MUNICIPAL OWNERSHIP is a term broad enough to include the ownership by a municipality of any form of property. Usage has limited its meaning, however, to the owner ship by cities of certain well recognized types of public or services such as water, gas, electricity and street railway transporta tion. Municipal ownership is usually thought of as including the municipal operation of the utilities owned, the ownership and operation being popularly regarded as inseparable. It is, however, not uncommon for municipally owned utilities to be leased and operated by private corporations. In the following paragraphs mu nicipal ownership and operation will be dis cussed as a single policy and system.
In recent years the number and variety of enterprises to which municipal ownership has been extended throughout the world have greatly increased. This extension has been more striking in Europe than in the United States. A survey made in 1906 showed that in the towns and cities of Prussia 33 different kinds of undertakings were in public hands. Needless to say most of these were enterprises which are almost universally regarded in this country as improper fields for municipal activ ity. The following may be mentioned as ex amples: abattoirs and stockyards, warehouses, breweries, hotels, canning factories, mines, bakeries, mills, fisheries and livery stables. In the United States municipal ownership has usu ally been confined to undertakings which have some or all of the following characteristics: (1) those which are natural monopolies, in which competition is either impossible, imprac ticable, or highly inconvenient, such as supplies of water, gas or electricity; (2) those which are dependent upon securing special privileges and rights from the public, such as the right of eminent domain and the right to occupy the streets with tracks, pipes, poles and wires; (3) those which produce commodities or services of which the city itself must necessarily be a heavy consumer, such as water for various municipal purposes and electricity or gas used for public lighting; (4) those which directly concern the health of the city or itsgeneral safety, as water, the purity of which directly affects the public health and which is also necessary for fire protection and street flushing; (5) those which subserve the public welfare directly but which private capital cannot always be relied upon to provide at sufficiently low cost, such as public recreational facilities of various kinds or commercially unprofitable transportation facilities such as some of the municipal ferries in New York. There is a marked tendency in this country to emulate the cities of Europe and enlarge the scope of municipal ownership. Recent years have witnessed experiments in the direction of the municipalization of ice plants, fuel yards, theatres and opera houses, although in none of these cases has the city made any effort to monopolize the field. It seems clear that we may expect a continued expansion in the field of municipal ownership. At present however, municipal ownership in the United States is confined in the main to the systems for supplying water, light, power and trans portation.
Cities which have embarked upon municipal ownership ventures have almost always been led to do so by force of certain concrete facts existing in individual cases rather than by any dispassionate and logical analysis of conflicting arguments. It has required no argument to convince indignant citizens that under private ownership of the city's vital utilities rates were high, service was poor, equipment was out of date, stock was watered and that public utility corporations were an influence for evil in local government and politics. Efforts to correct these abuses by legislation or by administrative control have usually proved ineffective and mu nicipal ownership has been resorted to, fre quently without much examination of the argu ments for or against it, on the assumption that it would succeed where all else had failed. And it may be said, whatever criticisms may be raised by persons looking on from the outside, that the cases in which municipal ownership has proved unsatisfactory to the cities which have adopted it are few indeed. It should not be inferred from the foregoing that there has been any dearth of arguments on either side of the question of municipal ownership. In spite of the extension of municipalization al ready alluded to it remains one of the most debatable and hotly contested issues in the whole field of municipal policy. The arguments in
favor of municipal ownership may be sum marized as follows: (1) A broadening of the scope of municipal activity will stimulate in terest on the part of the citizens in civic affairs by giving them a direct and immediate con cern in what the city is doing. Civic pride and interest will produce civic efficiency. At the same time a higher grade of public officer will be attracted into the service of the city by the necessary creation under municipal ownership of places of dignity and importance. (2) The city will enjoy better service from publicly owned and operated utilities than from those privately owned. The primary motive of the public utility corporation is to make a large profit, frequently on watered capitalization. Expenditures made to improve the service ren dered mean a reduction in these profits and are, therefore, not made when they can be postponed or avoided. Under municipal owner ship the ambition to make profits is absent. The city could afford to invest the profits of the business in necessary improvements of service. It could make needed extensions of service into undeveloped parts of the city at a temporary loss which could be met from the proceeds from the rest of the system. It is untrue that the city would display less initiative than would private capital in the management of these enterprises. In fact the reverse would be true. Experience has shown that the desire to remain in the undisturbed possession of generous rev enues has completely killed the business initia tive of many public utility companies, which, secure in their monopolistic franchise rights, have shown little or no enterprise. (3) Mu nicipal ownership has been shown by experi ence to be financially successful. It gives the city a substantial surplus or enables it ma terially to reduce rates and in many instances it has done both. The case of Glasgow, Scot land, is frequently cited. The city took over the horse car lines in 1894. The lines have been electrified and extended from 64 miles to 197 in 1913. The number of passengers has in creased from 57,104,647 to 311,480,086 during the same period. The fares have been reduced. Under a system of zoning the average rate per mile is .44d under municipal management as against .89d under private control. The hours of labor of employees have been reduced and their wages raised. At the same time the enter prise has proved a source of income to the city and in 1913 after deductions for operating ex penses, depreciation, interest on capital, sink ing fund charges, etc., there was a balance of £33,000 to be turned over to the °Common Good.° San Francisco embarked upon the mu nicipal ownership and operation of about seven and one-half miles of street car line in 1913. The end of the first year showed a net profit of $45,000 as well as better service, and im proved conditions of labor. The mileage has since been increased and promises to keep on growing. Examples of this sort could be multi plied at length. (4) Municipal ownership would remove one of the most fruitful sources of cor ruption in municipal government. Bribery and dishonesty thrive where there are privileges to be dispensed and public service companies have not hesitated to resort to these methods in their efforts to ward off unfriendly control and regulation or to secure new franchises and concessions. Even when actual corruption has not been resorted to these private interests have felt the need of building up a political influ ence for the purpose of protecting themselves from all sorts of governmental interference. Municipal ownership would strike at the root of this evil by removing the incentive and oppor tunity for corruption. It is furthermore urged that under an adequate civil service system mu nicipal ownership would entail no danger of a political machine composed of the employees of the publicly owned enterprises. (5) The mu nicipalization of public utilities wouldgive the city the power to avert strikes and labor troubles which tinder private ownership occur so frequently and with such disastrous results to the public welfare and convenience. Lack ing the motive of exorbitant profits the city would be able to meet the reasonable demands of its employees fairly and improve the con ditions under which they work.