the boat companies for the 
 use of railroad docks in the port of Milwaukee are usually for 
 five year periods. The Bush Terminal Company in New York 
 makes no leases for longer than ten years. It is argued by offi- 
 cials of this company that ten years is about as long as condi- 
 tions can be foreseen with any degree of accuracy. 
 
 Whatever leasing policy the city might deem wise for itself 
 it would naturally expect a corporation developing docks under 
 a franchise to follow. If the rights of shippers and vesselmen 
 are to be safeguarded under a system of private ownership of 
 docks, provision must be made for continuing public control of 
 dock management, including supervision of leasing policy. 
 
 I have assumed that the system of leasing pier space to boat 
 owners, as distinguished from systems of dockage or wharfage 
 charges, would be followed in Chicago, as that system is the 
 simplest and is the one with which the shipping interests of the 
 Great Lakes are most familiar. It should be the policy of the 
 city, however, to have at all times some unleased pier space at 
 which occasional boats may load and unload. For the use of 
 such piers it would be most convenient, perhaps, to provide a 
 schedule of wharfage dues, after the manner of Galveston, im- 
 posing a charge of so much a ton on goods moved over the pier. 
 For passenger boats not having regular leased pier space it 
 would be necessary to devise a system of charges based probably 
 on the size of the boat. 
 
 61 
 
m. 
 
 THE IMPORTANCE TO CHICAGO OF THE PAS- 
 SENGER, PACKAGE FREIGHT, AND FRUIT 
 AND VEGETABLE BUSINESS. 
 
 Although considerable attention was given to this phase of 
 the subject in the report of the Harbor Commission, it may be 
 well to point out again in the present connection the importance 
 to Chicago of the passenger, package freight, and fruit and veg- 
 etable business. In earlier stages of development the great raw 
 materials and bulk commodities constitute the larger part of 
 the water traffic of any port. But as communities progress other 
 forms of traffic grow in comparative importance. 
 
 Chicago could have a much lager water traffic in the miscel- 
 laneous cargo line if it would but provide better accommoda- 
 tions for handling such articles of commerce. Better facilities, 
 no doubt, would greatly encourage passenger traffic on the lakes. 
 The development of such traffic signifies much for the health 
 and pleasure of our own inhabitants and makes the city a much 
 more attractive place for visitors. 
 
 Better facilities for handling fruit and vegetables are sorely 
 needed in Chicago. Increase of traffic and better service to con- 
 sumers should follow improvement of facilities for handling this 
 class of business. 
 
 Some figures may help us to understand the importance of 
 the package, or unclassified freight movement. The freight 
 movement of 81,000,000 tons on the Great Lakes in 1907 is classi- 
 fied approximately as follows : 
 
 63 
 
Per cent. 
 
 Iron ore and other minerals (except coal) 58 
 
 Lumber 
 
 Grain and grain products 7 
 
 Hard coal 5 
 
 Soft coal 19 
 
 Unclassified, including merchandise, fruits and 
 
 vegetables 8 
 
 Total 100 
 
 It will be seen from the foregoing table that for the Great 
 Lakes as a whole the percentage of unclassified freight is greater 
 than that of hard coal, grain and grain products, or lumber. For 
 Chicago the percentage of unclassified freight to the total freight 
 handled in the port is higher than that for the Great Lakes as an 
 entirety. The receipts and shipments of the port of Chicago 
 (including both the Chicago and Calumet harbors) for 1907 were 
 11,410,470 net tons. Of this sum the receipts were 8,564,754 and 
 the shipments 2,845,716 net tons. The receipts and shipments 
 by water in the port of Chicago in the year 1907 may be classi- 
 fied in percentages as follows : 
 
 Receipts, Shipments, 
 per cent. per cent. 
 
 Iron ore and other minerals (except coal) . . 62.35 .63 
 
 Lumber 8.58 .07 
 
 Grain and grain products 21 72.00 
 
 Coal (both hard and soft) 16.51 4.03 
 
 Unclassified 12.35 23.27 
 
 Total 100.00 100.00 
 
 The following extract from the report submitted by me to 
 the Chicago Harbor Commission last year gives some figures 
 designed to indicate that the unclassified freight movement is 
 of much more value than might be inferred from the compara- 
 tive tonnage statistics : 
 
 "With respect to lines of lake commerce, Chicago f s interest would 
 seem to lie most in the direction of increasing the package freight or mis- 
 cellaneous cargo business. 
 
 "Iron ore, which constitutes about one-half the total tonnage of lake 
 commerce, is little seen in the Chicago harbor. Nor do we care for it there. 
 The great blast furnaces do not belong in the center of the city. They are 
 
 64 
 
better located for all concerned where they are, at South Chicago, Indiana 
 Harbor and Gary. 
 
 "Chicago is still the world's greatest lumber market, although the 
 arrivals by water have greatly decreased. The water business is stiH of im- 
 portance, however, and many lumbermen think the present volume of busi- 
 ness may be maintained for a generation or more. At any rate, it is im- 
 portant that the city have facilities for handling such quantity of lumber 
 as may continue to come here, even though no increase may be looked for, 
 owing to the disappearance of the timber supply at points available for 
 water transportation. '.The place where the lumber is wanted appears to be 
 the Chicago river and not the Calumet. For the year 1907 Chicago re- 
 ceived in round numbers 2,400,000,000 feet of lumber, of which 400,000,000 
 feet, or one-sixth, came by water. Not many years ago the receipts of lum- 
 ber by water greatly exceeded those by rail. 
 
 "The coal unloading facilities in the Chicago river are not as good as 
 at other leading lake ports. Perhaps they are as good as are warranted by 
 the condition of the harbor. Eiver improvement might be expected to lead 
 to the introduction of better unloading facilities. While the Calumet river 
 may answer as a trans-shipping point, it cannot meet the needs of Chicago 
 proper as a receiving point for coal for consumption in this city. 
 
 "The number of grain elevators on the Chicago river is growing smal- 
 ler. As elevators have been destroyed by fire or other cause they have not 
 been rebuilt. The center of the wheat trade is moving westward and north- 
 ward away from Chicago. The city, however, while it does not lead in 
 wheat, is still the world's greatest grain market. The center of the corn 
 supply is not likely to move away. Much of the grain storage of the city 
 is on the Calumet river. Except for one consideration it might be a matter 
 of indifference to the community at large whether the grain center be on 
 one river or the other, apart from the question of preserving investments 
 already made. That consideration has to do with the encouragement of the 
 package freight business. While the total volume of freight east is greater 
 than the volume west, more package freight moves west than east. The 
 package boats, therefore, need grain cargoes east, in part at least. And as 
 most of the package freight comes into Chicago rather than the Calumet 
 river, it is highly important that there be elevators in the Chicago harbor 
 to supply the package boats with their return cargoes of grain. These 
 boats would find it disadvantageous to be obliged to go to South Chicago 
 for grain, especially for partial cargoes, after unloading in the Chicago 
 river. This constitutes an argument for encouraging at least a considerable 
 number of grain elevators to stay in the Chicago harbor. 
 
 "Because iron ore, grain, coal and lumber constitute the principal vol- 
 ume by weight of lake commerce, it is assumed in some quarters that they 
 alone are worthy of serious consideration. The package freight or miscel- 
 laneous carim business, however, is of very great importance. The great 
 
 65 
 
dry goods and grocery houses of Chicago actually bring in enormous quanti- 
 ties of merchandise by water. The ability to do so constitutes the principal 
 reason for the pre-eminence of this city as a wholesale and jobbing center. 
 It is difficult to obtain precise information as to the volume and value of 
 this traffic, because facts of this nature are not freely given to the public 
 by concerns engaged in keen competition with one another. 
 
 "From the record and decision of the Interstate Commerce Commission 
 in the case of Wyman, Partridge & Co. and others against certain lake 
 and rail carriers, docket No. 1126, certain specific information is obtainable 
 with reference to the business of Wyman, Partridge & Co. of Minneapolis and 
 Marshall Field & Co. of Chicago. For the year 1905 the latter firm brought 
 into Chicago by lake approximately 18,000 tons of merchandise, having an 
 invoice value at points of shipment of about $12,000,000. The lake and rail 
 receipts of Wyman, Partridge & Co. for the same year were 6,000 tons, of an 
 invoice value of $3,000,000. 
 
 "The receipts of unclassified freight in the port of Chicago including 
 Chicago and South Chicago for the year 1905 were 1,098,054 tons. The 
 shipments were 640,042 tons. Of the receipts of 1,098,054 tons, the 18,000 
 tons belonging to Marshall Field & Co. represented a value of $12,000,000. 
 The total hard coal receipts at Chicago and South Chicago for the year 
 1905 were 884,057 net tons. At Buffalo September prices, $4.91 a ton, this 
 coal was worth $4,330,719.87, or only a little more than one-third the invoice 
 value of Marshall Field's receipts by lake for the same year. The wheat 
 shipments by lake from Chicago for 1905 were small, only 5,498,868 bushels. 
 But the larger shipments of 1907, 14,448,231 bushels, had less value than the 
 receipts of Marshall Field for 1905. The corn shipments of 1905 were 44,- 
 939,308 bushels. At 40 cents a bushel the value of this corn would be only 
 about 50 per cent more than the Marshall Field receipts by lake. The lum- 
 ber receipts by lake for 1905 were 423,993 thousand feet. At $20 a thou- 
 sand, a high price, this lumber would have only two-thirds the value of the 
 Marshall Field lake receipts. The iron ore brought into the port in 1905, 
 principally in South Chicago, amounted to 3,324,320 tons. At $2 a ton this 
 ore would have only a little more than half the value of the Marshall Field 
 receipts. 
 
 "The entire value of Duluth's traffic for 1905 was: 
 
 ' ' Eeceipts $31,849,509 
 
 ' ' Shipments 74,065,789 
 
 "Total $105,915,298 
 
 "The value figures for Chicago's receipts and shipments are not avail- 
 able, but if they were it is evident that Duluth's commerce', despite its 
 greater tonnage, would be comparatively insignificant in value. 
 
 "Federal government reports (see Monthly Summary of Commerce and 
 Finance) give, estimates of value of traffic through .the Soo. According 
 
to these reports, the value of unclassified freight passing through the Soo 
 developed from $18,744,600 in 1889 to $170,227,650 in 1906. The value of 
 the iron ore traffic grew from $14,335,492 in 1889 to $121,981,795 in 1906. 
 In other words, the unclassified freight through the Soo in 1906, of 1,134,- 
 851 net tons, was worth approximately $48,000,000 more than the 35,357,042 
 tons of iron ore passing through the same channel. The unclassified freight 
 passing both ways through the Soo is about the same in volume as that 
 entering the port of Chicago. Against the 1,134,850 tons of unclassified 
 freight traffic through the Soo in 1906, Chicago had receipts of 1,035,- 
 317 tons. For the years 1905 and 1907 Chicago's receipts of unclassified 
 freight exceeded the Soo traffic. It would seem to be a good guess that the 
 unclassified freight received at Chicago would have a higher average value 
 per ton than that passing through the Soo. 
 
 "Value of the articles handled, as well as tonnage, must be taken into 
 consideration in measuring the value of traffic to a community. 
 
 ' ' The fruit traffic is one form of the miscellaneous cargo business that 
 is of special importance to Chicago. In most instances rail carriage is con- 
 sidered preferable to water carriage, unless the latter offers lower rates. 
 But for fruit, water carriage is best in cases where the destination can be 
 reached by a night's run. The lack of the jarring motion of the train 
 and the coolness of the water journey cause fruit carried by boat to arrive 
 in better condition. The fruit belt of Michigan is just about a night 's run 
 from Chicago and fruit gathered in the late afternoon can be placed on the 
 dock in Chicago early the next morning, in time for delivery for consump- 
 tion the same day. As has already been indicated, in the discussion of the 
 passenger boat business, the fruit handling facilities in this port leave 
 much to be desired." 
 
APPENDIX A. 
 
 Extract from Report of the Street Railway Com- 
 mission to the City Council of Chicago, 
 December, 1900. 
 
 PUBLIC CONTROL AND DURATION OF GRANTS. 
 
 These two matters should be considered together because of the inti- 
 mate relation one bears to the other. 
 
 The primary object in granting to private corporations the right to 
 encumber the public streets with car tracks is to secure street car service. 
 Unless this primary object is accomplished the street railway policy of the 
 city must be said to be a failure, no matter how large revenues may be 
 secured for the public treasury, nor how advantageous for the city the 
 terms of a franchise grant may be in other respects. How to secure ade- 
 quate service at reasonable rates is, therefore, the essence of the street 
 railway problem. All other considerations, comparatively speaking, are of 
 secondary importance. 
 
 One way that suggests itself of securing adequate service is to stipu 
 late for it in the franchise. But franchise stipulations of this kind are not 
 self-executing. It is one thing to insert in a grant provisions requirng 
 certain things in the way of service. It is quite another matter actually 
 to get the things done. Moreover, it is absolutely impossible to make stip- 
 ulations today that will fit the changed conditions of tomorrow. No person 
 is wise enough to formulate for insertion into a street railway franchise 
 that is to be interpreted as a contract all the stipulations that will be 
 necessary to insure good service for the period, say, of a generation for 
 which the franchise may run. In fact, the more a street railway franchise 
 partakes of the nature of a contract, which cannot be altered in any 
 material respect except with the consent of both parties, even to meet 
 changes in conditions which could not be foreseen at the time the grant 
 was made, the less satisfactory is it certain to prove in operation and the 
 more is it likely to militate against healthy and progressive development. 
 On the other hand, the more such a franchise partakes of the nature of a 
 mere license, being subject to complete regulation and control by the 
 public authorities at all times, the better for the public at large. Mere 
 property interests of a government, like the property interests of an indi- 
 vidual, may properly enough be contracted away. But governing authori- 
 
 69 
 
ties ought not, by contract, to divest themselves of governing functions. 
 Control of the public streets and of the public means of transportation 
 thereon, is a governing function which should, so far as possible, be 
 vested in the proper governing authorities at all times. Such control should 
 be continuous and properly ought not to be surrendered beyond recall, 
 either by contract or in any other manner. But, of course, it is surrendered 
 to a greater or less degree by the ordinary definite term street railway 
 grant with which we are familiar. The present widespread dissatisfaction 
 with street railway management in private hands, it would seem, may in 
 large measure fairly be attributed to the fact that public authorities have 
 not retained continuous control, as they should have done, but have per- 
 mitted themselves to be divested of it by contract. British and German 
 cities generally have a reputation for marked ability in making contracts 
 with public service corporations, and some of the agreements made by those 
 cities, conferring franchise rights, are remarkable for the ingenuity and 
 detail with which they seek to guard against future contingencies. But 
 the results under these very carefully drawn contracts do not seem to be 
 satisfactory, because, as the contract periods expire, British and German 
 cities are rapidly adopting the policy of municipalization. Some contend 
 that the careful restrictions of the contracts made by British and German 
 cities tend to hamper and discourage private enterprise and thus to pre- 
 clude satisfactory street railway development under private management. 
 Whether this or some other explanation be accepted as the correct one, 
 the fact remains that the system of regulation by contract has not proven 
 satisfactory in British and German cities, as attested by the fact that this 
 system is being abandoned with considerable rapidity for the policy of 
 municipalization. Prof. James, of the University of Chicago, who has 
 lately returned from a trip of investigation of German cities, tells an 
 incident which helps to an understanding of the movement toward munic- 
 ipal ownership in Germany. In reply to a question as to the reason why 
 the City of Cologne was proceeding to take over its tramways, the Mayor 
 of that city said to Prof. James: "We are taking over the tramways 
 because it was found impossible thoroughly to safeguard the public inter- 
 ests under any contract with a private corporation that could be drawn." 
 
 There is unquestionably in American cities a strong popular trend 
 in the direction of municipalization of street railways. It seems also to 
 be unquestionable that the growth of municipalization sentiment is due 
 in large measure to the failure, or supposed failure, of many American 
 cities to get satisfactory results from public service corporations with 
 which they have attempted to deal on the contract basis. 
 
 One of two things appears to be inevitable. Either a system of really 
 effective continuing public control over street railways must be developed 
 or street railways are virtually certain to be municipalized sooner or later. 
 Manifestly, therefore, it should be the part of those who look with dis- 
 
 70 
 
favor upon the idea of municipalization to do what they can to assist in 
 developing a system of control over street railways that will prove satis- 
 factory to the public. 
 
 In attempting to devise a system of effective public control, the impor- 
 tant considerations are: (1) That adequate powers of control be reserved 
 to the governing authorities to be exercised by such authorities in their 
 discretion at any time; (2) that special machinery be created for the purpose 
 of insuring the intelligent exercise of such powers of control in the interest 
 of the public. 
 
 As has been said, franchise stipulations designed to insure adequate 
 service are not self executing. There must be some supervising body, 
 whose special business it is to see that the things stipulated are actually 
 done. Moreover, specific franchise stipulations cannot possibly cover all 
 points in relation to service that may arise. The proper governing author- 
 ities should be able at any time to make such regulations, or to order 
 such improvements in service, as the needs of the public may require. 
 Therefore broad powers of control should be reserved to the governing 
 authorities, to be exercised as need may arise. Section 6 of the proposed 
 bill aims to reserve to city councils broader powers of control than are now 
 possessed. If this bill should not become a law before the settlement of the 
 pending franchise-renewal problem, the City Council by all means ought 
 specifically to reserve such powers of control in any grant that may be 
 made. 
 
 Having reserved the right of control, special governmental machinery 
 for the exercise of such right must be devised if the control is to be 
 really effective and of benefit to the public. Chicago today has rights 
 of control which are not exercised for the lack of any supervising body 
 whose special business it is to recommend regulations for the improve- 
 ment of the service and to see that existing regulations are properly 
 enforced. 
 
 What should this machinery be? Two plans or methods are naturally 
 suggested for consideration. One is the creation of a Commission to be 
 entirely independent of the Council. The other is to have the desired 
 machinery of control developed within the Council. The Street Eailway 
 Commission gives its approval to the latter plan. 
 
 It would recommend that a new standing committee of the Council 
 be created, to be known, perhaps, as the Committee on Local Transporta- 
 tion. This committee in many respects might well be modeled after the 
 Track Elevation Committee. It should not be large in number. It should 
 have regular quarters in the City Hall, which should at all times during 
 business hours be open for receiving complaints concerning service from 
 citizens, and for the imparting of information. This committee should have 
 such expert and clerical assistants as might be required. These assistants 
 
 71 
 
should be under the protection of the civil service law, to the end that 
 their tenure of employment should be permanent or during good behavior, 
 in order that the city may have the benefit of their experience after they 
 have become familiar with the problems to be dealt with. The most 
 important feature of this plan is the one providing that the Council, 
 through its committee on this subject, should have at its service a per- 
 manent force of experts 'to advise and assist it in dealing with the various 
 problems of local transportation as they may arise. 
 
 Naturally, too, this same committee, with its expert advisers and its 
 mass of accumulated information and experience, is the one to which 
 ordinances conferring the right to construct or operate street railways 
 would be referred. This committee, acting for the Council, would be better 
 qualified to conduct the preliminary negotiations with a private corpora- 
 tion over franchise terms than would a committee that is only occasionally 
 called upon to consider street railway matters. The present plan of 
 referring street railway ordinances to one of three committees (Streets and 
 Alleys, West, North or South, as the case may be), according to the 
 part of the city in which it may be proposed to locate the road, is espe- 
 cially objectionable as tending to foster the sectionalism which it should 
 be the object of a well considered street railway policy to obliterate. If 
 the street railway systems of the city ought to be unified as far as possible, 
 and the Commisison believes they should be, the City Council itself ought 
 to take the first step in that direction, by having one committee to con- 
 sider all street railway matters, rather than three committees, made up on 
 strictly sectional lines, as is the case at present. 
 
 All Grants Should Expire Together. 
 
 In order for the city to control the situation satisfactorily it must be 
 able to deal with the problem as an entirety at any given time, which 
 it is not in a position to do when some outstanding grants expire at one 
 time and some at other times. It ought to be the policy of the city in the 
 future, therefore, to make provision to have all grants expire at the same 
 time. This is a matter of much importance. 
 
 Duration of Grants. 
 
 It was said at the opening of the discussion under this heading that 
 the question of duration of grants was closely related to the problem of 
 public control. The nature of that relation will now be considered. 
 
 As has already been stated, efforts to control public service corpora- 
 tions through contractual agreements generally have proven unsatisfactory 
 wherever tried, whether in this country or in Europe. The Commission, 
 in the plan recommended for the reservation of broad powers of control, 
 hopes to secure better results than can possibly be secured through con- 
 tract stipulations in the franchise with reference to service. But the 
 
 72 
 
Commission does not delude itself with the hope that the results under .this 
 plan will be entirely satisfactory and perhaps they may not in practice 
 prove even approximately so. It is difficult to compel a corporation enjoy- 
 ing definite term rights in the public streets to do what it may desire for 
 reasons of self-interest not to do. The only way for the city to be certain 
 of its ability to exercise complete control over its public streets and over 
 the means of transportation thereon is for it not to surrender beyond 
 recall any rights of use or of occupation in such streets. The city can 
 control completely only when it is in a position to terminate at any time 
 the right of use claimed by any person or corporation that may choose to 
 defy the will of the city -in any respect. In other words, the grant 
 terminable at any time at the will of the city authorities is the only kind 
 under which the city can be sure of its ability to dominate the situation 
 at all times. And it is precisely in the communities where that form of 
 grant obtains that the best results generally are secured, and it is in such 
 communities that the relation between the corporations and the public 
 are the most satisfactory. We refer to the State of Massachusetts and to 
 the City of Washington, D. C. 
 
 In Massachusetts street railway grants do not run for any definite 
 period. A company is simply granted a " location, " that is, it is per- 
 mitted to lay its tracks in a street. But the location may be revoked at 
 any time. Until recently the power of revocation rested absolutely with 
 the local authorities, but the act has lately been amended so as to give 
 the right of appeal to certain state authorities where the company may 
 feel that it has been treated unfairly. But the principle of a grant 
 revocable by the public authorities at will has not been altered. This 
 power of revocation, it is true, has seldom been used, but its existence has 
 served to keep the corporations on their good behavior at all times, and 
 to keep the public authorities complete masters of the situation at all 
 times. Moreover, capital has not been wanting for street railway enter- 
 prises in Massachusetts under these conditions. 
 
 The only careful and thorough-going official study ever made in this 
 country of the subject of the proper duration of street railway grants, so 
 far as this Commission is aware, was that made by a Massachusetts com- 
 mittee, of which Mr. Charles Francis Adams was chairman. The report 
 of that committee, which was submitted to the legislature of Massachusetts 
 in February, 1898, is so enlightening and instructive that lengthy extracts 
 from it are appended to this report. The Massachusetts committee, after 
 an examination of the different varieties of grant in use, declared in 
 favor of the continuation of the Massachusetts system of indefinite term 
 grants. "In theory," it says, "such a franchise is to the last degree 
 illogical." Yet it cannot be said, the Commission further adds, "that the 
 system has for the half century it has been in use worked otherwise than 
 on the whole satisfactory." On the other hand, the term franchise, where- 
 
 73 
 
ever its results were studied, the committee says, "has been productive of 
 dissention, poor service, scandals and unhealthy political action. ' ' The 
 committee adds: "There is probably no possible system productive of 
 only good results and in no respect open to criticism; but, in fairness, the 
 committee found itself forced to conclude that the Massachusetts franchise, 
 which might, perhaps, not improperly be termed a tenure good behavior, 
 would in its practical results compare favorably with any. Certainly those 
 results are as immeasurably as they are undeniably better than the results 
 as yet produced in Great Britain." 
 
 The important thing in the testimony of the Massachusetts committee 
 is the assertion that the Massachusetts system of indefinite term grants has 
 worked well in practice. It is important to know, too, that the system is 
 satisfactory both to the companies and to the municipalities, for at the 
 hearings of the committee neither asked for any change in the form of 
 franchise grant in this respect, except that the companies suggested some 
 "partial measures of protection against possible orders of sudden, ill-con- 
 sidered or aggressive revocation." 
 
 Turning to the City of Washington, we find this same indefinite term 
 grant in use, with most satisfactory results. Washington is one of the 
 smaller cities of the country, and therefore does not furnish as profitable 
 a field of operation from the street railway manager's point of view as 
 do the larger centers of population like Chicago, Philadelphia or New York. 
 Nevertheless, Washington has the best street railway service of any city 
 in the country and it has led most other cities in the introduction of 
 improvements in service. 
 
 In Washington franchise grants are conferred by act of Congress, and 
 all grants are subject to alteration, amendment or repeal at any time, at 
 the will of Congress. Under the power thus reserved Congress orders such 
 improvements in service as it may deem desirable, and whenever it deems 
 them desirable, and the orders are at once executed without parley or 
 litigation. The overhead trolley was never permitted in Washington. When 
 the underground trolley was shown to be feasible, Congress passed an act 
 reading in part as follows: 
 
 "That the said Metropolitan Eailroad Company be, and the same is 
 hereby authorized, empowered and required to equip and operate the lines 
 of its cars upon and along * * * with an underground electric system 
 for the propulsion of such cars." 
 
 Under this order Washington was the first city in the country to secure 
 the underground trolley. 
 
 Under the reserved power to alter, amend or repeal grants at will 
 Congress has required different companies to make arrangements for issuing 
 transfers from the line of one company to those of another, and it has also 
 
 74 
 
required different companies to use certain tracks in common where he 
 public interests would be served by such an arrangement. 
 
 In framing franchise legislation for Porto Eico Congress made pro- 
 vision for this same form of indefinite term grant. 
 
 In view of the fact that the indefinite term franchise has worked so 
 well in practice, it may be in order to question the statement of the Massa- 
 chusetts committee that found in favor of this form of grant that "such 
 a franchise is to the last degree illogical. ' ' Things that are illogical 
 usually do not work well, in the long run at least. The fact that the 
 indefinite term franchise has actually produced such satisfactory results in 
 practice must lead one to inquire if it is not really correct in principle, 
 despite its seeming illogical character. 
 
 As the Massachusetts committee very clearly and very correctly points 
 out, the street car, in evolutionary development, is " nothing more nor less 
 than an improved omnibus, and the tramway a special feature in the pave- 
 ment of the public way; a feature adapted, it is true, to the car's special 
 use, but not necessarily excluding from general use the portion of the street 
 in which it is laid. This is all the street railway was fifty years ago, when 
 first laid; it is all it is now an improved line of omnibuses, running over 
 a special pavement. If this fact be firmly grasped and borne constantly 
 in mind, the discussion, and the principles underlying it, are greatly sim- 
 plified. The analogy throughout is with the omnibus line, and not with 
 the railroad train; with the public thoroughfare, and not with the private 
 right-of-way. Upon this distinction, indeed, all the questions now to be 
 discussed, whether of taxation or of franchise privilege and obligation, will 
 be found to turn. " 
 
 Now, the omnibus is operated under a license that gives no right as 
 against the authority granting the license that cannot be altered or taken 
 away at any time. All would concede the unwisdom and impolicy of 
 making the license for the omnibus a binding contract for a definite period 
 of time that could not be altered or revoked by the granting authority, no 
 matter how conditions might change, and no matter how arbitrary and over- 
 bearing the manager of the omnibus line might be in his dealings with 
 the public. And yet the indefinite term grant or revocable license for the 
 street car, which is only an improved omnibus, is conceived to be illogical. 
 We cannot think that it is so. On the contrary, the indefinite term grant 
 is nearer in accord with the correct principle than is the term grant. 
 
 Because of the great outlay involved in establishing a street railway 
 system, it is said, the owners of such property ought to have some assur- 
 ance that their property value will not be destroyed by some hasty act of 
 revocation. And so they ought. But the assurance should be that, if their 
 rights to use the street be revoked, their property suitable to and used for 
 street railway purposes should be taken off their hands at a fair valuation; 
 
 75 
 
not that they should be privileged to remain in undisputed possession of 
 the public streets for a definite period of time, whether they serve the 
 public well or ill. 
 
 The Street Eailway Commission believes that the definite term grant, 
 whatever its duration, is open to serious objections. It is of opinion that a 
 grant of indefinite duration but subject to termination at any time upon cer- 
 tain conditions, one of which should be the taking of the property of the 
 grantee at a fair valuation, would be productive of much better results. But 
 this idea is so much at variance with commonly accepted views in this state 
 concerning franchise grants, and would mark such a radical departure from 
 present policy, that the Commission has hesitated to do more than to com- 
 mend the idea to public favor. It has not sought to incorporate the idea 
 into the draft of the bill herewith submitted. As a modification of this 
 idea, however, and as a means of controlling the situation in the interest 
 of the public, the Commission would recommend that grants hereafter made 
 contain a provision giving the city the right to terminate the grant and 
 to take over the property at an appraised valuation at the end of every 
 five year period. This provision should be inserted primarily with a view 
 to its use only in case public dissatisfaction with service and conditions 
 should be so great as to make a change in management imperative. With 
 such a provision in the grant there is much less likelihood that there would 
 be cause for public dissatisfaction. 
 
 76 
 
APPENDIX B. 
 
 Extracts from the Report of the Metropolitan Im- 
 provements Commission of 1909, created to 
 study the Boston situation. 
 
 Confusion or rigidity of movement in a terminal situation will produce 
 the same confusion and absence of flexibility throughout the entire trans- 
 portation line using that terminal. 
 
 * * * * * * * 
 
 There has been no united effort or plan for raising the freight termi- 
 nals to the modern standard of efficiency or economy. They require radical 
 improvement if the future commercial opportunities of Boston are to be met. 
 The water terminals are mainly owned and controlled by the railroads and 
 other transportation lines. They are already becoming congested to the 
 point of interfering with the despatch and economy of business, and are 
 in no way comparable in their arrangements and facilities with those of 
 many other cities of less commercial importance. Whether these deficiencies 
 in terminal facilities have already retarded the commercial growth of the 
 city is a question which may not reward discussion, but certain it is that 
 the existing railroad and harbor terminals as now arranged and admin- 
 istered offer slender encouragement to the legitimate aspirations for the 
 future. 
 
 Greater Boston as a Terminal District. 
 
 Greater Boston being in effect one terminal district; the proper improve- 
 ment and development of its terminal facilities should be treated as a 
 single problem. The present arrangement of separate and independent 
 freight terminals for the several railroads and lines of water transporta- 
 tion should be abandoned, and in its place there should be adopted a com- 
 prehensive plan for a flexible and efficient system of interchange terminals, 
 whereby commodities, whether in carload or cargo bulk, or in lesser lots, 
 may be delivered and transshipped from railroad to railroad, or from land 
 to water, or vice versa, and distributed among consignees, with the highest 
 attainable expedition and economy. The establishment of such a system of 
 interchange terminals is of the greatest importance to Boston. The con- 
 trolling features of such a system should be direct and effective connec- 
 tion between all lines of railroad entering the city and every portion of 
 
 77 
 
the terminal system, as well as access to and use of the system and its 
 facilities by every railroad on equal terms for like service. 
 
 Such a system necessarily involves some well-considered plan of water- 
 terminal improvement. Boston for many years has been without any 
 definite plan for harbor development or for the correlation and efficient 
 connection of its terminals. With a few notable exceptions, the wharves 
 and docks of Boston are of insufficient length to accommodate steamships 
 of the size and type now coming into general use. The wharf sheds are 
 mostly of wooden construction, inviting frequent conflagration. Not only 
 should the docks be longer and wider, but the piers should be wide enough 
 to afford ample room for streets, warehouses or freight sheds and railroad 
 tracks. It appears very probable that between the great ports North 
 Atlantic business will soon be done almost entirely by steamships of the 
 combination type large passenger steamers carrying freight. Docks that 
 are to be built should be arranged to a considerable extent for the accom- 
 modation of passenger business as well as freight business. The very fact 
 that so much passenger business has heretofore come to Boston, despite 
 such inadequate facilities, demonstrates that better facilities are demanded, 
 and that the passenger business under reasonably favorable conditions may 
 be expected to show a large increase. It is certainly a matter of congratula- 
 tion and encouragement that the shipping of Boston harbor has so well 
 maintained itself with so little consideration or assistance from the public. 
 The persistence of business under disadvantageous terminal conditions leads 
 to the reasonable conviction that with advanced facilities the port of 
 Boston has a promising future. But harbor terminal facilities must be 
 furnished through private enterprise or by the commonwealth or munici- 
 pality, or by a combination of these authorities. In view of the lack of 
 co-operation on the part of the public authorities, the railroads are to 
 be commended for their enterprise, not only in furnishing dock and termi- 
 nal facilities, but in actively encouraging connecting steamship lines. With- 
 out this the port would long since have come to a commercial standstill. 
 
 The federal government has made it an invariable rule to expend noth- 
 ing in the development of terminals or harbor facilities. It has, however, 
 been very generous in improving the channels and waterways of the harbor, 
 and has made large expenditures for that purpose. In addition to this, 
 the commonwealth between 1870 and 1908 inclusive expended $4,781,435.15 
 in harbor improvements, represented mainly by dredging and related work. 
 The City of Boston itself, on the other hand, has for many years done noth- 
 ing worthy of note in developing its harbor. Added to this comparative 
 neglect on the part of the city, many undertakings, private as well as public, 
 have been established on the water front of the harbor which may seriously 
 hamper and restrict its complete or ideal treatment in the future. Defective 
 facilities and disordered conditions have been allowed to remain unrem- 
 edied, although their injurious effect upon Boston's commerce has been 
 repeatedly recognized and brought to the public attention. 
 
 78 
 
The progressive ports of the world have adopted the contrary policy, 
 and it is now becoming generally recognized that the wise administration 
 of any port requires that it shall plan its facilities and arrangements 
 ahead of present demands, and thus be prepared to meet whatever the 
 immediate future may require. 
 
 Less important commercially than the improvement of freight and 
 water terminals, but of prime consequence to the welfare and safety of 
 the people, is the early adaptation, of the railroad passenger terminals 
 in Boston to modern requirements. The geographical position of Boston, 
 its congested territory and the habits of its people make it the one city 
 above all others which requires well-ordered, rapid and comfortable subur- 
 ban transportation. The electrification of all railroad passenger lines in 
 the Metropolitan District within the next few years is highly probable. 
 Changes in present terminal structures and arrangements whether with 
 reference to freight or passenger terminals should therefore be carefully 
 studied, with due regard to that probable and far-reaching change in trac- 
 tion methods and its inevitable effect upon terminal problems. 
 
 Freight Terminals Radically Reformed. 
 
 The first and most important step of progress must be a general 
 recognition by the public that these matters are of vital interest, and 
 that they are to be dealt with as different but essential features of the 
 one problem of transportation as applied to a commercial and industrial 
 center. A complete and comprehensive plan of improvement should be 
 worked out to a finality, in order that when the plan is at length adopted 
 there shall be no doubt of its effectiveness or feasibility. The studies of 
 the commission have necessarily been preliminary; no detailed engineering 
 plans or estimates of cost of suggested improvements and developments 
 have been made. The many lines of investigation entrusted to the com 
 mission have not left it sufficient time or money for the preparation of 
 such plans or estimates. Final studies should be along the broadest and 
 most intelligent lines, without restriction as to any reasonable expense. 
 The essential thing is to have a plan that is known to be right, and then 
 to follow it without substantial deviation as soon as conditions, financial 
 and otherwise, permit. The main purpose is to secure an adequate ulti- 
 mate development of terminal facilities for the transfer, delivery and 
 distribution of freight, and the requisite improvements in the Boston 
 passenger terminals. 
 
 How to Achieve the Needed Improvements. 
 
 It is % very important, nevertheless, that the public should reach some 
 definite and comprehensive plan with reference to all these desirable 
 railroad, terminal and harbor developments, in order that they may be 
 
 79 
 
carried forward without unnecessary delay. To arrive at such a plan, 
 as a completed study, will certainly require very considerable time and 
 expense, involving engineering details and an exhaustive examination with 
 reference to the matter of cost. The commission recommends that the 
 work of formulating such a plan for ultimate presentation to the legisla- 
 ture be placed in charge of a commission to be appointed by the Governor 
 -and Council, with no other duty than the working out of this great trans- 
 portation problem, and that no reasonable expense be spared to have 
 the studies of that commission so final and complete as to deserve and 
 secure the fullest public approval. 
 
 When, at length, after the final report of such commission, the time 
 shall have arrived for definite action in that regard, the equipment of 
 Boston with a proper system of freight and water terminals, with modern 
 warehouses and port facilities, as well as the reformation of its pas- 
 senger terminals, should be worked out and completed under public direc- 
 tion. There is probably no practicable alternative. Assuming that such 
 improvements could be carried out by a company projected purely as a 
 private enterprise, the transfer and switching charges which a modern 
 terminal system is designated to eliminate would necessarily be continued 
 by such a company as its only source of revenue, and might thereby 
 become perpetuated. The exaction of such charges from the railroads 
 would inevitably evoke their lasting opposition. On the other hand, in 
 so far-reaching a matter, action by the railroads themselves on their own 
 initiative, or effective co-operation among them, is extremely unlikely. 
 This is especially true when there are so many companies owning or oper- 
 ating railroads entering the city. Public direction with railroad co-opera- 
 tion offers the most promising solution of the problem. But such a plan 
 should be,, and if it is to succeed must be, made reasonably attractive to 
 the railroads. No effort should be spared to secure their full co-operation 
 with the public on equitable terms. It is eminently fit that so compre- 
 hensive a proposition as that of terminal and harbor development should 
 be carried out by the united action of the public authorities and the 
 railroads. They would enjoy in common the benefits of an increasing 
 
 , commerce and business, with the resulting growth in population and in 
 wealth. They should, therefore, participate in bringing these things to 
 
 . pass. 
 
 Bearing this view of the matter in mind, the most feasible method of 
 bringing the present inadequate and ill-connected terminals of Boston 
 intq. one great modern terminal system would appear to be through a 
 terminal company, to be organized and promoted by the joint action of 
 the public authorities and all the railroad companies. The reconstruction 
 of the passenger terminals and their connection by the proposed tunnel, 
 upon the adoption of the above or any similar plan, should be carried 
 
 ' 
 
 out chrough the instrumentality of the same terminal company. Such 
 
 80 
 
terminal company should acquire the terminal properties and sites" for 
 terminals now owned by the railroads, with all connecting track lines, so 
 far as they would form an essential or natural part of the proposed termi- 
 nal system. 
 
 Whatever plan may be adopted for acquiring and paying for these 
 properties, its one paramount requisite is that it shall be perfectly just 
 to railroads and public alike. If a basis of acquisition could be formulated 
 agreeable to the railroads, payment for the properties acquired from them 
 might be made in stock or bonds of the terminal company, or partly in 
 each class of securities. All or a portion of the bonds of the terminal 
 company, as the case might be, could be issued for additional terminal 
 properties and for improvements, construction and developments. To secure 
 the advantage of lower interest rates, and in recognition of its own par- 
 ticipation in the whole proceeding, the Commonwealth might very prop- 
 erly guarantee the payment of the bonds of the terminal company, the 
 mortgage securing such bonds to contain proper sinking-fund requirements. 
 Following various precedents, the bonds might with equal propriety be 
 exempted from taxation and made a savings-bank investment. The man- 
 agement of the terminal company should be by the railroads and the Com- 
 monwealth jointly, each electing a definite proportion of its board of 
 directors. Terminal operations would thus be controlled and managed in a 
 way that would amply conserve railroad interests and at the same time 
 afford a proper measure of protection to the public. With appropriate 
 legislation there would be 110 legal obstacle in the way of such joint action 
 by the public authorities and the railroads. Moreover, there ought to be 
 no reason why this should not be entirely practicable. 
 
 ******* 
 
 The commission has sought to make it clear that the water front of 
 the Metropolitan District affords the highest possible opportunity and 
 promise for commercial and industrial development. It follows as a corol- 
 lary that the source of such opportunities should be in every way properly 
 safe-guarded. Nothing further should be done by the public in the way of 
 takings for purposes or otherwise which will divert any portion of 
 this great water front from its potential use for commerce and industry. 
 The commission has recommended the permanent reservation of certain 
 areas within Boston harbor for the location of a future system of docks. 
 It is a matter of regret that the most available industrial sites along 
 the water front cannot be similarly reserved. 
 
 SI 
 
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