Evening capital and Maryland gazette. (Annapolis, Md.) 1910-1922, 1916-03-02
FALLACIES OF
MUNICIPAL OWNERSHIP
How City Officials Deceive Tax
payers by Hiding Losses OF
Municipal Plants.
IN FINANCIAL REPORT.
Municipal Ownership is Maintained
and Promoted by the Rankest
Kind of Deception.

About nine out OF every ten munlc-
ipal utility plants are mortgaged for
all or more than they are worth. They
are owned by the individuals who hold
the bonds representing the capital IN
vested in them. and the interest paid
on the bonds represents the return on
the investment or the profit TO the
owners. 50 you see under sO-called
municipal ownership the users OF a
public utility Must pay a profit to the
capital employed. although the profit
in such cases is called interest This
profit or interest charge is as newt
able as the sum- the moon and the stars.
Municipal ownership. in such cases,
is virtually individual or private own
ership under political control and man
agement The owners-the bondhold-
ers-are quite willing to submit to the
political control and management be
cause their capital investment and in
terest or profit. generally az the rea-
sonable rate OF 3 per cent. viii be re
turned from the seneral tax revenues
of the municipality if nor from the
operating revenues of the utility. That
is why capital can be secured more
readily and at a lower rate of interest
or profit at a so-called municipality
owned utility than for so-called pri-
vately owned utility. Investors in
municipal plant are not required to de
pend upon efficiency in management
for the security of their principal and
Interestingly may depend solely upon
the taxing powers of the municipality
SO there is no good ground for com
plant from either owners or operators
under the system that properly should
be called individual ownership under
political control and management.
Real Public Ownership.
Real public ownership of utility
plants is best eXemplified by our So
called priyately-owned properties
There are very few utility plants in
this country owned by one, two or even
a half dozen individuals. Most of our
utility companies have numerous stock
and bond holders; their securities are
on the market and may be acquired by
any individual who desires to invest
Investors in so-called privately owned
utilities have no taxing powers Of
municipality 10 secure their principal
and interest, and they must necessarily
depend upon efficiency and economy
in management. Their timidity and
their demand for a slightly higher rate
of return than is paid on municipal
bonds would disappear if it were not
for the fact that the fruits of efficiency
and economy in management upon
which they must depend for security,
are always subject to serious impair
ment of absolute destruction through
unjust political interference.
Hundreds of thousands of men and
women in moderate circumstances
have invested part of their savings in
the stocks and bonds Of the so-called
privately owned utility companies in
this country. This class of investors
is composed largely of farmers, mer-
chants, manufacturers. lawyers. doc
tors, preachers-the public in general
This makes real public ownership. We
might correctly call it public owner
ship subject to political destruction
If any public utility can make any
good showing under municipal owner
ship. that utility ought to be the water
service. Because life aud property
are safe-guarded in large measure by
an adequate supply of water the public
is not inclined to tolerate pernicious
political interference in this branch of
the public service. On account OF this
lively public interest in the water sup
ply We have in this country a number
of waterwOrks systems under munic-
ipal ownership which are not seriously
impaired by political ineffciency and
extravaganza. but the number is not
near as large as il should he or as It is
generally believed to be. While most
Of our municipal water systems give
good service because the public will
tolerate nothing less than good service
very few Of them are operated eco
nomically, and when all the facts are
produced most of them show a heavy
drain upon the tax revenues
The Chicago waterworks has been
frequently cited as a shining examine
of successful municipal ownership and
operation, and a large majority Of the
citizens Of Chicago so consider f. In
hundreds OF political speeches it has
been stated that in Chicago. where the
water rate is only cents per thousand
gallons, the department is operated at
profit in dollars and cents. as is
shown by the official report Of the De
partment OF Public Works. But the
fact that in Chicago the aggregate
amount which consumers pay in ad-
dition to their water rates for the serv-
ice which they receive is much greater
than the aggregate amount OF their
water rates
The municipal ownership advocates
and the official report of the water
department have nothing whatever 10
say abouts70 900 600 having been spent
for the drainage canal to purify the |
water supply. not ore dollar of which |
has been chalked against the water |
department Not word about the
S1,250-o00 a wear for the administration
and maintenance Of the drainage ca
nal. Not a syllable about the fact that
Chicago property owners paw about
Sl,5O0.000 more in fire insurance pre-
miums annually than they would pay
if Chicago had an adequate water SEW
ice. No breath about the fact that on
account Of the low pressure. thousands
OF Chicago property owners must IN
stan and operate their own pumps al