OWNERSHIP OF PUBLIC UTILITIES

OWNERSHIP OF PUBLIC UTILITIES

C. W. WILES.

Within the past few years there has been a wave of sentiment in favor of public ownership of waterworks, electric light and gas plants. Following that, come discouraging reports that the public ownership of these utilities in England and Scotland have proved disastrous failures. In this country, no doubt, there has been a growing sentiment in favor of cities owning the waterworks, and, in a less degree favoring the ownership of the electric light and gas plants. In some cases there can be no doubt that this sentiment has been fostered and encouraged by persons who expected to benefit in some way by public ownership, if they could be controled by politicians, without regard to the cost to the public. When a waterworks is operated by a company, it is on the same basis as any other business, and is expected to return for its investment a reasonable per-cent, on its cost. When operated by a city, it is supposed to yield a proper return to pay interest on bonds, provide for depreciation and repairs, and a fund for future extensions and payment of bonds—allowing the net profits to the citizens in the way of reduced rates for water. In a large number of cities the payment for water used in public buildings for fire protection, parks, and sewers is not made, and the consumers pay a sufficient rate for their water to meet all these added expenses. If cities should pay into the water department a proper amount for fire protection, based on the number of hydrants (as would be the case, if the works were owned by a private company,) and for all water used in public buildings, parks, fountains and sewer-flushing, then this department would be operated on the same basis as a plant owned by a company, provided the same economy and care were exercised in its operation, then the rates to the consumers could be reduced, so that the people would have water furnished at net cost. In a table prepared by Mr. Dow R. Gwinn, of Terre Haute, Ind., of 122 cities, 82 of which have municipal ownership, and 40 private ownership, the following rates are shown. The averaged rate charged by municipal plants for domestic use in a house of six rooms, is $5.98 per annum; by private ownership, $6.72— showing 74 cents in favor of municipal works. The average for a six-room house, with closet, bath, washstand and 30-ft. lawn is, municipal works, $16.75; private, $20.84—showing an average difference in favor of the municipal ownership of $4.09 per service per year. With all other conditions equal, this would show the net profit to the private company. This is not taking into account the fact that a larger proportion of the works that furnish filtered water are of private ownership, and the cost to deliver good water is, therefore, greater than many of the larger works that pump direct from rivers and lakes. Within the past two or three years a number of the largest cities, seeing the necessity of filtered water, are installing purification plants, and in every case will advance the cost of water to the consumers. Therefore, the actual difference in the price of wrater by the two is not great; and we must also consider that private works must base their rates, so that the revenue will meet interest on cost of construction, maintenance, repairs, and sinking fund, for payment of bonds, while many municipal works make no provision for interest on cost of construction, taxes, or a reserve for payment of bonds, depending on a general tax for those items, if the revenue from the consumer is insufficient after paying maintenance and repairs. There is no doubt that with many advantages enjoyed by a municipal works, such as lower rate of interest on bonds, exemption from taxes, and, in some cities, a frontage tax on unimproved property, with equally careful and economical management under expeiienced employes, they can supply water at a lower rate than a private company. But, with municipal works under a political management, where the employes are chosen because of their political influence, and subject to change with every new city administration, and where faithful and experienced men give way to w’ard politicians or favorites without regard to fitness, it is no wonder that public ownership of these utilities may become an expensive burden to the taxpayer, and the property rapidly depreciate in value. In justice to municipal water departments, every city should cause to be paid into such department a fair return for the water furnished for fire protection, for all water used in public schools and buildings, parks, fountains, sewer-flushing and streetsprinkling, and all public uses, then the water department would have credit for the service rendered, and the management would know how to apportion the rates to the private consumer, so that he could have his water at first cost, above an adequate return for investment in the plant and its maintenance. There is no doubt that the general public sentiment will demand municipal ownership of at least waterworks, and that many private plants will gradually pass into the control of municipalities. It is with regret that we note that in a few cities the desire for municipal ownership has led them to take an unfair and unreasonable method to dispose of the private company that had served the people faithfully for many years. In order to obtain the property at a very low value, they have threatened and, in some cases, have begun the construction of competing plants, thereby attempting to render value-

less the property that was constructed when they greatly wanted it and were unable to construct for themselves. It would seem that common honesty would prompt an attempt to acquire such plants by a fair appraisal of its value at least. We find in Professor Edward W. Bemis’ work, entitled “Municipal Monopolies” that in the year 1800 there was but one public waterworks and fifteen private in the United States, and up to 1850 there were only thirty-three public and fifty private; in 1865 there were sixty-eight public and ninety-four private; in 1880, 293 public and 305 private; in 1885 there were 447 public, and 566 private; in 1890, 806 public and 1,072 private; but from this time to the present the gain of public ownership has been much greater than private. In the northern central and northwestern States the proportion of public ownership is the greatest. Two hundred and five works have been acquired by cities, and twenty have passed to private control; of the fifty largest cities in this country twenty-one have always owned their works; twenty have changed from private to public ownership, and nine are owned by private companies.

At Pueblo, Mex., the commission of the coming Centennial exposition has arranged with Gomez Conde to install electric pumps to raise the waters from his concession at la Noria to the top of the Cerro de San Juan, from which point it will be distributed over all the grounds of the exposition.

•Paper read at the twenty-eighth annual convention of the American Water Works association, Washington. D. C., May, 1908.

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