The age-herald., 1900-06-29
THE GAS QUESTION
 A CONSUMERS VIEW
Extracts from Professor Richard I. EIy's Discussion of
 the Problem.

submits the following on the absorbing question of gas:
 "The matter of new gas contract would seem to be of sufficient importance to war rant an investigation by the City Council, not only of the prices paid by neighboring cities, but of the scientific data governing such economic problems, as can be deduced from a study Of the experiences of older cities in all parts of the world and of the
 writings of such men as make study or such subjects This, however, young cities rarely do. Take young people, they usual ly prefer to go ahead and have the excite ment Of their own mistakes. Until they have made mistakes indeed the mistakes of their elders rarely seem to interest them. Richard T. Ely, in his book Problems of Today points out very clearly the differ
 ence between natural and artificial monop- oles. The natural monopolies are rail- ways, canals telegraph, telephones, gas, water and a few others.
 Ely says: "A pursuit is a natural mo-
 nopoly when it is excluded from the steady,
 constant pressure of competition,' that is so excluded by the unpreventable operation of natural laws. Competition, as it may temporarily exist between natural monop- oles can only be detrimental. As for in- stance, when a new company enters the field and duplicates the gas or water pipes, or when competition in rates breaks out among the railroads, we naturally speak
 of it as war. It is destructive and has like
 war a termination of hostlities in view
 Such state of affairs would not deceive
 the simplest minded into expecting steady
 and continuous competition.
 When a new gas company is formed in
 the interest or the dear people let the
 confident citizen take the managers at their
 word and ask them to make low rate for
 number of years, and he will find that
 they will refuse. Rates go down and a
 bitter struggle ensues, but it is not com
 petition, 1t is fight for mastery. The
 only question at issue is under what terms
 shall we combine" Combination is inc
 vitable because natural laws brought it
 about, and even legislators are powerless
 to oppose their movements.
 Very likely ten thousand attempts at
 competition in gas supply have been made
 in this and other countries, and the civil
 1zed world has yet to the first instance
 Of permanent successful competition
 Ely, from whom the above quotations are
 taken shows very convincingly by argu-
 ment as we'll as by the experiences of many
 older cities Qaboriously collected), that
 all natural monopolies, that is, inevitable
 monopolles such as gas, water and the
 like, must sooner or later be owned by
 the people themselves, and therefore the
 sooner the better
 Supplying gas is from iu inherent na-
 ture monopoly, simply because making
 gas with two or more plants must always
 be so vastly more expensive than making
 1I W1tn one, that cOmDetitiOn he
 possible until a basis of combination can
 be agreed upon.
 Any encouragement, therefore, to the or
 ganization of rival gas companies is un-
 wise and baneful. The inevitable end must
 always be combination, and this results in
 an unnecessarily costly plant (by the
 duplication of mains) and consequently in- creased hxed charges which must be paid by the consumer, making his bills much larger than they would have been if one company, properly controlled Cor prefer ably, plant owned by the city) had had the field unopposed.
 Ely again says:
 The proper method for city authorities to follow in the case of gas supply. pro- vided 1t does not furnish gas itself is very simple. The franchise should be sold at public auction for fifteen years, when it should expire, the city reserving the right of purchase of the works at the expiration oi the period at an appraised valuation |. put without any addition for com
 puisory purchase, good will or future l profits"
 In short the manufacture of gas being q natural monopoly in which all attempts at competition are necessarily harmful by in- creasing cost of plant by wasteful expen- allure, should be acquired by the munich pality in the beginning if possible or the authorities should have that end in view by selling the franchise for as much as possible With certain concessions hv renewing contracts for short periods, with concessions, with the privilege of purchase at the expiration of the contract. The short time contract would seem to be the only rational one in that gas must always be- come much cheaper in proportion as more of it is used.
 Ely says again, That gas could be made | and sold at a profit in most of the large l cities of this country at 50 cents per thou l sand were it not that destructive gas wars had so increased fixed charges and rolled up capitalization out of all reason" That | the first city is yet to be heard of that, | owning its gas works, regrets it. The most | unfortunate city in the world with it's gas | works is Philadelphia, and yet when q ring proposed to sell the gas works, and | had the council fixed, then was such a | popular outcry with hints of the peniten- l tiary that the council was terrified into doing it's duty. Birmingham has had no competitive companies, therefore the plant l here ought to be as cheap as that of any 1 other city of its size.
 Wheeling, w. Va, bought its gas works | in 1871 for $1OO,O0 they were free from | debt in 1880; present value, s500,000; rates, l $l.50 at first, later $1.20; then 90 cents, and l now 75 cents; inhabitants, 5000. Manchester, England supplies it's own | gas at 66 cents. Some towns in Scotland | supply gas for less than 50 cents.' "Fifteen years ago Belfast, Ireland, bought its works Since then they have paid off the debt, greatly improved the plant and reduced gas to the consumers | from s1.20 to 66 cents and Belfast imports all her coal from Scotland"
 | Leeds, England. has A cent gas. The above is made up ot condensed and | imperfect interpretations and quotations | from one of the highest authorities in the | land, Richard T. Ely, professor of Political Economy in the University of Wisconsin. l We are aware that most practical econo- | mists'' refuse to listen to professors of l political economy on the ground that they | are visionary and theoretical and don't
 really know anything about politics or | economics, either. Still, leaving his theo- | of ha ha