Comparison of existing municipal street railway undertakings in foreign cities being found of little value for the purpose of our investigation, your committee has considered the subject under the following heads: (1) What will municipal ownership of the street railways of Detroit cost? (2) Can Detroit afford to make the investment? (3) Is it desirable to assume the burden; to assume the responsibility of a costly experiment with no definite assurance that cheaper fare could be provided without affecting the quality of service? The Cost As the franchise of the Detroit United Railway which expired on November 14, 1909, covered only a part of the city system, unless an advantageous purchase of the remaining lines can be made by the city, municipal ownership can be only partial for at least fourteen years, at least not unless the city shall engage in a costly work of paralleling such lines. Two systems would mean two fares in many cases now covered by transfer. The legal rights to own and operate a street railway, if the people so vote, is now secured to Detroit; extension of the bond limit, now also possible if voted, would insure a part of the purchase price. Unfortunately, it is a fact that the higher the percentage of the bonded debt of a municipality to the value of its taxable property, the higher the rate of interest required to market its bonds. In Detroit the amount which the municipalization of the street railway system would require would, when added to the present bonded debt, so largely increase the percentage of bonded debt to taxable property as to exclude the bonds from Savings Banks' investment. Immediate municipal ownership of Detroit's street railways would involve: The amount of the appraisal of the Committee of Fifty plus several million dollars for betterments and extensions, including the fifty-seven miles of new track recommended by the committee on extensions and rearrangement, which are imperative if the city is to have proper service and which the Detroit United Railway or any other company would be required to assure the city in order to secure further operating privileges. In the matter of cost must be included the heavy demand which must be met in the not distant future for the construction of a subway as outlined by the committee on extensions and rearrangement, also interest on the bonds issued to effect the purchase, a loss of taxes in 1908 amounting to $134,842.63. This enlarged field for damage claims against the city would be found no inconsiderable item of expense. A comparison of Detroit's bonded indebtedness with that of other cities to-day is all in Detroit's favor, being far below that of other cities of the same class. Any plan to increase the debt of the city must take into account the normal demands certain to be made upon the taxpayers from year to year. Can Detroit Detroit's tax rate this year is $18 per thousand. In order to keep the rate down as low as this the common council and board of estimates are annually driven to the doubtful economy of cutting appropriations for expenditures wholly desirable and almost indispensable in order to prevent too great a drain upon the resources of the average taxpayer. Under the tax rate of recent years pavements have often necessarily been allowed to remain in deplorable condition; the present tax rate, which is the cause of some dissatisfaction because more than two dollars higher than last year, is still insufficient to place the pavements in an entirely satisfactory condition. Three much-needed school building appropriations were disallowed this year and there is a generally admitted need of more play-grounds and bath-houses. The board of water commissioners contemplate extensive improvements approximating two and a quarter million dollars. While this expenditure will be spread over a period of several years, the increased water tax necessary to provide for this expenditure will increase the amount the taxpayer and patron of public utilities must pay for the privilege enjoyed. As a municipality we are seemingly pushed to the limit of our resources to perform such primary, non-contentious municipal undertakings, as having no element of profit in them cannot be left to private enterprise. Do taxpayers desire to assume the responsibility in the hope of securing cheaper transportation? By placing the street railway system under municipal control a large body of municipal employees is created, each member having a vote. The management is made to reside in a body politic, subject to change at least every two years. Do these conditions indicate a fair probability that such efficiency and economy in administration and operation will prevail as will serve to reduce fares in a sufficiently large degree to warrant and render advisable the faith and credit of the city; increasing the bonded debt and tax rate? Will not the increased expenditure add to the burden of taxation to such an extent as to react upon the industrial development of the city and drive away more population and manufacturing than could possibly be attracted to it by the benefits these expenditures were intended to secure? In England the rapid rate of increase in taxation, largely due to increase in municipal trading, has reached an alarming stage. Statistics show that, while in 1880 the local debt of Great Britain and America was about the same, during the ten years from 1880-90 the British local debt advanced at the rate of $30,000,ooo per annum, while the American local debt increased only $4,000,000 per annum. In 1904-5 the national debt of Great Britain was $91.68 per capita, the American national debt at the same time being only $11.91 per capita, while in New Zealand and the Australian commonwealth, where municipal ownership is so largely entered into, the per capita of the public debt was, during these years, in the commonwealth, $288.60, and in New Zealand, $348.10. A comparison made in 1904-5, showing the average indebtedness of 18 principal cities of Great Britain as compared with 18 of the principal American cities, shows: Per capita debt of American cities... $40.96 Our form of city government is adapted primarily to put a check on expenditures. There is no machinery for a progressive business-like administration of any department. Questions of policy and of appropriations must be argued in the common council and board of estimates, and however useful such a system may be to keep the tax rate within bounds, no one will claim that an intricate business like the operation of a great railway system should be left to the decisions of bodies of men inexperienced in the particular problems involved. It is no answer to say that the management might be in the hands of a commission composed of able business men. Success in one business does not qualify a man to succeed in managing another wholly dissimilar business. Moreover, men competent to make profits cannot afford to give their services to secure profits for a city. Nor is the management of a street railway calculated to draw men into the service for the sake of honor, since the occupation is beset with difficulties and anxieties. Responsibility for life and property is in the highest degree burdensome, and the dealings with an army of employees on the one hand and with the public on the other require tact and experience which command a high price in the labor market. With profit to the individual as an incentive to economy in administration eliminated with our municipalities as at present organized, tenure of office tried and with politics entering so largely into municipal elections, it is a matter of grave doubt in the minds of your committee as to whether the conduct of an undertaking requiring experience for efficient management, could be operated by the municipality to the profit either of the taxpayer or the car patron. Summing up the situation as it exists in Detroit to-day, your committee believe that, inasmuch as the municipal ownership Detroit's Present Situation of street railways at the present time would: (1) Largely increase the city's bonded debt. (2) Increase the tax rate. (3) Diminish the amount of taxable prop erty. (4) Increase the city's liability for damage claims. (5) Benefit neither taxpayer, employee nor patron. (6) So increase the tax rate as to react to the detriment of the city's industrial expansion. (7) Promote increased political manipulation. We believe: That for Detroit to engage in street railway operation would be to enter a field adapted to private rather than public undertaking. To enter upon an experiment certain to be costly and not certain to be successful, a course most unwise, from a business standpoint, and which, in the opinion of your committee, should not be undertaken. Respectfully submitted, D. M. IRELAND, Sub-Committee on Municipal Ownership. I cannot refrain from remarking, before closing this paper, that political exigencies have kept from the voters the most logical solution of the street railway problem ever placed before the community. In closing, I will state that the corporation now owning and operating the street railways of the city of Detroit throughout the entire investigation of the committee of fifty and during the preparation of the ordinance acted in perfect good faith. It employed expert engineers to secure an inventory and appraisal of the physical value of the system, and compiled something like 40,000 typewritten pages of matter which it furnished the engineer employed by the committee of fifty, and at all times threw its books and records open to the investigation of the committee. I can state privately that had this ordinance been submitted to the people, carried and adopted by the common council, the street railway company would have accepted its provisions once and for all and removed the street railway problem from politics. The Minneapolis Gas Settlement. By STILES P. JONES, Secretary Voters' League of Minneapolis. The experience of three short years has made the city of Minneapolis a well-educated community along franchise lines. Previous to 1907, there had been little to develop a franchise sense in the community, and the franchise companies dwelt in a condition of peace and serenity regarding the future. Four years ago it would have been possible to put through the city council without any notable public protest franchise grants affecting the local public utilities that would have very inadequately guarded the public interests. This would have been not because the city council was more corrupt than those of other cities where the people were more vigilant in this regard, or that the citizens were necessarily more ignorant. It was simply a case of an undeveloped sense of the meaning of a public-utility franchise and its value and economic significance in a large and growing community. The real education of the Minneapolis public in a franchise way began early in 1907, when the campaign was inaugurated for a franchise agreement between the city of Minneapolis and the General Electric Company. This company is one of the concerns owned by Stone & Webster of Boston, and it practically has a monopoly in furnishing electric energy in Minneapolis. The General Electric campaign covered about two years, and was a long drawn out and bitter controversy. The company bent every energy to secure a favorable franchise agreement to replace a somewhat legally doubtful combination of odds and ends of grants made at various times to different companies which finally merged into the General Electric Company, while the mayor and part of the city council, backed by assistance from some prominent business sources, insisted upon a settlement that in full measure should protect the public interests. General Electric Campaign |