The San Francisco call., 1903-09-26
FOR A
PUBLIC SERVICE
ARE DANGEROUS

| Inc discussion OF muIlcipdl OWLeISlllP y
of public utilities is at this time oppor-
tune. The editorial comment on the ques-
/ ton which follows was made by Public
/ Policy, a high-class journal of Chicago,
] which devotes itself to a correct under
standing of public questions and to the
development of good citizenship. The com
ment of Public Policy is based upon an
editorial in The Cau and was published
on September 10, 1908. as follows:
PUBLIC UTILITY BONDS
Under the title OF Taxation Without Bene-
ft there is in this issue very able discussion
by the editor OF The Call Of San Francisco Of
the policy Of mortgaging all property in a
city for the purpose Of a public utility that
can supply the needs OF but a comparatively
small portion of the city. After calling attcn-
ton to the elastic meaning of the term pub
lie utilities" illustrated by the experience OF
New Zealand. and. may add. Of old Eng
land. the article shows that the so called ad-
vantages Of municipal ownership are deceptive
ana mostly due 10 unousinesSlke or partial
accounting. In this respect the article fully
sustains our contention that correct analysis
OF the accounts of any publicly owned and
operated industry will show that no economic
gain whatever has been made that is due 10
such ownership and operation. When such
gains appear they are the result of failure 70
charge fully all costs of ownership and opera
ton and relieving the utility from charges and
eXactions which are imposed upon the privately
/ owned and operated utilities with which COM
PARSONS are made.
After making these statements the editor OF
/ Inc can discusses the policy Of mortgaging
ali the property Of city for the purpose or
owning and operating a utility that can ben
eht Dut small portion Of the city. In doing
this the point is made that such a policy must
lead to ''confiscatory taxation" In this con-
hectlon the statements are made that the
taxation of man only for a benefit he does
not share, nor need to share, is a violation OF
his rights, which, tolerated may in other mat
indefinitely led
masses OF taxpayers may be involved in con-
| nscatiOE- The Independence Of our people be-
resentatiOn. Is not taxation without benefit.
or the possibility of benefit. as bad or worse ?''
We contend that the bonding Of a city for
the purpose Of a public service utility is not
only an improper use Of the taxing power. but
that II is wholly unnecessary. Such under
taking should be handled purely a business
proposition II the property, its franchise,
grant OF power to use public rights OF way, in
come, etc, is not sufficient security for the
bonds to be issued account Of the utility il
is not sound business proposition and should
not be undertaken. A correct construction OF
will forbid its exercise for unnecessary pur-
pose, or for the purpose Of establishing in
dustry that must be sustained by taxation in
order TO enable private users of its services to
obtain the same at less than their entire and
true cost. When industry is self-sustaining
its property, franchises and income viii fur
nish ample security for all the funds required
for its ownership and operation II bonds so
secured cannot be sold to advantage a govern
ment TelaDses into tyranny, pure and sim
pie when 1t exercises its sovereign power to
compel the taxpayers to make investments that
sound business sagacity rejects as unsOund.
This is the point at which the shoe pinches.
Municipal ownership advocates are too shrewd
proposition. They know full we'll that the kind
of estimates and spread-eagle talk, such as
have recently been used in Cleveland to induce
voters to vote bonds for a munlcipai electric
lighting plant. would not entitle them to a
moments serious consideration by men whose
/ business it is to know the value Of the securi-
ties offered when credit is asked public or pri-
vate. To decline to make a public service
utility sef-cOntained and self-sustained by
limiting its obligations to the securities created
by its own organization and operation rs to
confess It to be an unsOund business prOpOsi-
why the power of taxation should not be exer-
cised for its creation support.
Under the terms Of its charter. the BOardN
OF Supervisors Of San Francisco has full
power, when authorized by vote Of the peO-
Pile TO condemn and take over for public
count any or all of the privately owned and
operated public utilities When this charter
was granted by the Legislature its terms
hailed with Joy by all municipal ownership ad-
vocates and predictions We're freely made that
soon San Francisco would furnish examples
OF successful municipal ownership that would
But the people of San Francisco are realizing
that the Board of Supervisors has other busi-
ness to do besides acquiring and operating
public service utilities They are critically eX-
amining the business capacity shown in the
management Of the business with which the
board is already burdened, and finding 1t IN
competent to handle that business efficiently,
the people do not regard proven tnefnciency
as good argument for intrusting the board
with additional responsibilities, and are with
holding their authorization to undertake the
ownership and operation for public account of
any of the public service utilities. The city Of
Cleveland appears TO be the only place where
voters are judged to be sufficiently under con-
troll Of municipal ownership OratOry to be
pected to accept want Of time valid
cuse for blunders in a department the head Of
which is devCting much time and energy in
proving TO the people that he has not enough
TO do and therefore is perfectly competent to
manage a municipal electric lighting plant in
addition to his duties superintendent OF the
citv waterwOrks. I'm private business in
crease in the responsibilities of an incompetent
or overburdened manager is unknown prop
ositiOn But then, private business must be
self-sustaining or discontinued. 1t cannot ex-
act support from taxpayers This accounts for
the lack OF sound business methods in public
work