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relieved entirely therefrom; yet, in availing themselves of the use of these utilities, when in operation, the citizens whose properties were taxed therefor would pay the same rate for the same accommodations as the individuals who contributed nothing toward the cost of construction or purchase. This would be true of telephones, telegraphs, street railways, steam railroads and other like utilities, now existing, or which may be developed in the future.
It is a well known fact that some of these utilities in the smalier cities are, at times, not self-supporting. In 1893, 4, 5 and 6 many street railways throughout the country suspended business and became bankrupt. In case of municipal ownership, during such periods, the deficiency would have to be met by general taxation. The rank injustice of taxing the property owner to construct and aid in operating a utility for the benefit of the non-taxpaying class may sound well from a philanthropic standpoint, but it would result in revolution by the taxpayers, who are the warp and woof of the nation.
By the advocates of municipal ownership, it is assumed that sufficient net profits would arise from the operation of the public utilities to, in time, pay the cost of construction or purchase, the interest thereon, and maintain them in a state of efficiency; it is also assumed that bonds or certificates for such purchase price could be issued, made payable solely out of the prospective profits from the property acquired, and that these bonds easily could be negotiated. Certain legislation along these lines, affecting the city of Chicago, has already been enacted in this State, but such iegislation is no guarantee that such scheme will be practicable. It is simply the grant of a legal right to make an experiment. Under this legislation the net income and the tangible property acquired could be mortgaged to secure the money advanced to buy the plants, and in case of default by a street railway company, the mortgage could be foreclosed by the mortgagee, who would thus acquire the public utility for twenty years, and thus destroy this fanciful scheme. If the city
should default on the interest, followed by foreclosure and possession by the mortgagee, the city would be back again where it began, with no more power to regulate than it has now, and the mortgagee could hold possession for twenty years, but no longer, regardiess of whether his debt was liquidated or not. This latter provision would not prove alluring to the conservative financier when the city should seek to obtain a loan for such purpose.
Then can it be said with reason, a capitalist can be induced to hand over his money to the municipality without any security other than the possibility of receiving payment out of prospective profits, realizing, as he must. that the operation of these public utilities may be affected by changes in the political administration of the municipality, strikes, financial depression, the introduction perhaps of new methods that will depreciate the value of the old and various other causes that will affect the profits of the ventures ? The average man will hesitate before he will thus place his property at the mercy of political employes, who might be more apt to hold their positions by fealty to the boss than by devotion to duty.
If men could be thus induced to furnish the means and take the certificates, it looks as though their chief business in the future would consist, to use a common expression, "in holding the bag.”
On the other hand, if these utilities should be operated at a loss, and they might, then this system would incur taxation that would almost amount to confiscation of private property for the public good. Burdensome taxation is one thing which the American citizen resents. Property owners are now taxed to maintain state, county, town, school, city and other municipalities, which taxation in some municipalities in the state of Illinois at present amounts to twenty per cent of the income from such property. Add to this a municipal ownership tax to construct, and perhaps aid in operating public utilities, and there would be but slight incentive to citizens to own and possess private property. Municipal ownership would revolutionize our business methods
and change the relationship of one citizen to another. The constitutions of the various states would have to be amended as well as the constitution of the United States. It would bring into the government service hundreds of thousands of men who would be subjected to quasi military discipline and control and it would tend to strengthen the political power of the party in control of the particular government. An astute politician at the head of a municipality or government could, under this system, so strengthen and intrench himself, notwithstanding civil service, that it would be almost impossible to dethrone him, but if he could possibly be defeated, then upon the coming in of the successful party, experience shows that new men would be placed in charge, men perhaps wholly unfitted for the duties required, which is too often the case in political employment. New methods would be introduced in all these great public industries and the business of the country would be disturbed to a greater extent than it would be by the present adoption of a tariff for revenue only, and we might get both about the same time.
It has been said by our Supreme Court that a municipal corporation which supplies its inhabitants with water, gas, transportation, etc., does so in the capacity of a private corporation, and not in the exercise of its powers of local sovereignty, and that it stands upon the same footing as would any individual upon whom the like franchises had been conferred (146 Ill. 154-5). It occurs to me that it should be the function of governments to govern and regulate, but not to engage in quasi public or private industries.
Since municipalities and private corporations within each state are creatures of the statute, their powers may be enlarged or restricted at the pleasure of the legislature. Cities and villages may be authorized and empowered to own and operate these utilities and go into competition with private companies to supply to private consumers light, heat, power, transportation, etc. In this connection it will be well to remember that in the creation of private corporations, the State of Illinois
reserves its legislative power to, at all times, make such regulations and provisions as it may deem advisable to regulate such corporations, which provisions and regulations are binding upon any and all other corporations formed under the law, and our state has gone so far already along these lines as to confer upon the city of Chicago power to engage (by vote of the people) in the manufacture and sale of light, heat and power to private consumers in competition with private enterprises. This same power and authority can be given to all other cities and villages in the state, in like manner. Suppose a city avails itself of this anthority, what will be the probable effect upon the various private enterprises engaged in these industries ? Each city owns and controls all of its public streets and thoroughfares, without the use of which no private company can engage in furnishing to private consumers heat, light, power or other public utility, and the city thus controlling the public thoroughfares can preveni absolutely any other company from engaging in any such business, and thereby have the entire field to itself. It can then charge for service what it p!eases, and render such services when and where the wisdom and generosity of its council may see fit. But its advocates say under such ownership everybody will be treated fairly and therefore will be satisfied, but the various suuts that have been litigated in this state alone, between cities operating their own water works and the consumers, do not support such contention.
As to all the public utilities within the city, such city would have an absolute monopoly, and it is a serious question whether, under such conditions, the public would receive as good service as where these utilities are operated by private enterprise under sane and honest restrictions and regulations by the municipal authorities.
The advocates of municipal ownership and operation base their argument upon the assumption that the public officials who would have charge of the public utilities would be men of ability and honesty, and would at all times be devoted to the
discharge of their duties honestly and efficiently. Such an ideal condition of things never has existed and never will exist in any government. It is also claimed that the present conditions existing in the city of Chicago in the ownership and operation of some of these public utilities is an argument in favor of municipal ownership, but upon an analysis of this question the facts wiil not support such contention. If we go back to the time when these companies were granted the privilege of using and occupying the public streets for the operation of their business, we must not overlook or forget the fact that in granting these privileges the city council of Chicago had it within its power to stipulate and provide against all the evils of which the people now complain. The power was full and complete and the city council could have iinposed upon the privilege every condition necessary to secure and protect the comfort, convenience and rights of the people by making proper regulations and providing forfeiture of the grant in case of default. The fact that the public authorities then in control frittered away the rights of the people is a strong argument not for, but against, municipal ownership.
If these same public authorities, when they had it within their power to fully protect the rights and interests of the people, failed to do so, with what assurance can it now be said that public officials under municipal ownership and operation would be any more solicitous in guarding the rights and interests of the public? There is no evidence that human nature within the last fifty years has changed so much for the better that we may expect the officials of the future to be more capable or honest or solicitous for the public welfare and convenience.
It would look to the casual observer that the sentiment in the city of Chicago for municipal ownership has been created not so much by the desire to have the public own and operate their utilities as from the fact that the people are suffering now because of either the inefficiency or dishonesty of the public officials in the past.